The Value of Compliance Carbon Offsets in Cap-and-Trade Markets
Event details
| Date | 03.03.2026 |
| Hour | 12:15 › 13:15 |
| Speaker | Federica Zeni - SFI@EPFL |
| Location |
UNIL, Extranef, room 126
|
| Category | Conferences - Seminars |
| Event Language | English |
We study compliance carbon offsets in cap-and-trade markets. We develop a model predicting that firms sort into offset use by carbon productivity: highly productive firms rely solely on allowances, while less productive firms use offsets because they trade at a discount but carry invalidation risk. Using administrative data from California's cap-and-trade program, we find strong empirical support for these predictions. Structural estimation suggests that roughly one-third of compliance offsets fail to reduce emissions, generating about 2 percent uncounted emissions. Nevertheless, offsets can increase efficiency relative to an equivalent tightening of the emissions cap under certain conditions.
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