Carbon Offset Programs: How They Work and Which to Choose

Carbon offsetting has become both widely adopted and widely criticised. On one hand, the voluntary carbon market reached $2 billion in 2024. On the other, investigative reports have exposed projects that delivered little actual climate benefit.

So where does that leave you if you genuinely want to compensate for emissions you cannot yet eliminate? This guide cuts through the noise to help you understand how offset programs work, which ones are credible, and what to watch out for.

How carbon offsetting works

The concept is straightforward: you pay to fund a project that reduces or removes greenhouse gas emissions somewhere else, equivalent to the amount you want to offset. One carbon credit equals one tonne of CO2e avoided or removed.

1. Calculate your emissions — use a carbon footprint calculator to determine what needs offsetting
2. Choose a project type — reforestation, renewable energy, methane capture, direct air capture, etc.
3. Purchase verified credits — through a certified marketplace or directly from project developers
4. Retire the credits — credits are permanently removed from circulation so they cannot be resold

Types of carbon offset projects

Verification standards: the quality filter

Not all carbon credits are created equal. Third-party verification standards audit projects to ensure the claimed reductions are real. The main standards to look for:

• Gold Standard — founded by WWF, considered the most rigorous. Requires proof of additionality, permanence, and sustainable development co-benefits
• Verra VCS (Verified Carbon Standard) — the largest voluntary standard by volume. Strong methodology, though some project categories have faced scrutiny
• American Carbon Registry (ACR) — US-focused, strong on forestry and agriculture projects
• Puro.earth — specialises in carbon removal credits (biochar, DAC, enhanced weathering)
• ICVCM Core Carbon Principles — the new meta-standard that rates other standards, launched in 2024

A credit without certification from one of these standards should be treated with extreme caution. The verification process is what separates a legitimate climate investment from a green marketing exercise.

How to spot low-quality offsets

The offset market has had its share of scandals. Here are the red flags:

• No additionality — the project would have happened anyway, even without carbon finance. A hydropower plant that was already fully funded does not need offset revenue to exist
• Inflated baselines — the project claims to prevent deforestation that was never actually threatened. Some REDD+ projects have been criticised for this
• Double counting — the same reduction is claimed by both the project and a national government in their NDC
• Non-permanent removal — trees planted for carbon credits that are later cut down or destroyed by fire
• Outdated vintage — credits from projects completed many years ago, where the reduction already happened regardless

Best practices for buying carbon offsets in 2026

1. Reduce first, offset last — offsetting should complement, not replace, genuine emission reductions. The SBTi and CSRD both enforce this principle
2. Prefer removal over avoidance — removal credits (DAC, biochar, reforestation) actively take CO2 out of the atmosphere. Avoidance credits prevent future emissions but do not reduce current concentrations
3. Check the vintage — prefer credits from recent projects (last 3-5 years) with ongoing monitoring
4. Verify the registry — every legitimate credit has a serial number trackable on the issuing registry (Gold Standard registry, Verra registry)
5. Diversify project types — do not put all your offset budget into one project type. Mix nature-based and technology-based solutions

Carbon offsets and corporate reporting

Under the EU CSRD and the evolving SBTi framework, companies cannot use offsets to claim they have reduced their emissions. Offsets must be reported separately from actual emission reductions. The Scope 3 challenge makes this particularly relevant — most companies' largest emissions are in their value chain, and offsets do not shrink those numbers.

That said, offsets remain valuable for addressing residual emissions — the emissions that cannot be eliminated even with best-available technology. A credible net-zero strategy reduces 90%+ of emissions and offsets the remainder.

Frequently asked questions