Potential for International Offsets to Provide a Net Decrease of GHG Emissions

This paper explores how new market mechanisms could ‘achieve a net decrease and/or avoidance of greenhouse gas emissions’, as envisioned by the Parties at COP17 in Durban.

The authors explore what a net decrease might mean in practice, how it might be achieved, and the potential scale of the net atmospheric benefit that could be attained in 2020. They find that achieving a net decrease in global GHG emissions hinges on: a) the ability to generate offset units for which additionality is relatively certain; b) measures (such as shortened crediting periods or pre-issuance discounts) that lead to more GHG abatement than credited, i.e. surplus reductions; and c) a means to account for any surplus reduction in a way that it does not simply contribute to meeting an existing GHG reduction pledge.

The paper also draws lessons from the Clean Development Mechanism about challenges in attaining a net decrease, and examines the potential for existing CDM project types to produce surplus credits. Within the CDM, the authors find industrial gas projects to be most promising for yielding a net decrease in global GHG emissions, potentially yielding a net decrease on the order of 100 million tonnes CO₂e in 2020. However, there is declining interest among major offset buyers, the EU in particular, in using the CDM or other offset mechanisms for low-cost, industrial gas abatement.

Lastly, the paper finds that for offsets to attain a net decrease in GHG emissions, Parties must also reach agreement on how to avoid double counting of emission reductions associated with offsets.

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Note: This paper is the third in a series of three papers on the interactions between international carbon markets and mitigation pledges. Click on the links at right to see the others.

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