Understanding additionality

The additionality concept is arguably the most contentious issue in both the voluntary and mandatory carbon offset markets. A project cannot generate offsets, and therefore cannot accept revenue generated from the offsets, if it can be proven that it would have happened anyway. Sounds simple, right? Not exactly.

“The carbon market is so fraught with challenges because it’s very difficult to really address additionality,” says Scot Horst, president of Horst Inc., a sustainable materials consulting firm based in Kutztown, Penn. “If you aren’t addressing it, we are just lining people’s pockets in the name of the environment. If on the other hand, we are shifting money into real environmental projects that wouldn’t have happened otherwise without this mechanism, then it’s pretty cool.”

There is no single test for additionality. Many carbon offset retailers and project developers use different additionality tests. Some common tests include:

Regulatory
If the project is implemented to meet regulations or fulfill industry standards, it cannot be considered additional. If the project goes beyond compliance, it could be considered additional [see “Peak performers,” page 29].

Financial
An offset project is additional if it would have a lower than acceptable rate of return without revenue from carbon offsets.

Barriers
If non-business-as-usual implementation barriers, such as local resistance or lack of experience with a new technology, would otherwise keep a project from moving forward, the project is considered additional.

Common practice
If the project employs technologies that are very commonly used, it might not be additional because it is likely that the carbon offset benefits do not play a decisive role in making the project viable.