The Economics of Carbon Accounting and Carbon Offsets

Geoffrey Heal

No 30649, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: I provide a rigorous framework for accounting for corporate greenhouse gas emissions, based on the Greenhouse Gas Protocol. I show that only Scope 1 emissions are of interest from a national policy perspective: that emissions in Scopes 2 and 3 are duplicative, and that downstream Scope 3 emissions in total are equal to total Scope 1 emissions. The correct measure of a company's contributions to national GHG emissions is its Scope 1 emissions plus a part of the emissions of the household and government sectors. This is not generally the same as the level of emissions for which a company bears some responsibility, legal or otherwise. I apply some of these ideas to an analysis of carbon offsets, trying to understand the conditions under which offsets are a valid mechanism for reducing emissions by formalizing the ideas of additionality and leakage.

JEL-codes: Q00 (search for similar items in EconPapers)
Date: 2022-11
New Economics Papers: this item is included in nep-ene and nep-env
Note: EEE
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