Working Paper: NBER ID: w30649
Authors: Geoffrey Heal
Abstract: I provide a rigorous framework for accounting for corporate greenhouse gas emissions, based on the Greenhouse Gas Protocol. I show that only Scope 1 emissions are of interest from a national policy perspective: that emissions in Scopes 2 and 3 are duplicative, and that downstream Scope 3 emissions in total are equal to total Scope 1 emissions. The correct measure of a company's contributions to national GHG emissions is its Scope 1 emissions plus a part of the emissions of the household and government sectors. This is not generally the same as the level of emissions for which a company bears some responsibility, legal or otherwise. I apply some of these ideas to an analysis of carbon offsets, trying to understand the conditions under which offsets are a valid mechanism for reducing emissions by formalizing the ideas of additionality and leakage.
Keywords: greenhouse gas emissions; carbon offsets; scope 1 emissions; emissions accounting
JEL Codes: Q00
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Scope 1 emissions (L71) | national greenhouse gas totals (Q56) |
| Scope 2 and Scope 3 emissions are duplicative (L99) | total Scope 3 emissions across all firms = total Scope 1 emissions (L25) |
| Scope 1 emissions + household and government emissions (H19) | national GHG emissions (Q54) |
| valid offsets (Y10) | net emissions reductions (H23) |