SEMINAR:Additionality of Carbon Offsets: Project-specific vs. Standardized Baselines

Guest: Safak Yucel, McDonough School of Business, Georgetown University

Title: Additionality of Carbon Offsets: Project-specific vs. Standardized Baselines (IE, MFG)

Date/Time: December 24, 2025, 13:40

Location: FENS G032

Abstract: Developers generate carbon offsets by investing in emissions-reduction projects to receive two sources of revenue: project revenue, e.g., from the electricity sold in a renewable energy project, and offset revenue based on offsets issued by a non-profit carbon registry. The registry ensures additionality, i.e., the offset should represent one unit of reduction from the developer's business-as-usual emissions---what the developer's emissions would have been without the offset revenue. Although environmental groups raise greenwashing concerns against non-additional offsets, ensuring additionality is challenging because it requires assessing project revenue, which is the developer's private information. In practice, the registry assigns a baseline to represent business-as-usual emissions through one of the two methods: Under the project-specific method, a developer self-reports its business-as-usual emissions to the registry, which then inspects the report and assigns reported emissions as the baseline if it accepts the project. Under the standardized method, the registry assigns a common baseline to a group of similar projects. It is unclear which method leads to fewer non-additional offsets, greater reduction in emissions, and should be chosen by a registry. We analyze these economic and environmental implications by developing a sequential game between a registry and project developers. We find that project-specific baselines may lead to fewer non-additional offsets but lower emissions reduction, cautioning environmental groups against simply advocating for the method that leads to fewer non-additional offsets. We also find that a registry may prefer project-specific baselines even when they result in more non-additional offsets. Finally, we find that a registry's preference between the two methods is typically consistent with a corporate buyer's.
 

Bio: Safak Yucel is an associate professor of Operations Management (with tenure) at the McDonough School of Business, Georgetown University. Prof. Yucel is also the associate director of the Business of Sustainability Initiative. His main research interests are in sustainable operations, with a focus on renewable energy. He is also interested in the economic and environmental implications of new business models. Prof. Yucel's research has appeared in leading journals, including Management Science and Manufacturing and Service Operations Management. He has worked at the National Renewable Energy Laboratory of the U.S. Department of Energy, prior to receiving his Ph.D. in Operations Management from Duke University's Fuqua School of Business.