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Do carbon offsets offset carbon?

Calel, Raphael, Colmer, Jonathan, Dechezlepretre, Antoine and Glachant, Matthieu (2021) Do carbon offsets offset carbon? CEP Discussion Papers (1808). Centre for Economic Performance, LSE, London, UK.

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Abstract

We develop and implement a new method for identifying wasted subsidies, and use it to provide systematic evidence on the misallocation of carbon offsets in the Clean Development Mechanism - the world's largest carbon offset program. Using newly constructed data on the locations and characteristics of 1,350 wind farms in India - a context where it was believed, ex-ante, that the Clean Development Mechanism could significantly increase development above baseline projections - we estimate that at least 52% of approved carbon offsets were allocated to projects that would very likely have been built anyway. In addition to wasting scarce resources, we estimate that the sale of these offsets to regulated polluters has substantially increased global carbon dioxide emissions.

Item Type: Monograph (Discussion Paper)
Official URL: https://cep.lse.ac.uk/_new/publications/discussion...
Additional Information: © 2021 The Authors
Divisions: Grantham Research Institute
Centre for Economic Performance
Subjects: G Geography. Anthropology. Recreation > GE Environmental Sciences
H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HB Economic Theory
JEL classification: H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H23 - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
H - Public Economics > H4 - Publicly Provided Goods > H43 - Project Evaluation; Social Discount Rate
L - Industrial Organization > L9 - Industry Studies: Transportation and Utilities > L94 - Electric Utilities
Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q4 - Energy > Q42 - Alternative Energy Sources
Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q5 - Environmental Economics > Q54 - Climate; Natural Disasters
Date Deposited: 28 Feb 2022 11:03
Last Modified: 01 Mar 2022 00:03
URI: http://eprints.lse.ac.uk/id/eprint/113849

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