Outside The Cap

The policy brief examines the challenges of integrating carbon offsets into a U.S. cap-and-trade system, specifically highlighting the difficulties in quantifying and verifying soil and forest carbon sequestration. It argues that while offsets provide flexibility and cost-containment for capped entities, the high transaction costs and uncertainties associated with certain project types may make them less efficient than alternative regulations or incentive programs. The authors recommend a holistic strategy that evaluates the acceptable level of risk for overstating emission reductions and considers offsets as one part of a broader suite of climate policies.

• Carbon offset programs require strict quantification, verification, and enforcement to maintain the integrity of greenhouse gas caps, but certain activities—specifically soil and forest carbon sequestration—are less likely to meet these standards than others.
• While offsets can lower costs and increase compliance options for capped entities, the costs of overcoming certification challenges for some projects may be higher than if those reductions were achieved through other policy measures.
• The authors argue that policymakers should exclude from offset programs any reductions that could be more cost-effectively achieved through other policy mechanisms, rather than seeking maximal inclusion of offset options for the sake of flexibility for capped entities.
• Designing a U.S. carbon offset program requires policymakers to determine an acceptable level of risk for overstating emission reductions, accounting for measurement, baseline, and leakage uncertainties, and to establish mechanisms for insuring against carbon sequestration reversals.

APA

World Resources Institute (n.d.). Outside The Cap. https://www.wri.org/research/outside-cap

Chicago

World Resources Institute. Outside The Cap. n.d. https://www.wri.org/research/outside-cap.

Wikipedia

{{cite report |author=World Resources Institute |title=Outside The Cap |url=https://www.wri.org/research/outside-cap |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{worldresourcesinstitutendoutside, author = {{World Resources Institute}}, title = {{Outside The Cap}}, institution = {World Resources Institute}, url = {https://www.wri.org/research/outside-cap}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }