The Use of Offsets to Reduce Greenhouse Gases
"Discussions about reducing greenhouse gases often focus on limiting the use of fossil fuels to generate electricity or power cars and trucks, yet a variety of other actions— including disposing of waste in different ways, changing methods of farming, and lessening deforestation—could also reduce the concentration of greenhouse gases (GHGs) in the atmosphere. Both existing climate policies, such as the European Union’s Emission Trading System, and policies under consideration, such as the American Clean Energy and Security Act (ACESA) of 2009, which was recently passed by the House of Representatives, have recognized the potential for such actions to “offset” the extent to which the use of fossil fuels must be reduced to meet a chosen target for total GHG emissions. If such offsets—which can be defined as reductions in GHGs from activities not subject to limits on emissions— are less expensive than reductions from limiting the use of fossil fuels, they can reduce the overall economic cost of meeting a target for emissions. Yet the difficulty
of verifying offset activities raises concerns about whether the specified target will actually be met; those concerns may be especially acute when, as under ACESA, allowable offsets include actions taken outside of the country setting the target for emissions..."

The Role of Offsets in a Greenhouse Gas Emissions Cap-and-Trade Program: Potential Benefits and Concerns
"If Congress establishes a greenhouse gas (GHG) emissions reduction program
(e.g., cap-and-trade system), the treatment of GHG emission offsets would likely be
a critical design element. If allowed as part of an emissions program, offsets could
provide cost savings and other benefits. However, offsets have generated concern.

An offset is a measurable reduction, avoidance, or sequestration of GHG
emissions from a source not covered by an emission reduction program. If allowed,
offset projects could generate “emission credits,” which could be used by a regulated
entity (e.g., power plant) to comply with its reduction requirement. Offsets could
include various activities:

! agriculture or forestry projects: e.g., conservation tillage or planting
trees on previously non-forested lands;
! renewable energy projects: e.g., wind farms;
! energy efficiency projects: e.g., equipment upgrades;
! non-CO2 emissions reduction projects: e.g., methane from landfills"