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.
Year: 2013

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.

The paper also draws lessons from the Clean Development Mechanism about challenges in attaining a net decrease, and examines the potential for existing CDM project types to produce surplus credits. Within the CDM, the authors find industrial gas projects to be most promising for yielding a net decrease in global GHG emissions, potentially yielding a net decrease on the order of 100 million tonnes CO2e in 2020. However, there is declining interest among major offset buyers, the EU in particular, in using the CDM or other offset mechanisms for low-cost, industrial gas abatement.

Lastly, the paper finds that for offsets to attain a net decrease in GHG emissions, Parties must also reach agreement on how to avoid double counting of emission reductions associated with offsets.

Note: This paper is the third in a series on the interactions between international carbon markets and mitigation pledges. The others cover The others cover the implications of single-year pledges, and double-counting risks associated with the use of tradable units to meet mitigation pledges.

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