Carbon Confusion: Deciphering Your Carbon Impact and the Alternatives for Offsetting It

by QuickBooks

3 min read

Carbon footprints, renewable energy certificates, carbon offsets, green tags, carbon credits – global warming has introduced a whole new vocabulary to businesses concerned about their effect on the environment.  With the new lingo comes a host of questions.  What do these terms mean?  How do you measure the scope of your company’s environmental impact?  And, once armed with that information, what can you to do reduce it?

Businesses today are becoming much more savvy about sustainability.  Green practices like paperless offices, telecommuting, and hybrid vehicles are no longer exceptional, but are quickly becoming the norm.  Still, no business can be 100 percent green.  At some point, you’ll have to board an airplane for corporate travel or ship a product by road or rail, and even that hybrid vehicle emits some kind of carbon gas.

So, how do you measure your company’s impact on the environment?  The Greenhouse Gas Protocol Initiative has defined three levels you can use to measure the scope of your emissions:

  • Scope I (Direct Emissions): Emissions from sources that your company owns and controls.  Examples: onsite energy generation and company vehicles.
  • Scope II (Indirect Emissions): Energy-based emissions from sources other than your own, but that are created or consumed as a consequence of your activities. Example: purchased electricity.
  • Scope III: Emissions from other sources/activities other than your own, but that are that are created or consumed as part of your operations and are not covered in Scope II. Examples: waste disposal, business travel, outsourced activities.

Once you have a clear picture of the type and scope of emissions for which your company is responsible (and after factoring in your state’s regulations) you can begin to determine the best option for offsetting your impact.

Here’s what you need to know about your choices.


Carbon offsets, also called voluntary emission reductions, represent greenhouse gas (GHG) reductions in one place to “offset” an equal amount of emissions that were made somewhere else. Since GHGs are a global issue, the location of emissions is irrelevant. There are many companies that offer carbon offsets including Terra Pass, Native Energy, and Green Mountain Energy. A more detailed list of GHG offset marketers can be found at the U.S. Department of Energy’s website.

Renewable Energy Certificates (REC), Green Tags, or Renewable Energy Credits are commodities representing proof that 1 megawatt hour (MWh) of electricity was created using a renewable energy source.  Each uniquely numbered REC can be sold, traded, and bartered and the owner of the REC can claim to have purchased renewable energy.  The Department of Energy website lists a number of retail and wholesale REC marketers.


Carbon offsets and RECs are measured differently.  Carbon offsets represent the reduction or avoidance in producing one metric ton of carbon dioxide, while a REC represents the production of 1 MWh of renewable electricity.


Another key difference between carbon offsets and RECs is the type of project that produces them.  Carbon offsets can come from a range of projects, including tree planting, renewable energy technologies, and improvements to building structures.  RECs, on the other hand, come only from renewable energy projects like solar, wind, and biofuels.  Carbon offset projects focus on keeping emissions from entering the environment, while REC projects focus on promoting rewnewable energy projects.


Carbon offsets are typically priced at $10 to $15 per metric ton of carbon emissions.  Carbon offset marketers allow your company to see which projects will be funded and let you choose which projects receive credit for your purchase.  In addition, some organizations offering carbon offsets are non-profits, meaning your purchase may be tax deductible. Like oil and gold, REC is a tradable commodity, making the price dependent on supply, demand, technology, government intervention, etc.

While navigating the path of sustainability can sometimes be confusing and overwhelming to business owners, improved tools like carbon offsets and RECs make it easier than ever to make a real, positive difference on your environmental influence.  Armed with the knowledge of your company’s level and scope of GHG emissions, you can choose a clean power solution that offsets your impact and can benefit everyone.

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