Short version: To preserve environmental integrity, carbon credits must convey an exclusive claim to avoided emissions or enhanced removals and must not be counted or used more than once.
Long version: The use of carbon credits can make climate change worse – i.e., the atmosphere will see greater total emissions – if more than one party can lay claim to the avoided emissions or enhanced removals from which the credits were issued. For example, imagine that two different companies claim the same 100 tonnes worth of avoided CO2 emissions. Together they would claim to have avoided 200 tonnes of emissions, but the actual change in emissions to the atmosphere (relative to the baseline scenario) would only be 100 tonnes. The climate would be worse off, compared to a situation where both companies were to each separately avoid 100 tonnes of emissions. “Double counting” like this can happen in three ways:[1]
- Double issuance occurs if more than one carbon credit is issued for the same avoided tonne of GHG emissions. For example, a carbon crediting program can mistakenly issue two credits to the same project for one tonne of avoided emissions. This rarely happens. A more likely scenario is that two different programs could issue credits to the same project, without realizing the project is “double registered” under both programs. Most crediting programs run checks to avoid this situation (though they are not always foolproof). Finally, a more subtle “double issuance” risk is that the same program, or multiple programs, could issue credits to two different projects, each of which claims to have avoided the same tonne of emissions. An example would be if both the producer and consumer of biofuels claim to have avoided the GHG emissions from combusting the same liters of fuel – and two different programs issue carbon credits separately to each project without realizing the overlap.
- Double use occurs if two different parties count the same carbon credit toward their avoided emission or enhanced removal targets. Again, most carbon crediting programs have procedures to prevent this from happening. The most likely way for it to occur is for an unscrupulous seller to represent to a buyer that a credit was retired on their behalf, and then proceed to market the same credit to other buyers in the same fashion. To prevent this, carbon crediting programs must require that the purposeof any carbon credit retirement is clearly recorded in a registry system, that the beneficiaries of credit retirements are identified in the same registry, and that all of this information is publicly accessible. Across existing crediting programs, current practices related to this kind of information disclosure are somewhat mixed.
- Double claiming can happen if carbon credits are issued to a project for avoided emissions or enhanced removals that another entity (e.g., a government or private company) claims toward its own emissions target. For example, double claiming would occur if an energy efficiency project obtained carbon credits for avoiding emissions at a power plant covered by an emission target. In this case, both the project and the power plant could claim the same avoided emissions: the project through carbon credits, and the power plant through the contribution the project makes to helping meet its target. Double claiming associated with carbon credits is also a potentially significant issue under the Paris Agreement, an issue further discussed in Responsible Use of Credits.
Related pages:
How carbon crediting programs address exclusive claims
Questions for buyers to ask about ownership claims
[1] See Schneider et al. (2015) for a fuller explanation of double counting issues with carbon credits.