Offsetting is clearly being used very successfully by many of the participants in the EU trading system. It is serving to reduce prices of compliance and delivering substantial volumes of finance (circa €860 m per annum) to countries outside of Europe. We wish to use the information we present here to illustrate how the scheme is working. It is clear that contrary to the claims made by industry it would not be ‘impossible’1 for the EU to take on more ambitious climate targets since there is a readily available source of abatement accessible both within the EU and internationally via the offsetting market. In fact permits are so abundant that if the EU wishes to see a thriving market in abatement it should implement tighter caps on emissions and phase out industrial gas projects.