The concept of carbon offsets has its source in the 1997 Kyoto Protocol, which sets mandatory limits on carbon dioxide (a key greenhouse gas) emissions by industrialized and “transitional” (mainly ex-communist) economies. The idea is that those countries that can reduce emissions more easily and cheaply than others, and have managed to do so by more than their limit, can sell their surplus reductions (or carbon credits) to countries that have exceeded their limit, thus helping achieve the overall global emissions target at the least cost.