Ideally, carbon offset programs issue each project a number of offset credits equal to the number of reductions in carbon emissions it achieves. Realistically, any one project likely receives more or less offset credits than the emissions it reduces. Therefore, the net emissions impact of offset programs depends on the relative magnitude of over- and under-crediting. We apply a theoretical framework that differentiates between credited offsets and realized emissions reductions to quantify the net emissions impact of hydrofluorocarbon-23 (HFC-23) projects, which have traditionally dominated the supply of credits within the Clean Development Mechanism (CDM). In our analysis, we account for perverse incentives created by CDM methodologies and for conservative aspects of CDM methodologies. We find it likely that under-credited emissions reductions nearly equal the supply of over-credited offsets, implying that CDM HFC-23 projects effectively have little impact on net emissions and thereby maintain their environmental integrity, on average. Ignoring the supply of under-credited emissions in the context of CDM HFC-23 projects therefore exaggerates the influence of perverse incentives created by CDM methodologies that lead to over-credited offsets.
- Methodologies for crediting HFC-23 offset projects from the Clean Development Mechanism failed to award credits when reductions had occurred (under-credited emissions reductions) and awarded them when no reductions had occurred (over-credited offsets).
- It is likely that the supply of under-credited emissions reductions (which has been largely neglected until now) nearly equals the supply of over-credited offsets, implying that these projects maintain their environmental integrity on average.
- A complete accounting of under-credited emissions reductions and over-credited offsets is crucial to understanding the environmental integrity of HFC-23 offset projects and a prerequisite to informed policy decisions.