Double counting in international emissions trading

Lambert Schneider, Quelle: Öko-Institut 2019

Emissions trading provides countries or private sector entities flexibility to reduce greenhouse gases where it is cheapest. The resulting cost savings can help countries to adopt more ambitious climate targets. If the rules for international emissions trading are not appropriately designed, however, this can lead to more greenhouse gas emissions and higher costs. A significant risk is double counting of emission reductions. Some countries, such as Brazil, are proposing rules that would allow them to sell emission reductions to other countries and at the same time use them to achieve their own targets. “Such a system would undermine the environmental impact of the Paris Agreement: on paper, countries would achieve their targets, but more greenhouse gases would end up in the atmosphere,” says Lambert Schneider. “As scientists from five continents, we have joined forces to inform the wider public about the importance of adopting robust rules for international emissions trading at the next climate conference.” Double counting of emission reductions could arise not only between countries, but also with international aviation. Under the International Civil Aviation Organization, airlines are obliged to offset the increase in their CO2 emissions from 2021 onwards by purchasing emission reduction credits from climate protection projects. However, such projects also reduce the emissions that countries report under the Paris Agreement to achieve their emissions targets. This means that both the host countries of the climate protection projects and the airlines would count the same reductions to achieve their targets. Some countries, most vocally Saudi Arabia, oppose rules that would prevent such double counting. In principle, the solution is simple: as with money transfers between bank accounts, both sides must deduct or add the same amount, except that in emissions trading the relevant currency is greenhouse gas emissions. The seller country has to add sold emission reductions to its emissions; the buyers can deduct the purchased emission reductions from their emissions. This ensures that the reductions can only be used by the buyer, but no longer by the seller, to achieve climate targets. In practice, an agreement is difficult not only politically but also technically. Under the Paris Agreement, it is up to the countries to decide what kind of climate target they pledge. This has led to very diverse climate targets. Some countries have greenhouse gas targets; others have targets for the expansion of renewable energy or for afforestation. Some only have targets for specific sectors, greenhouse gases or years. And some targets are simply unclear. This makes it more difficult to robustly account for the international transfer of emission reductions. “To ensure environmental integrity in international emissions trading, the same international rules should apply to all transactions so as to avoid double counting in all instances,” says Lambert Schneider. “Moreover, countries participating in international emissions trading should, over time, adopt emissions targets that include all sectors and gases and apply to continuous multi-year periods rather than to individual years only”. Read the full article “Double counting and the Paris Agreement rulebook” in the Science journal. Read another summary "Double counting of emissions cuts may undermine Paris climate deal".

Lambert Schneider is research coordinator for international climate policy at Oeko-Institut. He participates in international climate negotiations and researches on international climate policy, with a focus on international carbon markets.