Dwyer Gunn’s post on carbon offsets at the Freakonomics blog provides a good overview of the issues involved in carbon offsets:
The offset credits are a popular component of most cap-and-trade proposals because they have the potential to lessen the economic costs of the programs. The cost of upgrading to environmentally friendly practices is very high for certain industries and carbon-offset credits can ease the transition in these situations. However there are doubts about whether the offset credits actually represent reduced emissions.
Her whole post is informative and useful, and builds on the very good posts on carbon offsets over the past few weeks at Common Tragedies.