Emissions Trading & Offsets

Emissions Trading & Offsets at SEI-US
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Using carbon tax revenues to help attain climate goals: Insights for Washington State from existing programs

SEI Working Paper No. 2017-05

Author(s): Broekhoff, D. ; Down, A. ; Lazarus, M.
Date: May 2017

Research Area(s): Emissions Trading & Offsets ; Climate Mitigation Policy

This paper examines how best to use revenues from a carbon tax to achieve both climate and non-climate goals, identifying pitfalls and strategies to avoid them.


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Ensuring the environmental integrity of market mechanisms under the Paris Agreement

SEI policy brief

Author(s): Schneider, L. ; Kollmuss, A. ; La Hoz Theuer, S.
Date: October 2016

Research Area(s): Emissions Trading & Offsets

Market mechanisms that enable the international transfer of greenhouse gas emission permits or emission reduction credits have been part of the international climate regime for two decades. They aim to reduce the cost of achieving mitigation goals by providing flexibility in how and where emissions are reduced. This policy brief identifies key issues and explores options for safeguarding the environmental integrity of market mechanisms under the Paris Agreement, drawing on lessons from mechanisms established under the Kyoto Protocol.
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Supply and sustainability of carbon offsets and alternative fuels for international aviation

SEI Working Paper No. 2016-03

Author(s): Bailis, R. ; Broekhoff, D. ; Lee, C.M.
Date: June 2016

Research Area(s): Emissions Trading & Offsets

This paper examines the potential supply of carbon offsets and jet fuel alternatives available to help meet the international aviation sector’s emission reduction needs in 2020–2035. The analysis shows that ICAO can apply high environmental and sustainable-development standards to both carbon offsets and alternative fuels without compromising its 2020 "carbon neutral" goal.


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Has Joint Implementation reduced GHG emissions? Lessons learned for the design of carbon market mechanisms

SEI Working Paper No. 2015-07

Author(s): Kollmuss, A. ; Schneider, L. ; Zhezherin, V.
Date: August 2015

Research Area(s): Emissions Trading & Offsets

This study systematically evaluates the environmental integrity of Joint Implementation (JI) in the first commitment period of the Kyoto Protocol. The analysis indicates that about three-quarters of JI offsets are unlikely to represent additional emissions reductions. This suggests that the use of JI offsets may have enabled global GHG emissions to be about 600 million tonnes of carbon dioxide equivalent higher than they would have been if countries had met their emissions domestically.
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Has Joint Implementation reduced GHG emissions? Lessons learned for the design of carbon market mechanisms (brief)

SEI policy brief

Author(s): Kollmuss, A. ; Schneider, L. ; Zhezherin, V.
Date: August 2015

Research Area(s): Emissions Trading & Offsets

This policy brief summarizes a systematic evaluation of the environmental integrity of Joint Implementation in the first commitment period of the Kyoto Protocol, 2008-2012. As of March 2015, almost 872 million Emission Reduction Units (ERUs) had been issued under JI. Host countries must cancel one of their emission allowances for every ERU issued, but more than 95% of ERUs were issued by countries with significant surpluses of allowances in the first commitment period of the Kyoto Protocol. Of the six largest project types, only one – N2O abatement from nitric acid production – had overall high environmental integrity; for the rest, additionality seems unlikely or questionable, or unrealistic assumptions were used that significantly overestimate emission reductions. Overall, 80% of ERUs issued came from project types with questionable or low environmental integrity.
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Perverse effects of carbon markets on HFC-23 and SF6 abatement projects in Russia

Nature Climate Change, online 24 August 2015

Author(s): Schneider, L. ; Kollmuss, A.
Date: August 2015

Research Area(s): Emissions Trading & Offsets

This article examines how the ability to generate additional Joint Implementation credits may have affected waste gas generation at chemical plants in Russia. The environmental integrity of project-based mechanisms has been subject to controversial debate and extensive research, in particular for projects abating industrial waste gases with a high global warming potential. For such projects, revenues from credits can significantly exceed abatement costs, creating perverse incentives to increase production or waste gas generation, to increase credit revenues from waste gas abatement. Here the authors show that all projects abating HFC-23 and SF6 under the Kyoto Protocol's Joint Implementation mechanism in Russia increased waste gas generation to unprecedented levels, once they could generate credits from producing more waste gas.
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Net climate change mitigation of the Clean Development Mechanism

Energy Policy, in press, online 22 May 2014

Author(s): Erickson, P. ; Lazarus, M. ; Spalding-Fecher, R.
Date: May 2014

Research Area(s): Emissions Trading & Offsets ; Climate Mitigation Policy

This article gauges the net emissions impact of the CDM, providing two scenarios based on different assumptions about the additionality of large-scale power projects. It also identifies options to increase the CDM's mitigation benefits. The authors find that the CDM's net mitigation impact likely hinges on the additionality of large-scale power projects, which are expected to generate the majority of CDM credits going forward. If these projects are truly additional and continue to operate well beyond the credit issuance period, they will decrease global greenhouse gas emissions. However, if they are mostly non-additional, as research suggests, they could increase global greenhouse gas emissions. The article closes with a discussion of possible means to increase mitigation benefit.
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Can carbon revenues help transform household energy markets?

SEI policy brief

Author(s): Lambe, F. ; Lee, C.M. ; Jürisoo, M.; Johnson, O.
Date: May 2014

Research Area(s): Emissions Trading & Offsets ; Climate Mitigation Policy

Carbon finance is emerging as an attractive option to help scale-up cookstove projects, but little research has been done on how well it meets these projects needs. This brief, based on SEI Project Report 2014-01, describes the findings of a scoping study in India and Kenya. Among the key findings is that the affordability of stoves is a major concern for most project developers. Some projects use microfinance, bulk discounts and other mechanisms to help households buy stoves, but high-end price subsidies are the most common approach. The study also found that many project developers, especially smaller businesses and NGOs, also face financial barriers, including lack of access to credit for working capital, low profit margins, and high upfront capital costs. A majority of the carbon-financed project developers interviewed were relying solely on carbon revenues to cover project costs.
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Addressing the Risk of Double Counting Emission Reductions under the UNFCCC

SEI Working Paper No. 2014-02

Author(s): Schneider, L. ; Kollmuss, A. ; Lazarus, M.
Date: April 2014

Research Area(s): Emissions Trading & Offsets ; Climate Mitigation Policy

Avoiding double counting of emission reductions is a key policy concern to Parties to the United Nations Framework Convention on Climate Change (UNFCCC). This paper systematically assesses how double counting can occur and how it could be addressed. It finds that double counting can occur not only directly, but in rather indirect ways which can be challenging to identify. Addressing double counting effectively requires international coordination in three areas: accounting of units, design of mechanisms that issue units, and consistent tracking and reporting on units. The paper discusses different options and makes specific recommendations for rules to address double counting up to 2020 and in a post-2020 climate regime.
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Can carbon revenues help transform household energy markets? A scoping study with cookstove programmes in India and Kenya

SEI Project Report 2014-01

Author(s): Lambe, F. ; Lee, C.M. ; Jürisoo, M.; Johnson, O.
Date: April 2014

Research Area(s): Emissions Trading & Offsets ; Climate Mitigation Policy

This report uses case studies of India and Kenya to examine the growing role of carbon finance in cookstove projects, with a focus on how it might support market transformation. Efforts to bring cleaner, more efficient stoves to the billions of people who use traditional biomass for cooking and heating have gained new momentum in recent years, driven both by longstanding health and environmental concerns, and by a growing recognition of the importance of modern energy access for development. In this context, carbon finance is emerging as an attractive option to help scale-up cookstove projects, through the Clean Development Mechanism (CDM) and through voluntary markets, where demand for credits from cookstove projects has been rising rapidly.
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Single-year mitigation targets: Uncharted territory for emissions trading and unit transfers

SEI Working Paper No. 2014-01

Author(s): Lazarus, M. ; Kollmuss, A. ; Schneider, L.
Date: March 2014

Research Area(s): Emissions Trading & Offsets ; Climate Mitigation Policy

This working paper explores the implications of the "time frame" of countries' mitigation pledges for the generation and use of tradable emissions units. Under United Nations Framework Convention on Climate Change (UNFCCC) agreements, some countries have adopted continuous or multiple-year emissions targets, while others have taken on discontinuous or single-year targets, most notably for the year 2020. Countries relying solely on single-year targets present greater uncertainty with regard to their emissions pathways, and as examined here, raise concerns regarding both ambition and comparability with other targets. The use of tradable units to meet a single-year target or the issuance of units in years prior to the single-target year could reduce the cumulative mitigation outcome compared with both single-year targets without using tradable units, and multi-year targets (with or without using units). Single-year targets may also limit the ability to use domestic carbon market instruments, such as emissions trading schemes.
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SEI Research Synthesis: Climate finance and carbon markets

SEI Research Synthesis Brief, Reducing Climate Risk theme

Author(s): Davis, M. ; Lazarus, M. ; Klein, R.J.T.; Persson, Å
Date: March 2014

Research Area(s): Emissions Trading & Offsets

SEI has considerable expertise in climate finance, market mechanisms, and related issues of transparency, accountability, equity and efficiency. SEI's work on these topics follows two related tracks: Stockholm-based researchers focus on climate finance and its governance, while the Seattle team focuses on market mechanisms, such as emissions crediting and trading. Both teams have made significant contributions to policy debates. This brief, part of a series synthesizing SEI research from 2009 to 2013, presents four key insights from our work, an overview of major projects and publications, and a look at new and ongoing work as well as future research pathways.
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Potential for International Offsets to Provide a Net Decrease of GHG Emissions

SEI policy brief

Author(s): Lazarus, M. ; Erickson, P. ; Schneider, L. ; Kollmuss, A.
Date: November 2013

Research Area(s): Emissions Trading & Offsets ; Climate Mitigation Policy

This policy brief explores what it means to achieve a net decrease of emissions through offsets, as the Parties to the UNFCCC have suggested; how it might be achieved, and what it might deliver. Several crucial questions still need to be answered, starting with what constitutes a "net decrease": From the perspective of an offset instrument or individual offset activity, surplus reductions can be achieved if actual emission reductions exceed the offset credits issued or used. From the perspective of global GHG emissions, however, emissions would also have to be reduced beyond what countries have already pledged, leading to a net atmospheric benefit. The analysis also shows that achieving a net decrease in global GHG emissions requires an ability to do all of the following: generate offsets for which additionality is relatively certain; produce more GHG abatement than is credited (surplus reductions); avoid double-counting of emission reductions; and ensure that surplus reductions do not count towards the host country's mitigation pledge.
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Potential for International Offsets to Provide a Net Decrease of GHG Emissions

SEI Working Paper No. 2013-06

Author(s): Lazarus, M. ; Erickson, P. ; Schneider, L. ; Kollmuss, A.
Date: August 2013

Research Area(s): Climate Mitigation Policy ; Emissions Trading & Offsets

This paper explores how new market mechanisms could "achieve a net decrease and/or avoidance of greenhouse gas emissions", as envisioned by the Parties at COP 17 in Durban. The authors explore what a net decrease might mean in practice, how it might be achieved, and the potential scale of the net atmospheric benefit that could be attained in 2020. They find that achieving a net decrease in global GHG emissions hinges on: a) the ability to generate offset units for which additionality is relatively certain; b) measures (such as shortened crediting periods or pre-issuance discounts) that lead to more GHG abatement than credited, i.e. surplus reductions; and c) a means to account for any surplus reduction in a way that it does not simply contribute to meeting an existing GHG reduction pledge.
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A ton is not always a ton: A road-test of landfill, manure, and afforestation/reforestation offset protocols in the U.S. carbon market

Environmental Science & Policy 33 (November 2013), 53-62; online June 2013

Author(s): Lee, C.M. ; Lazarus, M. ; Smith, G.R.; Todd, K.; Weitz, M.
Date: June 2013

Research Area(s): Emissions Trading & Offsets

The outcome of recent international climate negotiations suggests we are headed toward a more fragmented carbon market, with multiple emission trading and offset programs operating in parallel. To effectively harmonize and link across programs, it will be important to ensure that across offset programs and protocols that a "ton is a ton". This article shows how sample offsets projects in the U.S. carbon market are treated across protocols from five programs: the Clean Development Mechanism, Climate Action Reserve, Chicago Climate Exchange, Regional Greenhouse Gas Initiative, and the U.S. EPA's former Climate Leaders program. The authors find that differences among protocols can lead to significant differences in offsets credited.
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Assessing the Climate Impacts of Cookstove Projects: Issues in Emissions Accounting

SEI Policy Brief

Author(s): Lee, C.M. ; Lazarus, M.
Date: April 2013

Research Area(s): Emissions Trading & Offsets ; Climate Mitigation Policy

This policy brief, based on an SEI working paper, focuses on a key precondition for cookstove projects to obtain carbon finance and to ensure environmental integrity: credible, scientifically robust methodologies to measure and verify emission reductions. Carbon finance is gaining appeal as a way to scale-up improved cookstove projects while also meeting the need for standardization and accountability. Researchers have found the potential volume of credits could exceed 1 billion tonnes of carbon dioxide equivalent (CO2e) per year. To be viable and ensure environmental integrity, these projects need credible, scientifically robust methodologies to measure and verify emission reductions. The authors review existing methodologies, drawing on a literature review as well as interviews with market actors and technical experts, and identify gaps that need to be filled.
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Assessing the Climate Impacts of Cookstove Projects: Issues in Emissions Accounting

SEI Working Paper 2013-01

Author(s): Lee, C.M. ; Chandler, C. ; Lazarus, M. ; Johnson, F.X.
Date: January 2013

Research Area(s): Emissions Trading & Offsets ; Climate Mitigation Policy

This paper examines methodological challenges in gauging the emissions reductions associated with cookstove projects. An estimated 2.6 billion people rely on traditional biomass for home cooking and heating, so improving the efficiency of household cookstoves could provide significant environmental, social and economic benefits. Some researchers have estimated that potential greenhouse gas emission reductions could exceed 1 billion tons of carbon dioxide equivalent (CO2e) per year. Carbon finance offers a policy mechanism for realizing some of this potential and could also bring improved monitoring to cookstove projects. However, there are formidable methodological challenges in estimating emission reductions. This paper evaluates the quantification approaches to three key variables in calculating emission impacts: biomass fuel consumption, fraction of non-renewable biomass, and emission factors for fuel consumption.
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Transitioning away from large-scale power projects: A simple and effective fix for the CDM?

SEI Policy Brief

Author(s): Lazarus, M. ; Erickson, P. ; Spalding-Fecher, R.
Date: November 2012

Research Area(s): Emissions Trading & Offsets

This policy brief, based on SEI research for the High Level Panel of the CDM Policy Dialogue, shows how large-scale power supply projects may undermine the value and integrity of the Clean Development Mechanism (CDM) and proposes transitioning away from them. It finds that for large-scale power supply projects, which are expected to generate the majority of CDM credits going forward, additionality is hard to demonstrate with high confidence. Thus, the value and integrity of the CDM may hinge on the net emissions impact of such projects. The authors argue that a transition away from large-scale power projects could help address the over-supply of certified emission reductions (CERs), support projects that truly depend on CERs, and improve the CDM's overall mitigation impact. However, such a transition would need to be carefully considered, bearing in mind governance and legal aspects and the need for investor confidence.
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Standardized Baselines for the CDM – Are We On the Right Track?

Policy paper

Author(s): Schneider, L. ; Lazarus, M. ; Broekhoff, D.; Fussler, J.; Michaelowa, A.; Spalding-Fecher, R.
Date: November 2012

Research Area(s): Emissions Trading & Offsets

This policy paper provides a brief overview of the current CDM framework for standardized baselines, identifies important shortcomings, assesses lessons learned, and recommends directions for the further development of standardized baselines. While the current framework contains innovative ideas and proposals, the authors suggest that it may not achieve its objectives. It poses major practical challenges and could, at the same time, both discourage valuable and additional projects by under-crediting them and reduce environmental integrity by over-crediting others. The framework also employs an approach that inadequately considers the circumstances, technologies and trends in the applicable sector by using the same (default) approach and performance thresholds regardless of the sector, project type, and location.
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Assessing the Impact of the Clean Development Mechanism

Report to the High-Level Panel of the CDM Policy Dialogue

Author(s): Spalding-Fecher, R. ; Erickson, P. ; Lazarus, M. ; Achanta, A.N.; Haites, E.; Pahuja, N.; Pandey, N.; Seres, S.; Tewari, R.
Date: October 2012

Research Area(s): Emissions Trading & Offsets

This report, one of three commissioned by the High-Level Panel on the CDM Policy Dialogue, aims to provide an independent assessment of the impact of the CDM across a broad range of metrics and possible effects. The impact of the CDM is assessed firstly in relation to its original purposes stated in Article 12 of the Kyoto Protocol, namely "to assist Parties not included in Annex I in achieving sustainable development and in contributing to the ultimate objective of the Convention, and to assist Parties included in Annex I in achieving compliance with their quantified emission limitation and reduction commitments". Beyond sustainable development and cost-effective emission reductions, the analysis considers potential impacts on technology transfer, financing, net global greenhouse gas (GHG) emissions, energy security, clean energy investment and the regional distribution of projects.
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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.
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Study on the Integrity of the Clean Development Mechanism

European Commission, DG Clima, CLIMA.B.3/ETU/2010/0020r

Author(s): Ruthner, L. ; Lazarus, M. ; Johnson, M.; Chatterjee, B.; Fujiwara, N.; Egenhofer, C.; du Monceau, T.; Brohe, A.
Date: December 2011

Research Area(s): Emissions Trading & Offsets

This is the final report for the Study on the Integrity of the Clean Development Mechanism (CDM) carried out under contract for the European Commission by a consortium including AEA, SEI, the Centre for European Policy Studies and CO2logic. The project provides a comprehensive appraisal of the strengths and shortcomings of the CDM and develops practical reform options covering measures that could be taken by (a) the UN within the CDM process (referred to within this report as supply side measures), (b) those that could be taken by the EU regarding the use of CDM credits within the EU ETS (referred to as demand) side as well as examining (c) the potential for alternative mechanisms. The work takes into account recent developments at the UN level, the EU international position and EU domestic policy.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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How offset programs assess and approve projects and credits

Carbon Management 1:1, 119-134

Author(s): Kollmuss, A. ; Lee, C.M. ; 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.
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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.
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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.
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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.
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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.
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Handbook of Carbon Offset Programs Trading Systems, Funds, Protocols and Standards

EarthScan Publication

Author(s): Kollmuss, A. ; Lazarus, M. ; Lee, C.M. ; 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.
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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.
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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.M. ; 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 was published as SEI Working Paper WP-US-0904. For a copy of the paper, email Carrie Lee at carrie.lee[at]sei-us.org.

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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.
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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.
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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.
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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.
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A Review of Offset Programs: Trading Systems, Funds, Protocols, Standards and Retailers

SEI Research Report

Author(s): Kollmuss, A. ; Lazarus, M. ; Lee, C.M. ; 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.
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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.
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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.M. ; 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.
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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.
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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.
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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



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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



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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



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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



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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



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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