In this week's commentary, Danny Morris and Harrison Fell discuss California's approach to a simple problem—what happens when carbon offsets go bad (that is, when they don't deliver promised emissions reductions)? California's solution under its new cap-and-trade program is buyer liability: firms holding an invalidated offset have to replace it to stay in compliance. This is controversial. Opponents claim it will make the carbon market less efficient, and that the state is in a better position to bear this risk. Morris and Fell look at claims by both sides.
Note: The RFF Policy Commentary Series is on hiatus in August and will return to its regular schedule with new commentaries in September.
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