Credits May Not Reduce Emissions
Professors David Victor, John Barton, and Alan Sykes are quoted in a Stanford Daily article about a working paper published last month through the Program on Energy and Sustainable Development at the Freeman Spogli Institute for International Studies. Professor David Victor's and Lecturer in Law Michael Wara’s working paper is titled “A Realistic Policy on International Carbon Offsets:”
“We studied a scheme known as the Clean Development Mechanism, which is part of the Kyoto treaty on global warming,” said Victor, who serves as director of the Program on Energy and Sustainable Development. “We found that a large fraction of the market credits from that scheme were not, in fact, real reductions in emissions.”
“This study has worrying implications for the planet,” Victor added. “It means that the current strategies for taming the volcano of emissions from the developing world are not working.”
“The toughest energy problem for the coming half century will be slowing global warming,” Victor said. “Developing countries are key to that because their emissions are rising so rapidly, and the world must find a market-friendly way to encouraging those countries to cut emissions.”
The researchers found that the CDM was routinely abused by chemical, wind, gas and hydro companies who claimed emission reduction credits for projects that should not qualify. To earn credits under the CDM, emission reductions must be in addition to those that would have taken place without the project. The requirement of “additionality,” however, was difficult to prove and therefore resulted in widespread abuse of the CDM.
As a result of these abuses, the researchers found an absence of genuine pollution cuts, which in turn undermined U.S. and other governments’ assurances that carbon markets are dramatically reducing greenhouse gases.
Law Prof. John Barton said that Victor and Wara’s research on carbon credits is important for the future of the carbon trading market.
“The importance [of their research] is that the emissions-trading process is our working substitute for a carbon tax, which would economically be the most straightforward way of creating appropriate incentives to reduce CO2 emissions,” Barton said. “As a political matter, we will probably use an emission trading process rather than a carbon tax in any post-Kyoto agreement. Hence, we need to make it work well.”
Victor said that the U.S. should not to rely on offsets to provide a reliable ceiling on compliance costs or impose offset caps when designing the national regulatory system.
“Many companies are hoping to get large numbers of these international ‘offset’ credits, the generic term for the CDM, and use them to comply with the looming requirement to cut emissions here at home in the U.S.,” Victor said. “Congress is debating this legislation starting next Monday. If you tighten up the offset market then fewer credits will be available. And given that, we suggest that Congress pursue a different and much more transparent and effective system for helping companies plan the cost of complying with their carbon limits.”
Law Prof. Alan Sykes agreed.
“Assuming the analysis is correct, [this research] leads to serious doubts about the Kyoto Clean Development Mechanism and its ability to lower carbon emissions effectively,” Sykes said. “The suggestion that the United States should be careful not to repeat its flaws seems wise.”