Greenhouse gasses, such as carbon dioxide and methane absorb and emit heat radiation, which contribute to global warming. Human activities such as increased emissions through burning of fossil fuels and deforestation drive this climate threat. International treaties such as the Paris agreement, enables stakeholders to mitigate effects of climate impact and create new sustainable markets. Various carbon offset projects on the voluntary market are an attempt to neutralize climate impact. In this report we identify five main project types for carbon offsets: i) forestry and land use, ii) renewable energy and energy effectivization, iii) transport, iv) waste handling and v) household devices. These project types are evaluated against UNs 17 sustainable development goals. The results show a net positive impact on goal 13, Climate action, for all project types, which is congruent with the focus on carbon offsetting. The results also show that impact varies depending on how the project is deigned. Climate offsetting has enabled multiple stakeholders to contribute to climate change mitigation. Despite many global benefits, carbon offsets have been subject to criticism in cases where the concept is not used as intended. There are currently no clear guidelines as to when focus for companies should shift from internal reduction to external reduction through offsetting. Validation of carbon offsets is another problematic aspect, as there is no one standard for the market to secure the quality of projects.

Carbon-based forestry (CBF) projects for the carbon market have been proposed with the aim of mitigating climate change, enhancing forest cover and improving livelihoods in developing countries. Debate has ensued regarding the validity of applying market-based mechanisms to climate mitigation in the form of CBF activities. Through in-depth interviews and focus groups, this study explores the various stakeholders’ involvement in the development of CBF projects in the Peruvian Amazon and reveals how their interests influence the types of activities that are established. Farmers’ perceptions on the carbon trade are examined and it is demonstrated that the potential of earning a carbon credit may influence farmers’ current land management practices in favor for implementing reforestation or agroforestry systems on their terrain. Regardless, the number of obstacles and the preferences of stakeholders significantly limit the ability of small-scale farmers to access and benefit from the emerging market.

Carbon-based forestry (CBF) projects for the carbon market have been proposed with the aim of mitigating climate change, enhancing forest cover and improving livelihoods in developing countries. Debate has ensued regarding the validity of applying market-based mechanisms to climate mitigation in the form of CBF activities. Through in-depth interviews and focus groups, this study explores the various stakeholders’ involvement in the development of CBF projects in the Peruvian Amazon and reveals how their interests influence the types of activities that are established. Farmers’ perceptions on the carbon trade are examined and it is demonstrated that the potential of earning a carbon credit may influence farmers’ current land management practices in favor for implementing reforestation or agroforestry systems on their terrain. Regardless, the number of obstacles and the preferences of stakeholders significantly limit the ability of small-scale farmers to access and benefit from the emerging market.

Addressing climate change is a major undertaking. Agricultural soil has the potential to assist in decreasing the concentration of GHGs in the atmosphere by storing CO2 in the soil. Carbon offset markets have been suggested as a cost effective means of reducing GHG emissions. Farmers can increase their soil sink potential by applying Beneficial Management Practices (BMPs) that enhance carbon sequestration through improvements to soil, nutrient and livestock management practices (Fulton et. al., 2005). Whether or not a market for carbon offsets will emerge depends on a number of factors which mainly are related to the profitability of the BMPs and the costs of implementing a carbon contract. Provided that a market for carbon offsets emerges, the effectiveness of the market depends, in part, on the degree to which buyers and sellers in the market comply with the terms of the contracts they sign. The resource costs associated with monitoring and verification may result in incomplete monitoring. As long as monitoring is not perfect, non-compliance will be an issue. <p>The analysis that will be performed in this thesis introduces non-compliance in the economic analysis of carbon-offset market. The purpose of this work is to examine the overall cost effectiveness of the carbon-offset market when introducing non-compliance. <p>Firstly the theoretical model investigates the incentives for different farmers to participate in the carbon offsets market as well as incentives for engaging in cheating. The model recognizes farmers heterogeneity with respect to cost differences and examines the economic determinants of farmers non-compliance as well as the consequences of non-compliance on the performance of the carbon-offset market. Results support the standard finding that the extent of producers non-compliance decreases with an increase in the audit probability and/or an increase in the penalty per unit of non-compliance. In addition, the number of producers participating in the carbon offsets market is shown to increase with an increase in the carbon-offset price.<p> The analysis then introduces intermediaries in the market that will take care of trading carbon offsets as well as monitoring producers. The traders role in this study is played by an IOF (investor owned-firm) or a PA (producers association). Within the IOF, the analysis focuses on the monopoly and oligopoly structures. The key role of the traders is to guarantee, based on the amount of monitoring that is undertaken, that the emitters purchase only carbon offsets that actually correspond to sequestered carbon. The analysis then examines three cases for the group that monitors farmers compliance a group owned by for-profit traders, a government-run agency and a group owned by the PA trader. This part of the thesis examines what impact the involvement of the traders in the carbon-offset market has on non-compliance, as well as how the structure of the monitoring group affects non-compliance and the amount of carbon offsets traded in the market. The results of the analysis show that the monitoring groups always undertake sufficient monitoring to ensure that full compliance is achieved thus, while non-compliance is possible, it does not occur in equilibrium. The finding suggests that the formation of a government monitoring agency can potentially increase traded output and lower the price paid by emitters, still these changes are likely to be small, particularly when the trading sector is monopolistic. The overall analysis in this chapter shows that the optimal amount of enforcement, and as a result the cost effectiveness of a carbon-offset market, depends on the nature of the organization that undertakes the enforcement. <p>The next consideration of the thesis is the heterogeneity attributed to the timing of sequestration by different farmers. The analysis focuses on the carbon offsets pooling by considering two structures for the aggregator: a for-profit aggregator and a producers association. Pooling resources enables the farmers to benefit from economies of scale. The pricing schedule used by the aggregator is a two-part tariff. The two-part tariff is used as a way of providing an incentive for the farmers sequestering large amounts of carbon to participate in the pool. The study considers two alternatives for the coefficients that might be used to decide on the amount of carbon offsets to which each farmer will be entitled: default coefficient and custom coefficients. Each situation is modeled in a principal agent framework. <p>The analysis examines how the aggregator will target the monitoring service for different group of farmers. The investigation reveals that, under different scenarios, a PA or a FPA (for-profit aggregator) might lead to the formation of a heterogeneous pool or a homogeneous pool of each type. <p>The last issue investigated in this dissertation is the coexistence of a FPA and a PA in the default coefficient case. The analysis show that both aggregator structures can exist together in the market in the same time if the savings in the monitoring costs made possible by the PA are smaller than the cost of organizing the pool. If this condition is not satisfied the FPA cannot survive in the market and the producers association will dominate. <p>In addition to providing a better understanding of how the carbon-offset market may perform when introducing non-compliance, the results of this study can assist in assessing the cost effectiveness of the carbon-offset market when enforcement is undertaken by different organizations. Furthermore, the last consideration of the pooling option might help in selecting which type of pool a heterogeneous or a homogeneous one might perform better under different alternatives.

Addressing climate change is a major undertaking. Agricultural soil has the potential to assist in decreasing the concentration of GHGs in the atmosphere by storing CO2 in the soil. Carbon offset markets have been suggested as a cost effective means of reducing GHG emissions. Farmers can increase their soil sink potential by applying Beneficial Management Practices (BMPs) that enhance carbon sequestration through improvements to soil, nutrient and livestock management practices (Fulton et. al., 2005). Whether or not a market for carbon offsets will emerge depends on a number of factors which mainly are related to the profitability of the BMPs and the costs of implementing a carbon contract. Provided that a market for carbon offsets emerges, the effectiveness of the market depends, in part, on the degree to which buyers and sellers in the market comply with the terms of the contracts they sign. The resource costs associated with monitoring and verification may result in incomplete monitoring. As long as monitoring is not perfect, non-compliance will be an issue. <p>The analysis that will be performed in this thesis introduces non-compliance in the economic analysis of carbon-offset market. The purpose of this work is to examine the overall cost effectiveness of the carbon-offset market when introducing non-compliance. <p>Firstly the theoretical model investigates the incentives for different farmers to participate in the carbon offsets market as well as incentives for engaging in cheating. The model recognizes farmers heterogeneity with respect to cost differences and examines the economic determinants of farmers non-compliance as well as the consequences of non-compliance on the performance of the carbon-offset market. Results support the standard finding that the extent of producers non-compliance decreases with an increase in the audit probability and/or an increase in the penalty per unit of non-compliance. In addition, the number of producers participating in the carbon offsets market is shown to increase with an increase in the carbon-offset price.<p> The analysis then introduces intermediaries in the market that will take care of trading carbon offsets as well as monitoring producers. The traders role in this study is played by an IOF (investor owned-firm) or a PA (producers association). Within the IOF, the analysis focuses on the monopoly and oligopoly structures. The key role of the traders is to guarantee, based on the amount of monitoring that is undertaken, that the emitters purchase only carbon offsets that actually correspond to sequestered carbon. The analysis then examines three cases for the group that monitors farmers compliance a group owned by for-profit traders, a government-run agency and a group owned by the PA trader. This part of the thesis examines what impact the involvement of the traders in the carbon-offset market has on non-compliance, as well as how the structure of the monitoring group affects non-compliance and the amount of carbon offsets traded in the market. The results of the analysis show that the monitoring groups always undertake sufficient monitoring to ensure that full compliance is achieved thus, while non-compliance is possible, it does not occur in equilibrium. The finding suggests that the formation of a government monitoring agency can potentially increase traded output and lower the price paid by emitters, still these changes are likely to be small, particularly when the trading sector is monopolistic. The overall analysis in this chapter shows that the optimal amount of enforcement, and as a result the cost effectiveness of a carbon-offset market, depends on the nature of the organization that undertakes the enforcement. <p>The next consideration of the thesis is the heterogeneity attributed to the timing of sequestration by different farmers. The analysis focuses on the carbon offsets pooling by considering two structures for the aggregator: a for-profit aggregator and a producers association. Pooling resources enables the farmers to benefit from economies of scale. The pricing schedule used by the aggregator is a two-part tariff. The two-part tariff is used as a way of providing an incentive for the farmers sequestering large amounts of carbon to participate in the pool. The study considers two alternatives for the coefficients that might be used to decide on the amount of carbon offsets to which each farmer will be entitled: default coefficient and custom coefficients. Each situation is modeled in a principal agent framework. <p>The analysis examines how the aggregator will target the monitoring service for different group of farmers. The investigation reveals that, under different scenarios, a PA or a FPA (for-profit aggregator) might lead to the formation of a heterogeneous pool or a homogeneous pool of each type. <p>The last issue investigated in this dissertation is the coexistence of a FPA and a PA in the default coefficient case. The analysis show that both aggregator structures can exist together in the market in the same time if the savings in the monitoring costs made possible by the PA are smaller than the cost of organizing the pool. If this condition is not satisfied the FPA cannot survive in the market and the producers association will dominate. <p>In addition to providing a better understanding of how the carbon-offset market may perform when introducing non-compliance, the results of this study can assist in assessing the cost effectiveness of the carbon-offset market when enforcement is undertaken by different organizations. Furthermore, the last consideration of the pooling option might help in selecting which type of pool a heterogeneous or a homogeneous one might perform better under different alternatives.

The Western Regional Climate Action Initiative (WCI) was signed by the governors of Arizona, California, New Mexico, Oregon, and Washington, on February 26, 2007. Upon the release of the September 2008 Design Recommendations for the WCI Regional Cap-and-Trade Program, the WCI also included Montana, Utah, and the Canadian provinces of British Columbia, Manitoba, Ontario, and Quebec. A WCI goal is to reduce regional greenhouse gas (GHG) emissions 15% below 2005 levels by 2020. It has previously been recognized that the region’s forests can be important carbon sinks and sources, and it has been suggested that the carbon-storage capacity of forests may have economic value. Here, connections between forests and the developing WCI cap-and-trade system design are examined. Qualitative comparative analysis is used to examine characteristics of US states participating in the WCI. Content analysis is used to identify what advocacy groups promote what forest-related WCI cap-and-trade rules. A combination of low per capita GHG emissions, and strong environmental politics, is found to be related to regional climate initiative participation by US states, with important exceptions among WCI participants. Forest industry presence alone does not obviously influence participation. Electric utility and industry groups, including the forestry sector, are found to support an extensive WCI carbon offset system. Forest industry groups are also found to support the carbon neutrality of forest biomass combustion, and oppose regulating forest carbon emissions. Several environmental non-governmental organizations are found to oppose extensive carbon offset use, and oppose the unconditional consideration of biomass combustion as carbon neutral. Forest related aspects of the WCI Design Recommendations of September 2008 are found to largely agree with forest industry advocated policies. Some WCI provisions may provide incentives for forest carbon loss, or weaken the GHG emissions cap. Three recommendations are made: consideration should be given to appropriately discounting forest offset projects to address carbon emissions leakage; forest carbon emissions from land conversion should be accounted for; combustion of forest biomass from old-growth forests should not be considered carbon neutral. / Thesis (Master, Environmental Studies) -- Queen's University, 2009-10-29 22:29:48.499

Climate change is one of the most pressing environmental issues of our time, as it threatens the survival of human civilisation. With the increasing number of initiatives trying to address climate change, it is important to examine how effective they are and what other roles these initiatives can serve in transitioning society towards sustainability. This thesis investigates the role of one such initiative, carbon neutrality, within a strategic approach to sustainable development, based on the case study of the North American Credit Union (NACU). A scientific understanding of climate change and sustainability provide a strict evaluation of the carbon neutrality concept with its benefits and challenges, including the role of carbon offsets. Within this context, recommendations are provided for roles and actions that a financial organisation such as NACU can take in order to set high standards in this new and still evolving market of voluntary carbon offsets, while striving for full sustainability and leadership within the community.

This study addresses discourses and how they affect climate policy, through the example of carbon offsets as a tool to reach domestic emissions reductions in the Swedish Climate Policy Framework. An interpretation of Maarten Hajer’s argumentative discourse analysis is applied to understand the ideas and arguments that inform the policy debate on carbon offsets as a supplementary measure in this policy process. By mapping, comparing and finding dominating storylines, it presents how Swedish government actors, businesses- and non-governmental organizations legitimize, justify and contest carbon offsets. The findings suggest that the dominating storylines largely remain in the status quo on carbon offsets, connecting to the larger policy discourses of ecological modernization and green governmentality. They also show a potential attempt to divorce of international development from carbon offset mechanisms, as a way to increase efficiency. However, in a Paris Agreement and Article 6 landscape, room to reimage and critically evaluate the use of carbon offsets has also emerged. Established actors join civil society in raising uncertainty and doubt of the future of carbon offsets. These discursive shifts may impact how Sweden intends to exercise leadership in deep decarbonization going forward.

Carbon offsets are often presented as a multi-beneficial way for companies to mitigate their net climate impact while contributing environmental and social benefits on a global and local scale. Critics argue it is used to avoid more meaningful alterations to a company's own operations. Despite the increasing popularity of carbon offsets, little research has explored why companies choose to finance them. This study aims at addressing this research gap by exploring the motives that drive companies to offset emissions, how this fits into their sustainability strategies, and how the overall sustainability strategies are affected by acquiring carbon offsets. A multiple-method approach was deployed, using semi-structured interviews and content analysis. The study examines medium and large-sized companies in Sweden. Results indicate that carbon offsets are generally integrated as a final stage in the fundamental sustainability strategy. No indications could be identified that it has a detrimental effect on the company's overall sustainability initiatives. A model is proposed depicting the motives and drivers of corporate carbon offset financing. Legitimacy, competitiveness, and individual responsibility are three fundamental motives. Further, seven distinct drivers could be identified: labor retention, product differentiation, cost reduction, industry isomorphism, risk minimization, corporate culture, and personal values. These factors, internally or externally driven, incentivize companies to finance carbon offsets. There were two primary factors that acted as obstacles for companies when offsetting emissions. These perceived barriers were the risk of damaged credibility, and the risk concerning additionality and, what is in this study referred to as materiality. Overall, this study sheds light on the motives driving corporate carbon offset financing, and how companies integrate offsets into their broader sustainability strategies. This research is important for understanding how carbon offsets fit into companies' overall sustainability plans, and how policymakers can encourage meaningful corporate action on climate change. As a concluding remark, recommendations are provided for future research within the field.

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