At their core, both carbon credits and carbon offsets are accounting mechanisms. They provide a way to balance the scales of pollution. The big idea behind credits and offsets is that since CO2 is the same gas anywhere in the world, it doesn’t matter where the emissions reductions occur. It makes financial sense for consumers and companies to reduce emissions where it’s cheapest and easiest, even if it doesn’t involve their own operations.

Although the terms "carbon credits" and "carbon offsets" are often used interchangeably, they refer to two distinct products that serve two different purposes. Before you start shopping, it's important to understand the difference between the two and which one will help you achieve your goals. Here is a broad definition of the terms:

• Carbon offset: Removal greenhouse gases from the atmosphere.
• Carbon credit: Reduction emissions of greenhouse gases into the atmosphere.

To better visualize the difference, imagine a water source polluted by a nearby chemical plant. A “chemical offset” would mean taking chemicals out of the water to help clean it up. A “chemical credit” would mean paying another chemical company to release fewer chemicals into the water, so the overall pollution level stays the same. Clear as mud? Great. (Carboncredits.com)