Additionality and carbon credits

What is Additionality?

Additionality been touched upon in one of our previous posts but deserves its own explanation as one of the tenets of a high-quality offset or credit. It refers to the role played by voluntary carbon markets in ensuring that an offsetting activity can take place. For example, if an afforestation scheme would have been executed without rangers whose wages were covered by carbon credit income, it cannot be considered additional.

Different aspects of a project’s design are interrogated for additionality, but in general, a project either is or isn’t additional. The two main considerations are financial and environmental.

Financial Additionality

The voluntary carbon market connects companies using offsetting as part of their certain strategy with project developers looking to undertake activities that reduce greenhouse gases that are already in the atmosphere or are likely to be released. A project is financially additional if the income from selling carbon credits was integral to its overall existence. For example, a company could provide early-stage financing in exchange for a percentage of carbon credits generated in the first few years of the project’s crediting period, once offsetting activity is operational. The investing company can therefore be assured it will achieve carbon neutrality through offsetting in advance.

Environmental Additionality

The nature and range of activities that generate carbon credits must be particular to the implementation of that offsetting project, and not something that would have taken place anyway. Thus, it is closely tied to regional legislation. Additionality cannot be claimed if a project is in an area where emissions reductions are already required irrespective of the role of carbon markets. Therefore, avoided deforestation credits cannot be generated in legally protected space, like North American national parks. In these areas, the risk of unplanned deforestation is close to zero already.

How is Additionality Checked?

The additionality of a project is contingent upon a baseline scenario. That is, what would have happened in the proposed project area otherwise? Developers produce a range of records and visual representations of pre-existing conditions. This could be maps showing rates of deforestation over a ten-year period warranting intervention. Different offsetting methodologies require different proof. Voluntary carbon credit verifying organisations and independent auditors check this data and often conduct site visits also. Organisations that include additionality checks are:

• Verified Carbon Standard
• Climate Action Reserve
• Gold Standard
• American Carbon Registry
• United Nations Clean Development Mechanism

This covers almost the entirety of the voluntary carbon market. Such consistent commitment underlines the fundamental importance of additionality. Moreover, funding must go to emissions reductions and removal projects that need it and can actively contribute to tackling the climate crisis.

Next Steps

If you want to learn more about additionality or any of the other traits that make up a high integrity carbon credit, don’t hesitate to get in touch with a member of our Plannet Zero team, or request a training session.