I work at REI. At our store, all of our power comes from non-renewable resources.
However, we don't pay just for that electrical power. We pay X amount more so that 40% of the power we use is offset by the production of electricity by renewable resources. Even though the specific store I work at does not get the renewable energy, someone is.
Gore is doing something similar. Even if his house itself is not using renewable energy, he's paying for the creation of such, and someone is using it.
The whole idea behind offsetting carbon emmissions is this:
My carbon footprint is 100 lbs per year (just a random figure). To offset that, I'll pay extra so somewhere along the line, 100 lbs of carbon is not being produced. Note that that's the ideal situation, which REI doesn't do (yet).
What you mention
Cutting your energy costs, and upgrading your heating and AC equipment is offsetting your carbon emmisions.
is actually called reducing your carbon emmissions.
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