Constructing carbon offsets: The obstacles to quantifying emission reductions

The existing literature generally ascribes the virtual absence of the transport sector from the Clean Development Mechanism (CDM) to the inherent complexity of quantifying emission reductions from mobile sources. We use archival analysis and interviews with CDM decision-makers and experts to identify two additional groups of explanations. First, we show the significance of aspects of the CDM's historical evolution, such as the order in which methodologies were considered and the assignment of expert desk reviewers. Second, we highlight inconsistencies in the treatment of uncertainty across sectors. In contrast to transport methodologies, other sectors are characterized by a narrow focus on sources of measurement uncertainty and a neglect of economic effects ("market leakages"). We do not argue that the rejection of transport methodologies was unjustified, but rather than many of the same problems are inherent in other sectors. Thus, the case of transport sheds light on fundamental problems in quantifying emission reductions under the CDM. We argue that a key theoretical attraction of the CDM--equalization of marginal abatement costs across all sectors--has been difficult to achieve in practice.