Modeling the Economics of Greenhouse Gas Mitigation Summary of a Workshop (2011) / Chapter Skim
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Role of Offsets in Global and Domestic Climate Policy--Raymond J. Kopp
Role of Offsets in Global and Domestic Climate Policy--Raymond J. Kopp
Pages 92-99
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From page 92... ...
One can argue this lack of precision has not only caused a great deal of confusion around the concept, but also has led to a negative perception of offsets as tools of GHG regulatory policy among policymakers, at least in the United States. 35 Generally speaking, a GHG offset refers to a ton of greenhouse gas36 that that has not been emitted due to 30 Prepared for "Modeling the Economics of Greenhouse Gas Mitigation," National Research Council, the National Academies, Washington, DC, April 16, 2010.
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From page 93... ...
Countries under the Kyoto Protocol must keep their emissions under their Kyoto limits or purchase either Certified Emission Reductions Units (CERUs,43 in the form of Clean Development Mechanism (CDM) credits)
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From page 94... ...
Uncapped Tons Uncapped tons are "additional" emissions reductions from sources that do not have a compliance obligation. If an uncapped ton is purchased by a compliance entity, the emissions within the source category to which the entity belongs will rise above the cap.
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From page 95... ...
Offsets in a Post-Copenhagen World and the Value of Flexible Mechanisms Flexible mechanisms, particularly offsets, based on project-level crediting can be greatly improved with a movement to sectoral-based approaches that lowers transactions costs and considers additionality. Perhaps more important, a move to offset credits that are generated for reductions below negotiated baselines, rather than BAU emissions paths as embodied in most CDM-like project-level crediting, requires more aggressive developing-coun try participation and therefore greater global GHG reductions.
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From page 96... ...
The Likelihood of World 2 -- Bottom-Up Carbon Markets Absent the Berlin Mandate and the Kyoto structure of binding international emissions-limitation commitments, there is no longer a need at the sovereign level to meet international commitments with domestic reductions or to utilize the flexible mechanisms. However, to the extent that domestic regulatory policy has been developed in such as manner as to devolve legal responsibility for emissions reductions to the private sector (for example, through a cap-and-trade system)
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From page 97... ...
If the United States chooses another regulatory approach -- for example, regulation under the Clean Air Act or a strict standards approach appended to an energy bill like S 146258 -- the demand for offsets and flexible mechanisms by the United States could likely be zero.
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From page 98... ...
The Future Economic Value of Project and Sectoral Offsets CDM is a flexible mechanism under the Kyoto protocol. CDM credits have economic value since they can be used to meet compliance obligations for countries that are signatories to the Kyoto Protocol.
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From page 99... ...
Conclusions The future is highly uncertain for all offsets, including those from domestic and international sources, as well as existing CDM credits and proposed REDD and sectoral credits. The uncertainty emanates from unsettled domestic policy -- primarily in the United States -- and as-yet poorly shaped international policies that are developing for coordinated action on GHG mitigation.
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