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Do Carbon Offsets Offset Carbon?

Raphael Calel, Jonathan Colmer (), Antoine Dechezleprêtre and Matthieu Glachant ()

No 9368, CESifo Working Paper Series from CESifo

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 (search for similar items in EconPapers)
JEL-codes: H23 H43 L94 Q42 Q54 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-ene, nep-env and nep-ppm
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