Carbon Offset vs Carbon Allowance: What’s the Difference?

Carbon Offset

A certificate that equates to one ton of carbon dioxide (or equivalent) not emitted due to an investment in a carbon reduction project. Typical projects include re-forestation, prevention of deforestation, or methane capture. Carbon Offsets can be very difficult to verify.

Carbon Allowance

Carbon Allowance: A legal document issued by a government agency permitting the bearer to emit one ton of carbon dioxide (or equivalent) into the atmosphere. The total number of allowances available (a.k.a. the Carbon Cap) is pre-determined and legally binding, meaning that retiring one allowance reduces the maximum pollution allowed by one ton of carbon dioxide.
The market for carbon offsets and allowances has changed rapidly over the past decade and has left consumers vulnerable to unreliable claims of carbon reduction. The wildly variable quality of offsets on the market reflects the inherent uncertainty in offset projects, perverse economic incentives that motivate project implementers to inflate reductions, and lax or absent regulation. This uncertainty has resulted in a severe, but not unwarranted, crisis of faith in carbon offsets.
Carbon Lighthouse Association was founded to offer consumers an alternative to the offset market. Carbon Lighthouse Association does not provide offsets, but rather reduces the number of allowable government-regulated pollution allowances on behalf of our customers, enabling individuals and companies the opportunity to verifiably reduce carbon emissions and negate their carbon footprint. Carbon Lighthouse Association only purchases carbon offsets from legally enforceable domestic carbon cap and trade markets. Currently, we purchase offsets exclusively from the Regional Greenhouse Gas Initiative (RGGI), which is a mandatory market for power plants in nine Northeastern States. Learn more about RGGI. Each carbon allowance purchased by Carbon Lighthouse Association has a traceable serial number. Once that allowance is purchased by Carbon Lighthouse Association, it cannot be used by a power plant to emit carbon dioxide. As a not-for-profit, all revenue that Carbon Lighthouse Association receives goes to the purchase of carbon allowances and administration of the organization.