Nicholas Institute for Environmental Policy Solutions
August 2009

Primer on H.R. 2454: Offsets

Primer on H.R. 2454: Offsets

In cap-and-trade systems, uncapped or unregulated sectors can reduce greenhouse gas emissions or increase carbon sequestration. Voluntary greenhouse gas emission reductions or sequestered carbon by uncapped entities can then be translated into a commodity (i.e., a carbon offset), which capped entities can purchase to satisfy their emissions compliance requirements if making internal reductions is too difficult, cost-prohibitive, or both. This primer explains the necessity for offsets the strengths and shortcomings of Waxman-Marley’s offset provisions.