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Do Carbon Offsets Offset Carbon?

Author

Listed:
  • Raphael Calel
  • Jonathan Colmer
  • Antoine Dechezleprêtre
  • Matthieu Glachant

Abstract

We develop and implement a new method for identifying wasted subsidies and use it to provide systematic evidence of the misallocation of carbon offsets in the Clean Development Mechanism—the world's largest carbon offset program. Using newly constructed data on the locations and characteristics of over 1,000 wind farms in India, we estimate that at least 52 percent of approved carbon offsets were allocated to projects that would very likely have been built anyway. We estimate that the sale of these offsets to regulated polluters resulted in substantially higher global carbon dioxide emissions.

Suggested Citation

  • Raphael Calel & Jonathan Colmer & Antoine Dechezleprêtre & Matthieu Glachant, 2025. "Do Carbon Offsets Offset Carbon?," American Economic Journal: Applied Economics, American Economic Association, vol. 17(1), pages 1-40, January.
    • Handle: RePEc:aea:aejapp:v:17:y:2025:i:1:p:1-40
    DOI: 10.1257/app.20230052
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    More about this item

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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