September 2, 2014

The Lowdown on Buying Carbon Offsets

As much as we talk about energy efficiency and reducing carbon footprints, there are limits. Many businesses rely on driving, air travel, shipping and production for their core operations. They may be able to shave their pollution by, say, driving hybrid vehicles. But they can’t exactly call themselves “carbon neutral.”

So, another option: buying carbon offsets.

A whole collection of organizations has sprouted up in recent years encouraging small businesses to give money to support a renewable energy project or plant trees – and therefore offset some of the carbon dioxide they’re producing. More recently, airlines, utility companies and all sorts of companies have begun selling offsets to customers.

Sure, it costs money to buy the offsets. Some of the organizations offering them, however, are 501(c)(3) nonprofits, meaning your purchase may be tax deductible. And some businesses feel purchasing carbon offsets is a way to assure customers they are doing all they can to compensate for their pollution.

Here’s an example: Maryland-based Carbonfund.org touts itself as one of the leading carbon offset providers, with more than 1,700 businesses seeking its services. Businesses can use a calculator on its website to figure out their carbon emissions. Or, if they’re too busy or unable to do that, they can buy a package. A business with one to five employees, for example, can donate $350 to offset 35 metric tons of carbon dioxide produced annually. Carbonfund.org offers marketing materials so a business can promote its purchase of carbon offsets.

Other companies that sell offsets include TerraPass, Native Energy and Green Mountain Energy. The price of offsets typically ranges from $10 to $15 per metric ton of carbon emissions. Many offset sellers clearly outline their funded projects online and let buyers choose which project their offsets fund.

Should you do it? Buying carbon offsets not for everyone. Some businesses may feel their dollars are better spent on internal projects that lower their carbon footprint, such as buying LED light bulbs, rather than handing over money for an offset. And there have been news reports questioning whether offsets truly make a difference in reducing  carbon emissions or if they’re just a way to make business owners feel less guilty.

If you do buy offsets, make sure you’re buying from a reputable organization. You can research nonprofit organizations using GuideStar.org. Also know what projects the money is going toward and what percentage is going toward carbon-offsetting projects versus administrative costs. Australian blogger Michael Bloch offers some good tips for how to vet an offset seller.

Have you bought offsets for your business? Do you feel they make a difference?

3 Comments ▼
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Kelly Spors


Kelly Spors Kelly Spors is a former small-business and entrepreneurship reporter and blogger for The Wall Street Journal who has also written for Yahoo!, Entrepreneur, NFIB's MyBusiness magazine and The New York Times. Kelly is now a freelance editor and writer based in Minneapolis and has previously managed communications for an environmental non-profit that helps businesses find ways to be greener.

3 Reactions

  1. So, could farmers just start selling carbon offsets because as growers they help reduce CO2 in the air?

  2. Kelly,

    Great post with valuable insight. Why should small businesses respect their carbon footprint? Lots of customers take notice of companies that respect their carbon footprint. They see it as good business. Anything that gets you in good standing with your customers is something every small business should pay attention to.

    John Sternal
    @sternalpr

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