Voluntary carbon offsetting by local authorities: practices and lessons

Ce rapport est disponible dans : Climate Report, 29Local authorities (regions, departments, metropolitan areas and towns) are increasingly involved indefining and implementing policies to combat climate change. This is not a simple task, as beyondemissions generated by their administrative services, most greenhouse gas (GHG) emissions intheir territorial jurisdiction are beyond their direct control. Often given responsibility for theemissions of all actors within their administrative boundaries, different local authorities are oftenrestricted in their ability to foster reductions through their attributed jurisdictional competencies.Faced with such limitations in fostering reductions, voluntary offsetting is one of the tools availableto local authorities for reducing territorial emissions, by either purchasing carbon credits in order tooffset emissions or by selling generating credits in order to create a source of financial income.Although the voluntary offset market is still small in comparison with the compliance market createdby the Kyoto Protocol, market participants find it to be a more flexible, innovative and responsiveframework. In exchange, average prices, which are determined on an over-the-counter basis, areusually lower than those for compliance credits. At the same time, the compliance and voluntarymarkets reveal very significant differences linked to the nature of the project.This Climate Report presents ten case studies in order to better understand how and why localauthorities use this instrument. Analysing the offer, local authorities that sell carbon credits accountfor a very small percentage – just 3% – of voluntary offset projects. Their typical profile is that of aUS local authority, which is implementing a methane elimination project at its waste disposal site,primarily in order to anticipate future regulation and to obtain a source of additional financing.Local authorities’ share of the demand for voluntary credits is harder to quantify. The case studiesnonetheless shed some light on the determining factor for a successful offset programme: namely acarefully designed project rooted in the local authority specific context and is shared by localplayers. In fact, the vast majority of local authorities prefer to buy carbon credits generated byprojects implemented within their jurisdiction, in order to maximise other economic, social andenvironmental benefits than the simple reduction of GHG emissions. The choice of the financingvehicle (dedicated framework, tender or tax) depends on the size of the offset programme and onthe type of projects targeted. It has no determining impact on the success and sustainability of theoffset programme