"Businesses and individuals are buying carbon offsets to reduce their 'carbon footprint' or to categorize an activity as 'carbon neutral.' A carbon offset is a measurable avoidance, reduction, or sequestration of carbon dioxide (CO2) or other greenhouse gas (GHG) emissions. Offsets generally fall within the following four categories: biological sequestration, renewable energy, energy efficiency, and reduction of non-CO2 emissions. In terms of the carbon concentration in the atmosphere, an emission reduction, avoidance, or sequestration is beneficial regardless of where or how it occurs. A credible offset equates to an emission reduction from a direct emission source, such as a smokestack or exhaust pipe. The core issue for carbon offset projects is: do they actually offset emissions generated elsewhere? If the credibility of the voluntary offsets is uncertain, claims of carbon neutrality may be challenged. […] The viability of the voluntary offset market may influence future policy decisions regarding climate change mitigation. For example, credible offsets could play an important role, particularly in terms of cost-effectiveness, in an emissions control regime. There is some concern that the range in the quality of voluntary market offsets may damage the overall credibility of carbon offsets. If this occurs, it may affect policy decisions concerning whether or not to include offsets as an option in a mandatory reduction program."
CRS Report for Congress, RL34241