In the 2015 Paris Agreement, Parties agreed on ambitious global climate protection goals which are to be achieved through Parties’ Nationally Determined Contributions (NDCs). In accordance with Article 6 of the Agreement, the Parties can cooperate in implementing these NDCs. This makes it possible for emission reduction measures to be implemented in one country and the resulting emission reductions to be transferred to another and counted towards its NDC. Similar “offsetting mechanisms" have already been used in the past to achieve climate protection commitments through measures abroad, for example under the European Emissions Trading System (EU ETS).
The future role of offsets as an instrument of international and national climate policy was the subject of an online seminar entitled "How to raise ambition through carbon offsetting? Lessons learned and post-2020 prospects," which the Wuppertal Institute held together with South Pole on 30 September 2020. During the online seminar, the participants discussed the results of the UBA research project "Analysis of the advantages and disadvantages of offsetting approaches in selected sectors," which is led by the Wuppertal Institute. The project highlights past experiences and analyses the potential added value of offsets in the context of future climate policy. The focus of the discussion was on the ambition raising potential of offsets, i.e. the extent to which offsetting mechanisms could contribute to an increase of mitigation targets.
Blog posts with key results
In the run-up to the event, the project team published key results of the UBA research project in the form of blog posts. In the articles published on the I4C website, Nicolas Kreibich, Researcher in the Global Climate Governance Research Unit at the Wuppertal Institute, and Maria Carvalho of South Pole show that offsets can support the introduction of carbon pricing instruments. However, there are no indications that offsets can actually increase the ambition level of these instruments. The results of the analysis of offsets in the European Emissions Trading System as well as in other systems in Alberta, Australia, Colombia and Japan presented in the blog entries also make it clear that this instrument should only be introduced if there is a high level of ambition. Ensuring an ambitious mitigation targets should therefore be a priority.
With regard to the future use of offsets under the Paris Agreement, the research results make it clear that their design is decisive for their ambition raising impact. For example, their use should be limited to offsetting unavoidable emissions, so as not to counteract measures to avoid emissions and actually achieve climate change mitigation effects that would otherwise not have been achieved. At the same time, the mitigation measures in which the reductions are achieved should be embedded in the national climate protection strategy of the host countries in order to achieve a long-term, ambitious effect.
A recording of the event "How to raise ambition through carbon offsetting? Lessons learned and post-2020 prospects" as well as the previously published blog posts are available at the links below.