A mechanism by which the impact of emitting a ton of CO2 can be negated or diminished by avoiding the release of a ton elsewhere, or absorbing a ton of CO2 from the air that otherwise would have remained in the atmosphere. It can be helpful to differentiate between an emissions reduction and a carbon offset. Demand side management efforts pursued inside a utility's service territory, for example, would constitute an emission reduction; efforts pursued outside a utility's service territory, whether domestically or internationally, would be categorized as CO2 offsets since the impacts of the project would not show up in the utility's emissions statistics.
A carbon offset is a service that reduces the net greenhouse gas ("carbon") emissions of a party, by reducing the greenhouse gas emissions—or increasing the carbon dioxide absorption—of another party. The intended goal of carbon offsets is to combat global warming.