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Do Carbon Offsets Offset Carbon?

Author

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

    (CERNA i3 - Centre d'économie industrielle i3 - Mines Paris - PSL (École nationale supérieure des mines de Paris) - PSL - Université Paris Sciences et Lettres - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique)

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.(JEL H23, O13, Q42, Q54, Q58)

Suggested Citation

  • Raphael Calel & Jonathan Colmer & Antoine Dechezleprêtre & Matthieu Glachant, 2025. "Do Carbon Offsets Offset Carbon?," Post-Print hal-04889783, HAL.
    • Handle: RePEc:hal:journl:hal-04889783
    DOI: 10.1257/app.20230052
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    Citations

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    Cited by:

    1. Martielli, Francesco & Battisti, Enrico & Gonzalez-Cruz, Tomás Félix & Salvi, Antonio, 2025. "Carbon credits and financial performance: Exploring the moderating role of CSR strategy and corporate governance practices," Research in International Business and Finance, Elsevier, vol. 77(PB).
    2. Liao, Ling & Diaz-Rainey, Ivan & Kuruppuarachchi, Duminda, 2025. "The interplay of carbon offset, renewable energy certificate and electricity markets in Australia," Energy Economics, Elsevier, vol. 144(C).
    3. Thales A. P. West & Sven Wunder & Erin O. Sills & Jan Borner & Sami W. Rifai & Alexandra N. Neidermeier & Andreas Kontoleon, 2023. "Action needed to make carbon offsets from tropical forest conservation work for climate change mitigation," Papers 2301.03354, arXiv.org.
    4. Juliette Caucheteux & Sam Fankhauser & Sugandha Srivastav, 2025. "Climate Change Mitigation Policies for Developing Countries," Review of Environmental Economics and Policy, University of Chicago Press, vol. 19(1), pages 69-89.
    5. Filewod, Ben & McCarney, Geoff, 2023. "Avoiding leakage from nature-based offsets by design," LSE Research Online Documents on Economics 117927, London School of Economics and Political Science, LSE Library.
    6. Ovando, Paola & Castellazzi, Marie & Baggio-Compagnucci, Andrea & Hewitt, Richard J. & Gimona, Alessandro, 2025. "Feasibility of woodland expansion for carbon offsetting in Scotland revisited," Forest Policy and Economics, Elsevier, vol. 174(C).
    7. Salvi, Antonio & Martielli, Francesco & Battisti, Enrico & Forliano, Canio & Kumar, Satish, 2025. "Climate change management and companies' financial performance: Exploring the moderating role of carbon credits," Research in International Business and Finance, Elsevier, vol. 75(C).
    8. CHENG, Haitao & YANASE, Akihiko, 2025. "International Transfers of Green Technology and Carbon Mitigation Outcomes," Discussion paper series HIAS-E-154, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    9. Jaraitė, Jūratė & Kurtyka, Oliwia & Ollivier, Hélène, 2022. "Take a ride on the (not so) green side: How do CDM projects affect Indian manufacturing firms’ environmental performance?," Journal of Environmental Economics and Management, Elsevier, vol. 114(C).
    10. Estelle Cantillon & Aurélie Slechten, 2024. "Market Design for the Environment," NBER Chapters, in: New Directions in Market Design, National Bureau of Economic Research, Inc.
    11. Rodemeier, Matthias, 2023. "Willingness to Pay for Carbon Mitigation: Field Evidence from the Market for Carbon Offsets," IZA Discussion Papers 15939, Institute of Labor Economics (IZA).
    12. Kotchen, Matthew J. & Vogt, Andrew, 2025. "Is the emphasis on cofinancing good for environmental multilateral funds?," World Development, Elsevier, vol. 187(C).
    13. Gregory Trencher & Sascha Nick & Jordan Carlson & Matthew Johnson, 2024. "Demand for low-quality offsets by major companies undermines climate integrity of the voluntary carbon market," Nature Communications, Nature, vol. 15(1), pages 1-15, December.
    14. Filewod, Ben & McCarney, Geoff, 2023. "Avoiding leakage from nature-based offsets by design," LSE Research Online Documents on Economics 117928, London School of Economics and Political Science, LSE Library.
    15. Fabra, Natalia & Reguant, Mar, 2024. "The energy transition: A balancing act," Resource and Energy Economics, Elsevier, vol. 76(C).
    16. Aliénor Cameron & Marc Baudry, 2023. "The case for carbon leakage and border adjustments: where do economists stand?," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 25(3), pages 435-469, July.

    More about this item

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • 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

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