Séminaire QSEF – Quantitative Sustainable Economics & Finance

Jeudi 1er octobre 2026

11h – 12h

Salle 3001

Federica ZENI (EPFL) “The Value of Compliance Carbon Offsets in Cap-and-Trade Markets”

Summary:

We study compliance carbon offsets in cap-and-trade markets. We develop a model predicting that firms sort into offset use by carbon productivity: highly productive firms rely solely on allowances, while less productive firms use offsets because they trade at a discount but carry invalidation risk. Using administrative data from California’s Cap-and-Trade program, we find strong empirical support for these predictions. Structural estimation suggests that roughly one-quarter of compliance offsets fail to reduce emissions, generating about 1.4 percent uncounted emissions. Nevertheless, offsets can increase efficiency relative to an equivalent relaxation of the emissions cap under certain conditions.

Joint work: Aymeric BELLON, Deeksha GUPTA, Tarun RAMADORAI