VATSC06581 - Consideration: Payments that are not consideration: Payments in specific sectors: Carbon offsetting: Introduction

As a result of the Kyoto Protocol and growing public awareness of climate change, carbon offsetting emerged as an indirect way for business and individuals to reduce their carbon emissions. Carbon offsetting involves the purchase and removal from circulation (‘retiring’) of the various carbon credits that currently exist.

The carbon market is split into

• the compliance market (see VATSC06582), under the Kyoto Protocol, the UK Emissions Trading Scheme (UKETS) and the EU Emissions Trading System (EUETS), and
• the voluntary non-compliance market (see VATSC06583).