NSW drivers are being given the option to offset CO2 emissions during annual vehicle registration.

Under new changes, drivers can now choose to offset their vehicle's carbon emissions annually - at a cost of about $80 - when registering their car. 

NSW Energy Minister and Treasurer Matt Kean says the money will fund projects which reduce or offset CO2 emissions, including a regeneration scheme in the Bourke and Brewarrina shires growing native forest on cleared land.

Drivers can choose to donate $5 to $200 annually during the online registration process, Mr Kean says. 

“The transport sector is responsible for 22 per cent of all NSW emissions, with almost 50 per cent coming from passenger vehicles,” he said.

“For those people that can't afford electric vehicles ... they can choose to offset their emissions.

“We're not forcing anyone to do anything.

“We’re really excited about it … this is an opportunity for people to do their bit for the environment … and also deliver great things for our economy.”

Mr Kean said that drivers will be able to track the funded projects offsets through an online register. 

The government has selected Corporate Carbon Advisory Pty Ltd as its offset provider partner.