March 14, 2016, 11:00–12:30
Toulouse
Room MS 003
Environmental Economics Seminar
Abstract
In a voluntary emissions-reductions system, regulators must evaluate and sign off on firms' claims of what they would have done absent credits. This paper uses the behavior of non-participants and rejected applicants to ex-post evaluate these claims. We focus on Clean Development Mechanism (CDM) projects in industrial energy efficiency, co-generation, input substitution, and fuel switching in India. We pair over 600 projects from the UNEP CDM Pipeline to firms listed in India's CMIE Prowess dataset. After controlling for size, industry, and pre-treatment capacity trends, we find no evidence that applicants have different pre-treatment emissions levels or trends. We apply matching estimators to identify counterfactual non-participant firms for each firm that supplies carbon offsets. We find that participants reduce emissions relative to similar non-participant firms, but in a way that is moderated by a greater expansion of output. Looking across project types, the largest emission reductions come from projects that improve energy efficiency and export excess energy to the grid. (joint with Kim Liu)