How do offsets impact the cost of emissions reductions for the US economy?
Agricultural carbon offsets are a lowest cost option and they can significantly reduce the overall cost of a cap-and-trade system while still achieving the desired level of emissions reductions. Additionally, offsets may act as a price “safety valve” for cap-and-trade if an unlimited number of offsets are allowed. As the price of a carbon allowance or credit rises, because the cost of abatement is often lower for agriculture than for other sectors, new entrants will arrive at an earlier price-point than other participants.
Related Questions
- What happens if an offsets project inadvertently leads to an increase in greenhouse gas emissions elsewhere in the economy?
- Which allocation methodology should be used to maximise efficient and cost effective reductions in emissions?
- Do Reductions of Human CO2 Emissions Have Any Impact On Atmospheric CO2 Levels?
