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How additional is the Clean Development Mechanism? Analysis of the application of current tools and proposed alternatives. Study prepared for DG CLIMA.
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... Concerns arise when baselines are set too low, leading to potential over-crediting. Credits are often issued early, based on a modeled 100-year scenario, which can allow future reductions to offset current emissions (Badgley et al., 2021;Cames & Lazarus, 2017). Over-crediting and timing issues raise questions about the integrity of these credits (Haya, 2010). ...
... The additionality tests are designed to ensure that projects only receive credits if they truly go beyond business-as-usual, while also meeting regulatory and financial criteria. However, critics argue these tests do not always ensure genuine additionality (Cames & Lazarus, 2017;Haya, 2010). ...
... Compared to other programs, VCS's flexibility in baseline setting is a differentiator that increases accessibility but also raises concerns about consistency. While some programs may have stricter baseline methodologies, VCS aims to balance inclusivity with accountability, though the effectiveness of its additionality checks remains a debated topic among experts (Cames & Lazarus, 2017;Haya, 2010). ...
... This is due to the strong likelihood of miscalculating emissions avoided through fossil-power displacement or their weak additionality, since revenue from renewable electricity rather than offset sales is usually the decisive factor for investments. Numerous studies confirm the high likelihood of such problems ocurring 12,13,50,51 . Furthermore, renewable electricity has become competitive relative to fossil fuels around the world due to declining costs and supportive government policies 52 . ...
... Norwegian CL, a global cruise operator, sourced more than half its offsets from hydropower while Banco BV and Chevron each retired 2.99 MtCO 2 e and 1.38 MtCO 2 e. However, hydropower projects are highly unlikely to be additional, since most receive government support as infrastructure projects and are built regardless of the opportunity to capture extra revenue through offset sales 50 . As a result, hydropower projects are no longer allowed to register on VCS and are prohibited under a number of emissions trading schemes 53 and best-practice VCM frameworks 54 . ...
... In a complementary analysis, we examine the attractiveness of Brazil's, China's and India's policy environment for renewable energy diffusion, since research and registry principles consider a weak policy environment a critical indicator of a project's additionality 58,50 . Specifically, we compare each country's annual score from the World Bank's regulatory indicators for sustainable energy (RISE) project 59 , which evaluates the effectiveness of renewable energy policies, to the average score of OECD nations. ...
Most companies include carbon offsets in their net-zero strategy. However, many offset projects are poor quality and fail to reduce emissions as claimed. Here we focus on the twenty companies retiring the most offsets from the voluntary carbon market over 2020–2023. We examine if their offsets could be considered high quality and likely to benefit the climate. We curate an original company-level dataset to examine quality and climate benefits across four dimensions: (1) use of offsets from low/high-risk project types; (2) age of projects and credits; (3) price of credits; and (4) country of implementation. We find that companies have predominantly sourced low-quality, cheap offsets: 87% carry a high risk of not providing real and additional emissions reductions, with most offsets originating from forest conservation and renewable energy projects. Further, most offsets do not meet industry standards regarding age and country of implementation. These findings provide further evidence that the voluntary carbon market is not supporting effective climate mitigation. Particularly, we show that its persisting quality issues are exacerbated by the demand for low-quality offsets by individual companies.
... A study of 2,000 offset projects across all major offset sectors, representing a significant share of credits, found that only 12% of the total volume of existing credits constituted real emissions reductions (Probst et al., 2023). Similarly, a report on CDM credits produced by Öko Institut and published by the European Commission found that 85% of projects covered in the analysis were not additional (i.e. they would have happened anyway) or were over-estimated (Cames et al., 2016). Additionality is a "hypothetical baseline scenario" or counterfactual of the situation if the project had not been implemented. ...
Humanity is facing a multi-faceted crisis of civilisation, with environmental, social and economic dimensions. Fundamentally, this crisis is caused by capitalist dynamics of accumulation and extraction, and the associated use of the environment as a free or cheap resource and service provider. Effective biodiversity restoration and conservation requires a fundamentally different relationship with nature than the present one of domination, violence and extraction.
The South African government’s 2017 Biodiversity Finance Plan (BFP) makes an attempt to identify possible ways to secure adequate resources to carry out essential biodiversity work. But it is caught in the contradictions of securing environmental protection while operating within a capitalist economic framework.
The BFP identifies possible financial “solutions” that can be clustered into five potential sources: incentives and subsidies (which can leverage private sector resources); taxes and penalties; public sector core funding; market-based interventions; and global funds.
This report considers each of these in detail, assessing possibilities and challenges, and proposes other options that can lead to a more open-ended transformative approach rather than entrenching financial power and the commodification of nature. Water tariff reform, a sharp increase in carbon taxes, and increasing penalties for non-compliance with biodiversity regulations and laws offer good potential to generate resources and action on biodiversity restoration and conservation.
An area not considered in any detail in the Plan is in reducing or eliminating specific harmful subsidies to fossil fuels, mining and industrial agriculture, while retaining and extending access to energy and food for marginalised and disadvantaged populations, and reallocating a share of farm input subsidies towards biodiversity-friendly production inputs. The Sustainable Development Goals and the Global Biodiversity Framework (both of which the South African government supports) have explicit targets on the reduction and redirection of subsidies. Our government currently spends hundreds of billions on these subsidies annually, when just a fraction of this would be enough to support extensive biodiversity goals.
There is a key role for ongoing public sector financing. Biodiversity restoration and conservation is a public good and is essential for a sustainable economy. Interventions should not be held ransom to profit-making. Investment in management, monitoring and enforcement capacity is potentially the best use of public sector resources, if penalties for poor practice and non-compliance are sufficiently severe.
More generally, the government should consider an urgent redistribution of material resources through significantly higher progressive taxation, wealth caps, expropriation of resources above the cap and, ultimately, social ownership and democratisation of financial institutions and key industries and their reorientation towards the common good. This may fly in the face of the prevailing global ethos, but nothing less will enable us to restore and conserve biodiversity and meet the social needs of the population into the longer term future.
... To date, more than 40 countries and 20 cities, accounting for 22% of the worldwide GHG emissions, use carbon pricing mechanisms such as cap-and-trade systems (World Bank 2020), and many companies buy REC or other carbon credits to decrease their reported GHG emissions (Kollmuss et al. 2015). Despite this rising success, the genuineness of carbon credits, e.g., their real ability to decrease emissions, has been vigorously criticized (Schneider 2009;Alexeew et al. 2010;Kollmuss et al. 2015;Cames et al. 2016;Marino et al. 2019;Seymour 2020;West et al. 2020;Badgley et al. 2021;Marino and Bautista 2022;Bjørn et al. 2022). PAS 2060 specifies the following criteria checklist to ensure the genuineness of carbon offsets: additionality, permanence, leakage, and double counting (BSI 2014, p. 26). ...
Purpose : Planning a transition towards sustainable carbon neutrality at the organization level raises several accounting challenges. This paper aims to shed light on key challenges, highlight answers from current accounting standards and guidance, point out potential inconsistencies or limits, and outline potential solutions from the industrial ecology community through systemic environmental assessment tools, such as life cycle assessment (LCA) and environmentally-extended input-output (EEIO) analysis. Results and discussion: We propose a Measure-Reduce-Neutralize-Control sequence allowing organizations to plan their sustainable net-zero strategy, and discuss 24 accounting challenges occurring within this sequence. We then outline ways forward for organizations planning their carbon neutrality trajectory, pointing to existing resources, and for guidelines providers and the industrial ecology communities to address current limitations in the development of future accounting methods and guidelines. Overarching solutions to many accounting issues are to develop comprehensive, open-source, and high-quality life cycle inventory databases, to enable improved dynamic assessments and prospective LCA through integrated assessment models, to refine methods for assessing mineral scarcity and environmental impacts, the supply in some metals being expected to be a bottleneck to the energy transition, and to identify the appropriate climate metrics for planning sustainable carbon neutrality pathways at the organizational level.
... for International Aviation. There is already a large and growing body of evidence suggesting offset schemes are frequently plagued by integrity issues (Schneider & Kollmuss 2015;Badgley et al. 2022;Stapp et al., 2023;Cames et al. 2016;West et al. 2020;2023;. The focus on compliance failures in this study adds to a new dimension to the literature, showing how integrity problems can arise from the maladministration of methods and associated breakdowns in governance processes. ...
The boom-and-bust nature of rangeland ecosystems makes them ill-suited to nature-based solution (NbS) carbon offset projects involving sequestration in vegetation and soils. The variability in these systems makes it difficult to determine whether observed stock changes are attributable to the project activities, creating additionality risks. The low and variable rainfall in rangelands also means stock increases will often be impermanent, being susceptible to reversals in droughts, a risk magnified by climate change. The vast areas and small potential for gains per unit area add further complications, making it difficult to accurately measure carbon stock changes at low cost. This creates pressure to trade accuracy for simplicity in measurement approaches, increasing the risk of measurement errors. Despite these risks, rangelands have been advanced as a location for offset projects because of low land costs and low opportunity cost, and a perception they are extensively degraded. The most prominent example globally is human-induced regeneration (HIR) projects under the Australian carbon credit unit (ACCU) scheme, which are purporting to regenerate permanent even-aged native forests (areas with ≥20% canopy cover from trees ≥2 metres high) across millions of hectares of largely uncleared rangelands, predominantly by reducing grazing pressure from livestock and feral animals. Existing research has shown limited forest regeneration in the credited areas of these projects and that most of the observed changes in tree cover are attributable to factors other than the project activities, most likely variable rainfall. Here we extend this research by evaluating compliance of a sample of 117 HIR projects with regulatory requirements. The results suggest most HIR projects are non-compliant with key regulatory requirements that are essential to project integrity. The findings point to major administrative and governance failings in Australia’s carbon credit scheme.
... Among other issues, the instrument did not manage to overcome two key challenges: Its economic incentives were diluted by certificates from cheap emissions reductions of GHG other than CO 2 , and the governance on additionality and counterfactual baseline emissions was not robust enough to prevent circumvention (Wara, 2007;Gillenwater and Seres, 2011). As a result, certificates were generated and sold internationally, but -in reality -failed to deliver additional emissions reductions at the anticipated scale (He and Morse, 2013;Cames et al, 2016). Not suprisingly, this has fueled concerns about creating global trading regimes for removal certificates. ...
This paper provides an in-depth evaluation of the effectiveness of international climate agreements in addressing the issue of global warming. As concern about climate change increase, global collaboration has become crucial in designing and implementing strategies to reduce emissions of greenhouse gases. The study reviews major international agreements, including the Kyoto Protocol, the Paris Agreement, and the subsequent Kyoto Climate Agreement, exploring their internal mechanisms, goals, and results. Drawing on empirical data, it assesses how well these agreements have performed in real life as regards limiting the global warming. The paper also discusses the challenges and obstacles in the process of implementing the agreements, such as compliance difficulties, political hurdles, and the involvement of various stakeholders. By synthesizing current research and policy insights, the paper aims to enhance public understanding of the effectiveness of these agreements and provides recommendations for improving their impact in tackling the urgent threat of climate change.
The ‘boom-and-bust’ nature of rangelands makes them ill-suited to nature-based solutions (NbS) involving carbon sequestration in vegetation and soils. The variability in these ecosystems makes it difficult to determine whether carbon stock changes are attributable to project activities, creating additionality risks. Low and variable rainfall also means carbon stock increases will often be impermanent, being susceptible to reversals in droughts, a risk magnified by climate change. The small potential for gains per unit area over vast regions makes it difficult to accurately measure carbon stock changes at low cost. This creates pressure to trade accuracy for simplicity in measurement approaches, increasing the risk of errors. Despite these risks, rangelands have been advanced as suitable for offset projects because of low opportunity cost and a perception they are extensively degraded. The most prominent example globally is human-induced regeneration (HIR) projects under the Australian carbon credit unit (ACCU) scheme, which are purporting to regenerate permanent even-aged native forests (≥20% canopy cover from trees ≥2 metres high) across millions of hectares of largely uncleared rangelands, predominantly by reducing grazing pressure. Previous research found limited forest regeneration in the credited areas of these projects, and that most of the observed changes in tree cover were attributable to factors other than the project activities. Here we extend this research by evaluating compliance of a sample of 116 HIR projects with regulatory requirements and their performance in increasing sequestration in regeneration. The results suggest most HIR projects are non-compliant with key regulatory requirements that are essential to project integrity, and have had minimal impact on woody vegetation cover in credited areas. The findings point to major administrative and governance failings in Australia’s carbon credit scheme, and a significant missed opportunity to restore biodiversity-rich woodlands and forests in previously cleared lands via legitimate carbon offset projects.
Wide use of compact fluorescent lamps (CFLs) offers opportunity for residential savings with favourable environmental benefits. The size of the South African residential market shows that there are strong opportunities to be optimised. To exploit such opportunities, it is important to look at strategies that influence independent and interdependent consumer choice in lighting, and to examine how far these strategies have been successful in promoting the market penetration of CFLs. While this is so, there are some areas of concern about the performance of the product that have to be addressed, as well as need for public action arising from external diseconomies of consumption.
Suppressed Demand refers to a situation where Minimum Services Levels (MSL) necessary for human development are unavailable to people or only available to an inadequate level. Numerous barriers, such as low income levels or lack of infrastructure and skills prevent access to MSLs, such as potable water, cooking energy, lighting and electrification. We investigate the concept of suppressed demand as it applies to Clean Development Mechanism (CDM) and market based incentives for GHG emission reductions. We argue that carbon markets have shown significant and catalytic potential for project development so far, but they have had limited impact on the poor, as the poorest tend to emit least. Including "suppressed demand" is in line with the objectives of the CDM and can go some way to re-balance the CDM as the development mechanism it was intended to be, and to make it relevant for the poor. Moreover, it is in fact necessary in terms of climate change limitation, as it is necessary to include low emissions areas into emission trading regimes and to incentivize lower emissions growth in poor regions. Through three case studies of CDM relevant development projects that deal with MSLs, we find that current CDM methods do not adequately address suppressed demand and that simple, transparent and common changes to assessment methods can have a significant impact on the leverage potential of these projects in the carbon market. Including "Suppressed Demand" in the CDM in the ways suggested can therefore facilitate project development in low emissions regions, by making it financially viable, and thereby avoid GHG emissions in the future.
In order to reach a goal of universal access to modern energy services in Africa by 2030, consideration of various electricity sector pathways is required to help inform policy-makers and investors, and help guide power system design. To that end, and building on existing tools and analysis, we present several ‘high-level’, transparent, and economy-wide scenarios for the sub-Saharan African power sector to 2030. We construct these simple scenarios against the backdrop of historical trends and various interpretations of universal access. They are designed to provide the international community with an indication of the overall scale of the effort required – one aspect of the many inputs required. We find that most existing projections, using typical long-term forecasting methods for power planning, show roughly a threefold increase in installed generation capacity occurring by 2030, but more than a tenfold increase would likely be required to provide for full access – even at relatively modest levels of electricity consumption. This equates to approximately a 13% average annual growth rate, compared to a historical one (in the last two decades) of 1.7%.
When carbon credit is granted for projects that would occur irrespective of any subsidy based on mitigation of global warming, the projects generate "hot air," or credit without a real climate benefit. This is the case for tropical hydroelectric dams, which are now a major destination for funds under the Kyoto Protocol's Clean Development Mechanism (CDM). The countries that purchase the credit generated by dams can emit more greenhouse gases without their being offset by genuine mitigation. The limited funds available for mitigation are also wasted on subsidizing dams that would be built anyway. Tropical dams also emit substantially more greenhouse gases than are recognized in CDM accounting procedures. Tropical hydroelectric emissions are also undercounted in national inventories of greenhouse gases under the United Nations Framework Convention on Climate Change, giving them a role in undermining the effectiveness of as-yet undecided emission limits. Brazil's Santo Antnio Dam, now under construction on the Madeira River, provides a concrete example indicating the need for reform of CDM regulations by eliminating credit for hydroelectric dams.
We demonstrate and apply methods for assessing global, system-scale effects on energy and greenhouse emissions of offset programs that explicitly consider the rules by which energy-based offset credits are awarded. We compare our approach to idealized calculations in which all regions, including those without mitigation obligations, face a common carbon tax. We find a substantial gap between potential reductions in emissions and those realized in a suite of hypothetical offset assignment protocols as well as between offset creation and system-scales emissions mitigation, even when project-scale additionality and compliance issues are absent and baselines are known with certainty. In the worst cases, seemingly reasonable rules were counterproductive—i.e. increased global carbon emissions, despite strictly meeting additionality and baseline requirements. But, even when we modified the rules for creating offsets to reflect more closely implementation practices, there remained a large gap between potential and realized mitigation. This difference is systemic and traces to the basic nature of offsets. Offsets subsidize the deployment of non-emitting technologies instead of penalizing the use of emitting technologies. As a consequence, offsets lower the cost of energy, and encourage greater use energy rather than its conservation. Thus, even in well-crafted programs, it is impossible to capture the full economic potential because the program lacks a means by which to engage energy conservation. We demonstrate that while offsets programs reduce the cost to regions with emissions caps, they may achieve this result at the expense of reduced global emissions mitigation.