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The Climate Trust | Do Offsets Affect the Stringency of a Carbon Cap? | Scorcher

Do Offsets Affect the Stringency of a Carbon Cap? | Scorcher

California Market, Policy, Scorcher

Sheldon Zakreski, The Climate Trust
Weekly Policy and Finance Update – December 4, 2017

Bottom line | Since offset usage is a function of actual emissions, which is distinct from an emissions cap, usage is independent of the stringency of the cap.

One of the key features of placing a carbon cap is how stringent it should be, in terms of the volume of emissions reductions and the timeline for achieving that volume of reductions. Indeed, stringency is one of the primary factors considered by California when assessing whether to link its cap and trade program. Offsets are a function of a cap and trade program, and questions around the extent to which they can be used are often cited as evidence of the stringency of the program. The implication is that the higher the offset usage limit the less stringent the cap.

This inference misses the mark. Offsets within a cap and trade program have their usage limits set as a percentage of actual emissions, which are independent of the cap.

California’s greenhouse gas emissions declined by 4.8% in 2016, which was steeper than the 3.1% decline in the cap. The independence of these figures demonstrates that debates about reducing offset usage to increase the stringency of the cap are off-base. When actual emissions are below the cap as they were in 2016, the offset ceiling of 8% of emissions is equivalent to an offset ceiling of 7% of the cap in 2016.


Research and Resources

2016 California Covered Emissions Report
CaliforniaCarbon.info, November 23, 2017

California’s 2017 Climate Change Scoping Plan
California Air Resources Board, November, 2017


Top News Headlines

‘Huge and unexpected drop’ in California’s 2016 carbon emissions
Emily Guerin, KPCC, November 24, 2017

California should link carbon market with Europe, Jerry Brown says
Christopher Cadelago, Sacramento Bee, November 7, 2017


Nothing But Clear Skies Blog

A Carbon Copy of California’s Cap and Trade for Oregon?
Sheldon Zakreski, The Climate Trust, May 31, 2017


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Image credit: Flickr/Bemep

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