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Applying Lean Six Sigma to the Environment

Understanding carbon offset companies

6 min read

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:

  • TerraPass
  • Climate Friendly
  • Green Mountain Energy 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 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.

In summary, here are the different carbon offset companies:

Comparison of Offset Criteria

Terra Pass

Climate Friendly

Green Mountain Energy

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.


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