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A practical approach to offset permits in post Kyoto climate policy


  • Heindl, Peter
  • Voigt, Sebastian


International Carbon Offsets from developing countries and emerging economies such as permits from the Clean Development Mechanism (CDM) will potentially play an important role for cost containment in domestic greenhouse gas regulation schemes in industrialised countries. We analyse the potential role of offset permits assuming that major emitters such as the USA, Canada, Japan, Australia and New Zealand install domestic greenhouse gas regulation schemes to achieve the emissions reductions pledged in the Copenhagen Accord and seek cost containment. We estimate a potential demand for offset permits of 627 to 667 MtCO2e p.a. from industrialised countries. To describe the supply structure, we derive marginal abatement cost curves for developing countries and emerging economies. We find that developing countries and emerging economies can supply 627 to 667 MtCO2e p.a. at costs of approximately EUR 10 (in 2004 EUR), neglecting transaction costs and country specific risks. The highest potentials for the generation of carbon offsets are present in China, India and the rest of Asia.

Suggested Citation

  • Heindl, Peter & Voigt, Sebastian, 2011. "A practical approach to offset permits in post Kyoto climate policy," ZEW Discussion Papers 11-043, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  • Handle: RePEc:zbw:zewdip:11043

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    References listed on IDEAS

    1. Wolfgang Sterk & Bettina Wittneben, 2006. "Enhancing the clean development mechanism through sectoral approaches: definitions, applications and ways forward," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 6(3), pages 271-287, September.
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    Cited by:

    1. Suzi Kerr & Adam Millard-Ball, 2012. "Cooperation to Reduce Developing Country Emissions," Working Papers 12_03, Motu Economic and Public Policy Research.

    More about this item


    emissions trading; offsets; CDM; marginal abatement costs; climate policy;

    JEL classification:

    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy


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