Barbara Haya

Analysis of projects generating 80% of total offset credits issued by ARB under its U.S. Forest projects offset protocol shows that 82% of the credits generated by these projects likely do not represent true emissions reductions, due to the protocol’s leakage accounting methods. The total quantity of over-crediting across these 36 projects equals approximately 80 million tons of CO2. For context, the U.S. Forest Protocol has generated 80% of the offset credits in California’s cap-and- trade program; the estimated over-crediting is equal to one third of the total expected effect of California’s cap-and-trade program on emissions during 2021-2030.

Carbon offsets from improved cookstove projects could advance Sustainable Development Goals 13 (climate), 7 (energy), 5 (gender), and 3 (health). To legitimately "offset" emissions, methodologies must accurately or conservatively quantify climate impact. We conduct the first comprehensive, quantitative over/under crediting analysis of five cookstove methodologies, comparing them against published literature and our own analysis. We find misalignment, in order of importance, with: fraction of non-renewable biomass, fuel consumption, stove adoption, usage, and stacking, emission factors, rebound, and firewood-charcoal conversion factor. Additionality and leakage require more research. We estimate that our project sample, on average, is over-credited by 6.3 times. Gold Standard’s Metered and Measured methodology, which directly monitors fuel use, is most aligned with our estimates (only 1.3 times over-credited) and is best suited for fuel switching projects which provide the most abatement potential and health benefit. We provide specific recommendations for aligning all methodologies with current science.

Carbon offsets are widely used by individuals, corporations, and governments to mitigate their greenhouse gas emissions on the assumption that offsets reflect equivalent climate benefits achieved elsewhere. These climate-equivalence claims depend on offsets providing “additional” climate benefits beyond what would have happened, counterfactually, without the offsets project. Here, we evaluate the design of California’s prominent forest carbon offsets program and demonstrate that its climate-equivalence claims fall far short on the basis of directly observable evidence. By design, California’s program awards large volumes of offset credits to forest projects with carbon stocks that exceed regional averages. This paradigm allows for adverse selection, which could occur if project developers preferentially select forests that are ecologically distinct from unrepresentative regional averages. By digitizing and analyzing comprehensive offset project records alongside detailed forest inventory data, we provide direct evidence that comparing projects against coarse regional carbon averages has led to systematic over-crediting of 30.0 million tCO2e (90% CI: 20.5 to 38.6 million tCO2e) or 29.4% of the credits we analyzed (90% CI: 20.1 to 37.8%). These excess credits are worth an estimated $410 million (90% CI: $280 to $528 million) at recent market prices. Rather than improve forest management to store additional carbon, California’s offsets program creates incentives to generate offset credits that do not reflect real climate benefits.

Carbon offsets allow greenhouse gas emitters to comply with an emissions cap by paying others outside of the capped sectors to reduce emissions. The first major carbon offset programme, the United Nations’ Clean Development Mechanism (CDM), has been criticized for generating a large number of credits from projects that do not actually reduce emissions. Following the controversial CDM experience, California pioneered a second-generation compliance offset programme that shifts the focus of quality control from assessments of individual projects to the development of offset protocols, which define project type-specific eligibility criteria and methods for estimating emissions reductions. We assess the ability of California’s ‘standardized approach’ to mitigate the risk of over-crediting greenhouse gas reductions by reviewing the development of two California offset protocols – Mine Methane Capture and Rice Cultivation. We examine the regulator’s treatment of three sources of over-crediting under the CDM: non-additional projects, inflated counterfactual baseline scenarios, and perverse incentives that inadvertently increase emissions. We find that the standardized approach offers the ability to reduce, but not eliminate, the risk of over-crediting. This requires careful protocol-scale analysis, conservative methods for estimating reductions, ongoing monitoring of programme outcomes, and restricting participation to project types with manageable levels of uncertainty in emission reductions. However, several of these elements are missing from California’s regime, and even best practices result in significant uncertainty in true emission reductions. Relying on carbon offsets to lower compliance costs risks lessening total emission reductions and increases uncertainty in whether an emissions target has been met.

Key policy insights

- Substantial and ongoing oversight by offset programme administrators is needed to contain uncertainty and avoid over-crediting.

- California’s Mine Methane Capture Protocol may have influenced federal decisions not to regulate methane emissions from coal mines on federally-owned lands.

- Government priorities and methodological choices drive outcomes in carbon pricing policies with large offset programmes, contrary to the common perception that these policies delegate decision-making to private actors.

- Offsets are better understood as a way for regulated emitters to invest in an incentive programme that achieves difficult-to-estimate emission reductions, than as accurately quantified tons of reductions.

Natural and social scientists are increasingly stepping out of purely academic roles to actively inform science-based climate change policies. This chapter examines a practical example of science and policy interaction. We focus on the implementation of California's global warming law, based on our participation in the public process surrounding the development of two new carbon offset protocols. Most of our work on the protocols focused on strategies for ensuring that the environmental quality of the program remains robust in the face of significant scientific and behavioral uncertainty about protocol outcomes. In addition to responding to technical issues raised by government staff, our contributions- along with those from other outside scientists- helped expand the protocol development discussion to include important scientific issues that would not have otherwise been part of the process. We close by highlighting the need for more scientists to proactively engage the climate policy development process.