Do Carbon Offsets Offset Carbon?

46 Pages Posted: 28 Oct 2021

See all articles by Raphael Calel

Raphael Calel

Georgetown University

Jonathan Colmer

University of Virginia

Antoine Dechezleprêtre

London School of Economics & Political Science (LSE)

Matthieu Glachant

MINES ParisTech

Date Written: 2021

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.

Keywords: carbon offsets, infra-marginal support, subsidies, investment, wind power, misallocation

JEL Classification: H230, H430, L940, Q420, Q540

Suggested Citation

Calel, Raphael and Colmer, Jonathan and Dechezleprêtre, Antoine and Glachant, Matthieu, Do Carbon Offsets Offset Carbon? (2021). CESifo Working Paper No. 9368, Available at SSRN: https://ssrn.com/abstract=3950103 or http://dx.doi.org/10.2139/ssrn.3950103

Raphael Calel (Contact Author)

Georgetown University ( email )

Washington, DC 20057
United States

Jonathan Colmer

University of Virginia ( email )

1400 University Ave
Charlottesville, VA 22903
United States

Antoine Dechezleprêtre

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

Matthieu Glachant

MINES ParisTech ( email )

60, boulevard Saint Michel
75272 Paris cedex 06, 75006
France
+33 1 40 51 9229 (Phone)

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