A financial instrument designed to allow companies or individuals to pay to "offset" their greenhouse gas emissions by supporting third party emission reduction projects.
Used in both official and voluntary emissions trading schemes, carbon offset credits are meant to represent a reduction of one metric ton in the amount of carbon dioxide released into the atmosphere compared to if a project had not gone ahead.
Offsets are typically bought from emission reduction projects, such as renewable energy, forestry or energy efficiency initiatives, providing the developer with the funding needed to undertake the project.
Advocates of carbon offsets argue that they represent a cost effective means of cutting global greenhouse gas emissions that also help accelerate the roll out of clean technologies in the developing world.
However, critics claim the approach is fundamentally flawed and that it is near impossible to prove that projects deliver real and verifiable reductions in emissions.
They also argue that offsets can give businesses in rich nations an excuse to avoid addressing their own carbon emissions