Carbon offsetting and renewable energy development

Abstract

New carbon crediting and offsetting mechanisms are being developed under the Paris Agreement. Polluters can meet their emission reduction targets by acquiring and retiring carbon offset credits. Globally, most of these credits come from renewable energy sources. However, their additionality is increasingly questionable. Global renewable electricity capacity continues to grow. Greenhouse gas emissions from coal‐fired power generation are starting to fall, as governments and organisations pledge to curtail emissions, more capital is mobilised for energy transition, and renewable energy technologies become commercially competitive. The opportunity to earn carbon offset credits is becoming less indispensable to renewable energy development. Aggregate emissions could rise above the baseline level when polluters increase their emission budgets by using carbon credits generated from a renewable energy installation that is part of the baseline scenario. To safeguard environmental integrity, the conditions for including renewable energy in carbon crediting and offsetting schemes should be reconsidered.