Emissions Trading & Offsets

Emissions Trading & Offsets at SEI-US
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		Can Concerns with CDM Coal Power Projects be Addressed through Revisions to the ACM0013 Methodology? SEI policy note Author(s): Lazarus, M. ; Chandler, C. Date: December 2011 Research Area(s): Emissions Trading & Offsets This policy note briefly assesses the ability of potential revisions to address key concerns with the CDM methodology used to evaluate CDM coal power projects, ACM0013, and with such projects in general. It is a follow-up to SEI Working Paper 2011-02, which examined several concerns with awarding offset credits (CERs) to coal power projects under the Clean Development Mechanism. The note reviews key concerns with CDM coal power projects, lists potential remedies for each concern, and comments on whether these remedies are likely to prove feasible and adequate. The authors identify three problems with no clear possible solution: a low signal-to-noise ratio; the ineffectiveness of additionality assessment in the context of multi-billion-dollar coal power projects; and the contradiction of using climate finance in support of long-lived emissions-intensive infrastructure that could undermine the ability to meet 2°C climate stabilization objectives. More information Download PDF
		Coal Power in the CDM: Issues and Options SEI Working Paper No. 2011-02 Author(s): Lazarus, M. ; Chandler, C. Date: November 2011 Research Area(s): Emissions Trading & Offsets This paper examines several issues that arise in awarding emission reduction credits to coal projects in the Clean Development Mechanism (CDM). It identifies systematic weaknesses in the coal methodology's (ACM0013) design and application. The authors estimate that shortcomings lead to significant over-crediting of Certified Emission Reductions and discuss why a revision of the methodology to more accurately estimate emissions reductions may not be possible because of data constraints and weak signal-to-noise ratio. The paper also examines evidence that suggests the vast majority of these projects would have proceeded in the absence of the CDM, and are thus non-additional. It considers the suitability of coal in the CDM, given the identified flaws in the methodology, and in the light of coal's impact on climate change and its social and environmental burdens. Download the executive summary, or click below for the full report. More information Download PDF
		Importance of programme design for potential U.S. domestic GHG offset supply and quality Climate Policy, published online Author(s): Erickson, P. ; Lazarus, M. ; Kelly, A. Date: July 2011 Research Area(s): Emissions Trading & Offsets Greenhouse gas (GHG) offsets are a central feature of most regional and national cap-and-trade systems. This analysis considers how the design of GHG offset protocols for the United States – and the corresponding rules for eligibility, measuring, verifying and awarding offsets – might impact actual offset crediting and the realization of GHG mitigation potential. Findings indicate that although lenient offset rules and protocols may bring several times more credits to market than a conservative approach, they could also undermine the cap-and-trade system's effectiveness at reducing overall GHG emissions. In particular, lenient rules and protocols could conceivably lead U.S. emissions to exceed legislative targets by as much as 500 million tons CO₂e in 2020. More information External Link
		The Implications of International Greenhouse Gas Offsets on Global Climate Mitigation SEI Working Paper WP-US-1106 Author(s): Erickson, P. ; Lazarus, M. ; Larsen, J. Date: March 2011 Research Area(s): Emissions Trading & Offsets International greenhouse gas offset credits from developing countries could play a major role in fulfilling developed countries' emission reduction pledges under the Cancun Agreements, but there is great uncertainty about the future role of such offsets. This paper focuses on a key question: whether both the developing countries generating the offsets and the developed countries buying them will be allowed to count the same emission reductions toward their respective pledges. The authors quantify the implications of double-counting of international offsets by building a spreadsheet model to analyze how potential offset supply and demand balances may evolve. They find that double-counting could effectively reduce the ambition of current pledges by up to 1.6 billion tons CO₂e in 2020. They close by describing several possible ways to address the risks of offset double-counting. Download PDF
		The Implications of International Greenhouse Gas Offsets on Global Climate Mitigation SEI Policy Brief Author(s): Erickson, P. ; Lazarus, M. Date: March 2011 Research Area(s): Emissions Trading & Offsets This policy brief, based on SEI Working Paper WP-US-1106, The Implications of International Greenhouse Gas Offsets on Global Climate Mitigation, provides a summary of the paper's analysis of the potential impact of counting offsets toward the emission reduction pledges of both the developing countries that generate them, and the developed countries that buy them. Download PDF
		GHG schemes addressing climate change – How ISO standards help International Standards for Business, Government and Society (ISO) brochure Author(s): Baumann, T. ; Kollmuss, A. Date: January 2011 Research Area(s): Emissions Trading & Offsets This brochure provides information to potential users of GHG standards and programs, including 1) an overview of the climate change context including a map of available GHG standards, as well as those currently in development; 2) information on how GHG standards, such as ISO 14064, can provide the tools for implementing climate mitigation and adaptation strategies; 3) an overview of the future of GHG standards and how they can promote a faster up-take of new green technologies and low-emission practices; 4) opportunities to enhance current GHG standards and standards development; 5) proposed changes to address concerns and help maximize the effectiveness of GHG standards in moving the world to a more sustainable future. Download PDF External Link
		Industrial N₂O Projects Under the CDM: The Case of Nitric Acid Production SEI Working Paper WP-US-1007 Author(s): Kollmuss, A. ; Lazarus, M. Date: November 2010 Research Area(s): Emissions Trading & Offsets This paper evaluates nitric acid projects under the CDM and considers whether they may pose a risk to environmental integrity. The paper finds that the CDM successfully fostered abatement in this sector which previously had not engaged in abatement practices. It further finds that carbon leakage is unlikely for this project type and that there is no evidence that would indicate widespread gaming in order to maximize emissions reductions. The conclusions provide recommendations on how the current nitric acid methodologies could be improved and simplified through the use of a common benchmarking approach. More information Download PDF
		Industrial N₂O Projects Under the CDM: Adipic Acid - A Case of Carbon Leakage? SEI Working Paper WP-US-1006 Author(s): Schneider, L. ; Lazarus, M. ; Kollmuss, A. Date: October 2010 Research Area(s): Emissions Trading & Offsets This paper evaluates projects under the Clean Development Mechanism (CDM) that abate N₂O emissions from adipic acid production. The research shows that carbon markets enabled N₂O emissions abatement levels that had not previously been achieved. However, the analysis shows that the CDM appears to have caused significant carbon leakage during the economic downturn in 2008 and 2009. We estimate that about 20% of the CERs issued for CDM adipic acid plants for 2008 and 2009 - totaling to about 13.5 MtCO₂e - do not represent real emission reductions. The paper also evaluates policy solutions to prevent carbon leakage in the future. More information Download PDF
		How offset programs assess and approve projects and credits Carbon Management 1:1, 119-134 Author(s): Kollmuss, A. ; Lee, C. ; Lazarus, M. Date: October 2010 Research Area(s): Emissions Trading & Offsets Over the past decade, some offset programs have developed sophisticated processes to review offset projects, approve or reject them, and issue credits based on their performance. This paper reviews offset project approval and credit issuance processes for three compliance market programs and five programs that issue offset credits for the voluntary carbon market. It is important for policymakers to understand differences and recognize lessons learned from existing programs for the design and possible linking of future offset programs and markets. This paper provides an initial comparison of the decision-making structures of offset programs and discusses best practices. It suggests that an in-depth evaluation and comparison of program performance will be necessary to identify how program design impacts offset performance and quality. External Link
		Estimates of Future Supply of International Greenhouse Gas Offsets: A Critical Review Author(s): Erickson, P. ; Lazarus, M. ; Kelly, A. Date: September 2010 Research Area(s): Emissions Trading & Offsets U.S. policymakers have relied on offsets from developing countries as a primary form of cost containment in proposed cap-and-trade legislation. These legislative proposals allow for emitters to use up to 1.5 billion tons CO₂e of offsets from developing countries to meet their annual compliance obligations. In this paper, we review estimates of the projected availability (i.e., supply) of international offsets, and evaluate the various methods used. More information Download PDF
		Buying and Cancelling Allowances as an Alternative to Offsets For the Voluntary Market: A Preliminary Review of Issues and Options OECD Environment Working Paper No. 21 Author(s): Kollmuss, A. ; Lazarus, M. Date: August 2010 Research Area(s): Emissions Trading & Offsets ; Climate Mitigation Policy This paper explores scenarios under which, as an alternative to offsets, voluntary buyers could instead buy and cancel allowances from compliance markets. The purchase and cancellation of allowances reduces the available allowances in a cap-and-trade system, "tightening the cap" and, in principle, reducing the emissions that can be produced by covered sources. By this logic, purchasing and cancelling an allowance compels covered sources to achieve additional mitigation. More information Download PDF External Link
		Discounting Offsets: Issues and Options SEI Working Paper WP-US-1005 Author(s): Kollmuss, A. ; Lazarus, M. ; Smith, G. Date: July 2010 Research Area(s): Emissions Trading & Offsets ; Climate Mitigation Policy This paper describes the different types of discounting, their objectives and their potential impacts on carbon markets. Discount factors can be used to strengthen the environmental integrity of offsets and to give preference to certain projects types or geographic regions. All discounting approaches face the difficulty of having to establish the right discount rate that is politically acceptable, maximizes benefits and minimizes negative effects. While discounting is no silver bullet - its potential pitfalls are significant - it should be considered by policy makers as a mechanism to address specific objectives, in particular to remedy perverse incentives and to maximize the environmental benefit of offset markets. Download PDF
		Issues and Options for Benchmarking Industrial GHG Emissions White Paper for the Washington State Department of Ecology Author(s): Erickson, P. ; Lazarus, M. ; Adair, J.; Brant, J.; Levitt, E.; Hermann, H.; Larson, T.; Ross, B.; Wheeless, A. Date: June 2010 Research Area(s): Sustainable Futures ; Emissions Trading & Offsets ; Climate Mitigation Policy This White Paper explores several technical issues and options to be considered in developing benchmarks, including how to define the product or sector being benchmarked, how to establishment measurement protocols and boundaries, whether to establish benchmarks at average or better-than-average performance levels, and an initial assessment of possible data sources. More information Download PDF
		Handbook of Carbon Offset Programs Trading Systems, Funds, Protocols and Standards EarthScan Publication Author(s): Kollmuss, A. ; Lazarus, M. ; Lee, C. ; LeFranc, M. ; Polycarp, C. Date: April 2010 Research Area(s): Emissions Trading & Offsets This handbook provides a systematic and comprehensive review of existing offset programs. It looks at what offsets are, how offset mechanisms function, and the successes and pitfalls they have encountered. Coverage includes offset programs across the full swath of applications including 27 mandatory and voluntary systems, government regulated and private markets, carbon offset funds, and accounting and reporting protocols such as the WBCSD/WRI GHG Protocol and ISO 14064. The handbook is an essential reference for all regulators, policy makers, business leaders and NGOs concerned with the design and operation of GHG offset programs world-wide. External Link
		Carbon Markets Are Not Enough In Trade and Environment Review 2009/2010, 26-30 Author(s): Ackerman, F. Date: February 2010 Research Area(s): Climate Economics ; Emissions Trading & Offsets Writing in the United Nations Conference on Trade and Development's Trade and Environment Review 2009/2010, Ackerman argues that setting a price for carbon emissions is only the beginning of climate policy - not the end. While carbon prices will change energy costs, energy consumption and carbon emissions, relying on carbon markets alone would be ineffective and inequitable, so other policies are needed to offset the equity impacts of higher fuel costs and spur the development of new low-carbon technologies. Download PDF External Link
		Road-Testing of Selected Offset Protocols and Standards; A Comparison of Offset Protocols: Landfills, Manure, and Afforestation/Reforestation SEI Working Paper WP-US-1001 Author(s): Lazarus, M. ; Lee, C. ; Smith, G. ; Todd, K. ; Weitz, M. Date: January 2010 Research Area(s): Emissions Trading & Offsets This report examines U.S. EPA Climate Leaders' protocols for landfill methane, manure digesters, and afforestation project types, comparing them with the current versions of protocols developed for four other offset programs: the Clean Development Mechanism (CDM), Regional Greenhouse Gas Initiative (RGGI), California Climate Action Registry (CCAR), and Chicago Climate Exchange (CCX). We road tested these protocols for two sample projects for each of three project types to reveal differences in amounts of offsets counted under the different protocols. Note: This paper was last updated in April 2010. An earlier version, published as SEI Working Paper WP-US-0904, is available here (PDF link). More information Download PDF
		Linking Technology Development with Emissions Commitments: Exploring Metrics for Effort and Outcome SEI Working Paper WP-US-0909 Author(s): Lazarus, M. ; Kartha, S. Date: September 2009 Research Area(s): Climate Mitigation Policy ; Emissions Trading & Offsets In collaboration with the Institute for Energy Economics and Policy in Grenoble, France, SEI explored metrics for comparing the effort and outcome that would be associated with various national and regional climate mitigation policies that might be put in place after 2012 when the current Kyoto climate protocol is set to expire. Download PDF
		Carbon Offsetting & Air Travel Part 2: Non-CO2 Emissions Calculations SEI Discussion Paper Author(s): Kollmuss, A. ; Myers Crimmins, A. Date: June 2009 Research Area(s): Emissions Trading & Offsets This is the second of two papers that examine the key factors that have to be taken into account when calculating air travel emissions for the purpose of climate footprint and offset calculations. In order to estimate the full effect of aviation on climate, it is necessary to account for CO2 as well as for all other, non-CO2 warming and cooling effects. This paper is written for a non-technical audience and explains how to account for non-CO2 impacts of air travel emissions. More information Download PDF External Link
		How Realistic Are Expectations for the Role of Greenhouse Gas Offsets in U.S. Climate Policy? An Examination of Offset Supply Analyses World Resources Institute Working Paper. Author(s): Erickson, P. ; Lazarus, M. ; Kelly, A. Date: March 2009 Research Area(s): Emissions Trading & Offsets ; Climate Mitigation Policy A sound understanding of the economics of offsets - in particular, of the potential supply of offsets under future market conditions - is critically important for policymakers as they address major design decisions in crafting climate policy. The World Resources Institute, in conjunction with the Stockholm Environmental Institute (SEI), is conducting a study to examine potential supplies of GHG offsets in a domestic cap and trade system. This analysis will first identify key findings and clarify some of the assumptions, discrepancies, and shortcomings of the various efforts to quantify potential offset supply completed to date. Based on that analysis, the WRI-SEI study will summarize existing data on the potential volume of GHG reductions that could be achieved from these sources, and present cost curves for those reductions taking into account various assumptions about key offset policy design decisions. Download PDF
		Evaluating and Improving Carbon Offsetting Programs SEI Policy Brief Author(s): Kollmuss, A. Date: 2009 Research Area(s): Emissions Trading & Offsets There is continuing debate on how non-CO2 climate effects from aviation should be included in greenhouse gas air travel calculators. SEI shows that underlying this debate are not primarily scientific gaps but differing policy choices that have to be made in order to estimate aviation's other climate effects. Download PDF
		A Review of Offset Programs: Trading Systems, Funds, Protocols, Standards and Retailers SEI Research Report Author(s): Kollmuss, A. ; Lazarus, M. ; Lee, C. ; Polycarp, C. Date: December 2008 Research Area(s): Emissions Trading & Offsets Carbon or greenhouse gas (GHG) offsets have long been promoted as an important element of a comprehensive climate policy approach. Offset programs can reduce the overall cost of achieving a given emission goal by enabling emission reductions to occur where costs are lower. Furthermore, offsets have the potential to deliver sustainability co-benefits, spurred through technology development and transfer, and to develop human and institutional capacity for reducing emissions in sectors and locations not included in a cap and trade or a mandatory government policy. However, offsets can pose a risk to the environmental integrity of climate actions, especially if issues surrounding additionality, permanence, leakage, quantification and verification are not adequately addressed. The challenge for policymakers is clear: to design offset programs and policies that can maximize their potential benefits while minimizing their potential risks. This report is a systematic and comprehensive review of existing offset programs. Download PDF External Link
		Carbon Offsetting & Air Travel: Part 1: CO2-Emissions Calculations SEI Discussion Paper Author(s): Kollmuss, A. ; Lane, J. Date: May 2008 Research Area(s): Emissions Trading & Offsets This is the first of two papers that examine the key factors that have to be taken into account when calculating air travel emissions for the purpose of climate footprint and offset calculations. It examines methods of calculating CO2 emissions only, and provides a framework for how to allocate responsibility for these emissions among various aviation users. The aircraft parameters discussed are: Aircraft Model, Flight Profile and Flight Distance, Cargo on Passenger Flights, Seat Occupancy Rate, Seat Class. The final section of the paper analyzes emissions calculations for flights between three city pairs, and compares the results of three air travel emissions calculators (Atmosfair, TRX Travel Analytics, Virgin Atlantic) to each other as well as to the UK's Department for Environment, Food and Rural Affairs (DEFRA) multiplier for air travel emissions calculations. Download PDF External Link
		Maximizing the Positive: Interactions between Offset Programs and Other Climate-related Policies SEI Working Paper WP-US-0805 Author(s): Lazarus, M. ; Kollmuss, A. ; Lee, C. ; Kartha, S. ; Polycarp, C. Date: May 2008 Research Area(s): Emissions Trading & Offsets This paper addresses one of the more vexing and poorly understood questions facing GHG offset programs: How can offset programs be designed to work with, and enhance, other GHG mitigation policies to create an effective, secure, and equitable climate protection regime? Or, put more specifically, do offset programs, and the potential revenue streams and interest groups created by offset projects, erect barriers -- or create pathways -- to other effective government policies? As discussed in this paper, evidence appears to suggest that offset programs have played both roles, and specific policy measures can be undertaken to maximize positive, and to minimize negative, interactions with other policies. Download PDF
		Making Sense of the Voluntary Carbon Market: A Comparison of Carbon Offset Standards. Report commissioned by WWF Germany Author(s): Kollmuss, A. ; Zink, H.; Polycarp, C. Date: March 2008 Research Area(s): Emissions Trading & Offsets The report discusses the role of the voluntary carbon offset market. It provides an overview and guide to the most important currently available standards, using the Clean Development Mechanism (CDM) as a benchmark. The report compares the standards side-by-side and outlines the most pertinent aspects of each. It also includes a handy one page reference table for a quick comparison of the standards. Download PDF External Link
		Carbon Offsets 101, Probing the Secrets of this Complex And Rapidly Growing Business Published in World Watch Magazine Author(s): Kollmuss, A. Date: July 2007 Research Area(s): Emissions Trading & Offsets This article provides an introduction to the pros and cons of carbon offsetting for the general public. External Link
		The CDM After Montreal: Assessing the Dividends For Renewables and Development Renewable Energy for Development, Vol. 19, Issue 1. Author(s): Lazarus, M. Date: March 2006 Research Area(s): Emissions Trading & Offsets
		Climate Change: Redemption Through Crisis GTI Paper Series. Tellus Institute Boston Author(s): Kartha, S. Date: 2006 Research Area(s): Emissions Trading & Offsets ; Climate Mitigation Policy ; Sustainable Futures
		California Leadership Strategies to Reduce Global Warming Emissions Report to the California State Agencies Author(s): Lazarus, M. ; Bailie, A. Date: 2006 Research Area(s): Emissions Trading & Offsets ; Climate Mitigation Policy
		Market Penetration Metrics: Tools for Additionality Assessment? Climate Policy Vol 5, Nr 2, pp. 147-165(19) Author(s): Kartha, S. ; Lazarus, M. ; LeFranc, M. Date: 2005 Research Area(s): Emissions Trading & Offsets ; Climate Mitigation Policy
		Key Issues in Benchmark Baselines for the CDM: Aggregation, Stringency, Cohorts, and Updating Prepared for U.S. Environmental Protection Agency Author(s): Lazarus, M. ; Kartha, S. ; Bernow, S Date: June 2000 Research Area(s): Emissions Trading & Offsets
		Evaluation of Benchmarking as an Approach for Establishing Clean Development Mechanism Baselines Author(s): Lazarus, M. ; Kartha, S. ; Ruth, M.; Bernow, S.; Dunmire, C. Date: October 1999 Research Area(s): Emissions Trading & Offsets