Offsetting carbon emissions – what does additionality mean?

Thursday, February 24, 2022

For anyone who has spent time looking into offsetting, the concept of additionality comes up time and again. But what is it and why is it such a hot topic? Let’s get down to the basics.

The following is an excerpt from our white paper, Reforming the Voluntary Carbon Market. You can access the white paper in full here. First, a quick recap: Each tonne of CO₂ emissions reduced or removed from the atmosphere by an offsetting project creates one carbon credit. Companies, nations, and individuals can invest in these projects directly or buy the credits. A good carbon credit ensures that one tonne of CO₂ is actually reduced or removed from the atmosphere entirely because of the project. That’s where additionality comes in.

How do we determine additionality?

At Compensate, we use our project criteria to evaluate carbon projects. We test additionality by asking “Would the carbon sink exist in the absence of the project?”. If the answer is yes, then the project is deemed not additional, as it does not bring any impact beyond the business as usual scenario. Project developers usually only address financial additionality, meaning that the project would not be financially sustainable on its own without the revenue from carbon credits. In other words, the offsetter is directly responsible for enabling the offsetting action to take place. We go further and also assess policy level, environmental and technological additionality:

  • Policy level additionality means that the project goes beyond its host country’s climate objectives. If a project only enacts what policies already require, the project may be great for the climate but is not suitable for offsetting. As an example, if a national policy already restricts deforestation by prohibiting logging concessions, a project protecting them is not additional on the policy level.

  • Environmentally additional projects result in lower levels of emissions than would have otherwise occurred under the business as usual scenario. For instance, forest conservation projects with inflated and unrealistic estimates for deforestation do not actually avoid the claimed CO₂ emissions, as even without the project the actual deforestation would just be a small fraction of the estimate.

  • Technological additionality refers to whether the project introduces technological practices that go beyond conventional practices in carbon capture projects. Examples include emerging technology-based carbon capture, such as biochar, soil carbon that utilizes dynamic baselines or sensors quantifying carbon fluxes, and direct air capture and storage.

Additionality separates environmental projects from offsetting projects. While both are great for the climate, only projects that tackle additionality can be used for offsetting.

Why is additionality so important?

Additionality should be the basic requirement for all credits on the voluntary carbon market. Most projects that fail Compensate's evaluation process do so because of the lack of additionality. Compensating emissions with additional credits ensures the offsetter actually makes a positive impact and truly reduces the amount of CO₂ in the atmosphere. Using low-quality carbon credits with questionable climate impacts is harmful to the climate. This happens when non-additional credits that don’t go beyond business as usual are used as offsets. The result is net positive emissions as the compensated emissions are not actually counterbalanced by additional removals or emission avoidance.

As an example, if a company aiming to be carbon neutral has 100 tonnes of unavoidable emissions and they offset those emissions with credits deemed not additional, their emissions are not counterbalanced in practice, only on paper, which accelerates climate change. Reducing emissions should always be the preferred option, even in the case offsets are additional. Otherwise, we risk that offsetting displaces effective action to reduce company emissions. Bottom line? Additionality is one of the key qualities of a good carbon credit, and ensures that the money put into a project makes a real, additional, difference to the climate. Projects that don’t fit these criteria aren’t necessarily bad though – they just shouldn’t be used for offsetting.

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