Carbon offsets are the financial instruments used in a cap and trade structure. When someone is producing something with less greenhouse gas emissions or carbon production, they get a bogey that then has a value to those people that can’t get down to the cap. Often times, like in the example of the cement industry, if I were to switch to solar, my competition is still using coal. I’m way below the CO2 or greenhouse gas emissions for a ton of cement that I produce. My competition needs to buy them, and this marketplace uses carbon offsets to reward me and allow him to stay in business, but at a price.