The Net Emissions Impact of HFC-23 Offset Projects from the Clean Development Mechanism

Resources for the Future Discussion Paper 16-01

42 Pages Posted: 24 Feb 2016

See all articles by Clayton Munnings

Clayton Munnings

Resources for the Future

Benjamin Leard

Resources for the Future

Antonio M. Bento

University of California, Santa Barbara (UCSB)

Date Written: January 15, 2016

Abstract

Ideally, carbon offset programs issue each project a number of offset credits equal to the number of reductions in carbon emissions it achieves. Realistically, any one project likely receives more or less offset credits than the emissions it reduces. Therefore, the net emissions impact of offset programs depends on the relative magnitude of over- and under-crediting. We apply a theoretical framework that differentiates between credited offsets and realized emissions reductions to quantify the net emissions impact of hydrofluorocarbon-23 (HFC-23) projects, which have traditionally dominated the supply of credits within the Clean Development Mechanism (CDM). In our analysis, we account for perverse incentives created by CDM methodologies and for conservative aspects of CDM methodologies. We find it likely that under-credited emissions reductions nearly equal the supply of over-credited offsets, implying that CDM HFC-23 projects effectively have little impact on net emissions and thereby maintain their environmental integrity, on average. Ignoring the supply of under-credited emissions in the context of CDM HFC-23 projects therefore exaggerates the influence of perverse incentives created by CDM methodologies that lead to over-credited offsets.

Keywords: carbon offsets, China, environmental accounting, cap and trade, policy instruments and evaluation, climate policy, Clean Development Mechanism

JEL Classification: D01, Q54, Q56

Suggested Citation

Munnings, Clayton and Leard, Benjamin and Bento, Antonio M., The Net Emissions Impact of HFC-23 Offset Projects from the Clean Development Mechanism (January 15, 2016). Resources for the Future Discussion Paper 16-01. Available at SSRN: https://ssrn.com/abstract=2736920 or http://dx.doi.org/10.2139/ssrn.2736920

Clayton Munnings (Contact Author)

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States

Benjamin Leard

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States

Antonio M. Bento

University of California, Santa Barbara (UCSB) ( email )

Santa Barbara, CA 93106
United States

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