Greens are Right to be Suspicious of Carbon Offsets

Geoffrey Heal

No 33170, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: I distinguish between reduction offsets and removal offsets, the former generated by a reduction in the rate of greenhouse gas emissions and the latter generated by the removal of greenhouse gases from the atmosphere. I show that only removal offsets make any contribution to mitigating climate change. There is a simple intuitive explanation: a firm buys an offset to compensate for the fact that it is emitting greenhouse gases and plans to continue to do so. What should “compensate” mean in this context? That the purchase of the offset undoes the negative impact of the continuing emissions on the climate. This can only happen by the removal from the atmosphere of a quantity of greenhouse gases equal to that emitted by the purchaser of the offset. So an offset which compensates for the climatic impact of emissions has to remove greenhouse gases from the atmosphere. I also review carbon offsets generated by forest management, as of all currently-traded offsets these are the closest to removal offsets.

JEL-codes: Q2 Q5 Q58 (search for similar items in EconPapers)
Date: 2024-11
New Economics Papers: this item is included in nep-agr, nep-ene and nep-env
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