Understanding carbon offset companies

You might have heard of carbon offsets, but not understood exactly what they did, or were pretty skeptical of their intentions. Are the carbon offset projects real, or is it a money-making scam. Hopefully, we can provide some insight on what they do, so you can decide if it’s something you or your company wants to consider.

carbon offset is a reduction in emissions of carbon dioxide or greenhouse gases made in order to compensate for, or to offset, an emission made elsewhere. These companies provide a service to broker between the company looking to offset, and those looking to help fund their project.

We will spotlight a few of the more popular offset companies below:

  • CarbonFund.org
  • TerraPass
  • Climate Friendly
  • Green Mountain Energy
  • Carbon Advice Group

Carbonfund.org is a 501(c)(3) nonprofit organization, dedicated to climate change education, carbon offsets and reductions and public outreach.  Their mission is to lead the fight against global warming, by assisting individuals, businesses or organizations to transition “towards a ZeroCarbon™ world”

They support third-party validated renewable energy, energy efficiency, and reforestation projects globally, and are headquartered near Washington DC, in Bethesda, MD.

They developed the Carbonfund.org Quality Assurance Protocol, which ensures that every project meets or exceeds international certification standards (such as the Climate, Community and Biodiversity Standards, the American Carbon Registry, and the Verified Carbon Standard). This provides an additional set of criteria before it qualifies to be a part of their project portfolio

All carbon offset projects are reviewed against the following criteria:

  • They must be actual reductions based upon approved methodologies or protocols which require rigorous monitoring, reporting and verification (MRV) of the project’s activities.
  • They must be above and beyond “business as usual”, which means they would not have occurred in the absence of the project (such as driven by regulatory requirements).
  • Reductions must be independently verified by a third-party.
  • Should be independently certified to ensure permanence (useful life of a project) and other criteria
  • Reductions must be readily and accurately quantified, monitored and verified by independent, third-party auditors.
  • Should minimize the risk of leakage, which is the positive or negative impacts of a project on the surrounding area outside the project’s boundary

The verification must adhere to one of the following third-party certification standards: American Carbon Registry, Chicago Climate Exchange, Clean Development Mechanism, Climate Action Reserve, Climate, Community & Biodiversity Standards, Gold Standard, Joint Implementation, ISO-14064, Regional Greenhouse Gas Initiative, Social Carbon, US EPA Climate Leaders Program

The additional qualifying criteria to assess projects includes:

  • Making sure the projects are selected across the US and internationally, to get people from all over the world involved.
  • Have the potential to transform the clean energy market in and around the project’s location.
  • Projects that provide benefits beyond the environment, such as the socio-economic conditions through job growth, technology advancements, trade opportunities, etc.

For businesses interested in being a part of their CarbonFree® Partner program, they must offset their office, fleet and travel emissions at a minimum (at least $350).

The mission of TerraPass is to strive to reduce the greatest amount of carbon emissions through education, online tools, and carbon offsets. They are headquarterd in San Francisco, and oversee projects in the United States.

For businesses to be included in their TerraPass badge program, they need to offset at least 2000 metric tons per year.




They support projects related to the following areas:

  • farm power (anaerobic digesters, lagoon covers and electricity generators) to reduce methane emissions
  • Landfill gas capture (capture methane from landfills using wells, pipes, blower, etc) and using it for energy
  • Abandoned coal mine gas capture (capture methane using blowers and use it for energy)
  • Wind farms to generate electricity from sources other than carbon

Every offset purchase is verified in a periodic audit conducted by an accredited third party, which looks at the following areas:

  • Customer records and offset purchase contracts
  • Quality metrics review
  • Carbon offset portfolio to ensure it meets stated standards
  • Product content labels of what is being purchased

They also publish each year’s full portfolio on their website, once verified by the auditor. They use the Verified Carbon Standard and the Climate Action Reserve as the only carbon offset standards.


Climate Friendly supports energy efficiency and renewable energy projects globally to reduce carbon emissions. Their goal is to reduce carbon emissions to minimize the impact of climate change. They accomplish this through carbon management solutions, primarily through their carbon offset and renewable energy certificates (GreenPower and Gold Power). They are headquartered in Sydney, Australia, but support projects internationally, such as India, Brazil, Turkey, and China).

They provide accredited renewable energy carbon credits only after they meet international standards from the Verified Carbon Standard, Australian GreenPower program, and the Gold Standard.  They also maintain a detailed carbon register of all sales and purchases of energy and carbon credits, and they are audited annually by independent, accredited auditors.

They base their projects on the following criteria:

  • Must keep carbon in the ground
  • Guaranteed to permanently reduce greenhouse gas emissions
  • Must beover and above ‘business as usual’ and would not have occurred without outside support through carbon credits
  • Are independently verified using the highest international standards
  • Are not allowance-based, such as those that are part of complying with national emissions reduction legislation
  • Provide broader environmental and social benefits beyond climate change.
  • Are closely matched to the time our customers’ emissions occur.
  • Do not double count carbon credits

For corporate membership, companies must offset their greenhouse gas emissions associated with their business activities. Individuals can offset as little or as much carbon as they want (there are no minimums).

Green Mountain Energy offers renewable energy certificates (RECs) and carbon offsets to businesses and organizations, to help them achieve their business goals. Their goal is to support businesses with many different options to provide clean renewable energy, if direct purchase of clean energy is not possible.

Headquartered in Austin, Texas, they support many different renewable energy projects within the United States, such as methane capture at landfills and wastewater treatment facilities, forestry projects, in addition to renewable energy projects such as wind and solar. They do not provide much detail on how they identify and select their projects.

Their carbon offsets are sourced using third party certification standards, such as the Verified Carbon Standard, Climate Action Reserve, and Clean Development Mechanism, and undergo a voluntary third party audit annually.  The audit includes examination and testing of records, including customer sales records, renewable energy credit and carbon offset purchase contracts and attestations, and product content labels.

Carbon Advice Group is a carbon offset company, based in London, England. Their primary objective is to have as great an impact as possible in tackling global climate change.  They support energy efficiency, forestry, renewable energy projects that are focused on reducing direct emissions of greenhouse gases. The projects are located throughout the world.

The carbon offset projects strictly adhere to the independent verification set down by the UN’s Clean Development Mechanism, and meet recognized international standards for emission reductions.  They did not go into much detail on how the verification takes place.

The projects must meet the following criteria:

  • should help communities better themselves in a way that is socially, economically and environmentally sustainable, and result in improvements to human quality of life and lead to safer living conditions for all participants
  • must protect the local environment of the community in which they are undertaken and ensure that both short and long term improvements are achieved
  • must be monitored by independent bodies to ensure criteria are met and that target calculations are accurately reported.
  • must be able to clearly demonstrate how and where all investment is utilized
  • must produce carbon reductions or removals that could not have taken place without project implementation
  • must be independently verified by a Designated Operational Entity
  • must be registered, delivered and cancelled on your behalf with an Independent Carbon Credits Registry.

So that covers their intention and background, but where is the “guts” of these projects. Here is an example offset project from the Carbon Advice Group, to give you an idea of what they do. The other companies also provide examples, if you click on the logos above.

8.75 MW Wind Power Project in Gujarat, India

This is a wind energy project of capacity 8.75 MW comprising 7 Wind Turbine Generators (WTG’s) of 1.25MW each. The WTG’s are located at sites Bhogat, Lamba and Mandvi.

The project activity ran from March 2003 to March 2005. The project plan was to generate electricity at the wind energy farms, then use the state electricity grid to transport to the investing company, Rolex Rings Private Limited (RRFL), for its internal use. They are an auto-component manufacturing company, looking to continued contribution towards sustainable development by investing in renewable energy sources.

These wind mills are thus effectively saving 0.843 T of CO2/MWh of electricity generated. The project qualifies as a Small Scale CDM project activity (Renewable energy project activity with a capacity < 15 MW).

To qualify as a CDM project, it must qualify under the following categories:

  • Social well being: The state of Gujarat is facing a power shortage of 11~12% (15~26% peak power shortage), so these wind mills will help meet power shortage in the state.
  • Economic well being: Employment will be needed for the project implementation & management. In addition, funds to support the existing electricity infrastructure can be diverted to other social issues.
  • Environmental well being: Wind mills will lead to a reduction in fossil-fuel burning, reducing GHG emissions in the atmosphere. The reduction in coal use will also improve security of the country.
  • Technological well being: The success of the project will push R&D efforts by technology providers to develop more efficient and better machinery in future.

Despite the fact that the wind power investment is not a financially attractive option in itself, RRFL is planning to use the economic value of CERs from the project to help justify the expense. Overall, the total reduction in tones of CO2 equivalent is estimated at 150,000 tCO2e over a 10 year period.

Despite the benefits, local stakeholders need to be in agreement with the project. They were identified as the following groups: Panchayat, local community, GEDA and GETCO (GEB).

To obtain their input, a letter was sent to the sarpanch (elected head) of village at each wind farm site, and informed about the project. They were asked to call a meeting to inform all the people from the local community via the village panchayat. The panchayat is the medium and forum for every kind of decision and discussion that affects the local community.

No adverse feedback was obtained from local authorities as well residents. Moreover project proponents were appreciated for the environment friendly project activity.

GEDA is the wind farm developer and issues a certificate of commissioning, which can be taken as consent to go ahead with project activity. GETCO (GEB), which functions as state transmission utility and is a part of power purchase agreement between RRPL and Gujarat state, also issued a certificate showing approval.

Some expressed safety concerns related to wind energy in general, and their concerns were adequately addressed, as there was no negative feedback brought forward. Overall, the stakeholders saw it as a better form of energy, as compared to other sources of power. They also liked that it would have no negative impact on nearby areas and surroundings, will generate employment for nearby people, and will encourage more projects of similar nature.

In summary, here are the different carbon offset companies:

Comparison of Offset Criteria


Terra Pass

Climate Friendly

Green Mountain Energy

Carbon Advice Group

Org Type












Locations Serving






Greenhouse Gases


Methane and CO2




Offset cost per metric ton ($US dollars)






Which one do you choose? Consider reviewing a study by Tufts University on which carbon offsetters are the best.