One of the most fundamental principles of carbon programs is Additionality. All carbon standards develop methodologies for projects that demonstrate additionality. But what does it really mean?
A carbon project is additional only if the emissions reductions or removals would not have occurred without revenue from the sale of carbon credits. The efforts resulting from the project have to go beyond Business As Usual and what the law demands.
For instance if a natural reserve is protected by law it would not be additional to develop a conservation carbon project in that area. On the contrary if a native forested area is at high risk of deforestation, developing a carbon project would be considered additional.
In order to determine the carbon offset quality it is necessary to meet other principles as well: permanence, leakage, co benefits among others. In this article, we are going to explore on additionality and its connection to transparency and traceability.
The first definition of Additionality can be found in the Kyoto Protocol
“The Article 12.5 (c) of the Kyoto Protocol introduces the concept of additionality in the CDM. It states that certified emission reductions (CERs) should be “additional to any that would occur in the absence of the certified project activity”
(United Nations, 1998)
This definition has a wide spectrum of interpretation. Basically, helping to determine if the project capability, aimed to reduce, remove GHG and generate carbon credits, has a real mitigation and net profit at the atmosphere. All the carbon standards and schemes apply this criteria and have their own methods to measure. Also, the most known rating methodologies have their metrics to evaluate the additionality of the carbon projects.
In the last few years several rating agencies have began to offer their services as independent third party verifiers. You probably have heard of Sylvera, BeZero or Calyx. All of them rate additionality along with many other principles. The same projects can get different ratings or reviews from these agencies as they do not use the same data nor methodology.
EXAMPLES OF ADDITIONALITY
BeZero and its additionality test
“A project must apply an additionality test as part of the accreditation process in order to be eligible for a BeZero Carbon Rating. There must be sufficient information available to assess how the test is applied and subsequent results. In the case where a project has been deemed automatically additional, there must be sufficient information on the criteria for this assessment, available either through the accreditation agency or from the project documentation”
Additionality assesses the inclusion of the following sub-criteria in the methodology:
- Eligibility of activities that are triggered by legal requirements
- Consideration of carbon credits before the decision to proceed with the project and restrictions on the eligibility of existing projects
- Financial attractiveness
Carbon markets and carbon credits should be trustworthy. As they continue to grow as environmental commodities, it is important for the involved parties to make transparent and reliable commitments to ensure their credibility and transparency.
Transparency is important in carbon markets to ensure that the credits being traded are legitimate and represent actual emissions reductions.
In some cases, intermediaries selling carbon credits do not prioritize transparency, resulting in high profit margins for projects in economically disadvantaged countries, without sufficient contribution towards their development.
Issues of this nature serve as a warning to both the market and its participants, highlighting the significance of transparency when purchasing or selling carbon credits. To guarantee transparency within the offsets market, several methods can be employed:
- Reporting requirements: All informative documents must be public (validation processes, verification, project design, parties involved, how many credits have been issued, how many are missing…) This information ensures transparency from the issuance phase to the marketing of the carbon credits.
- External auditors: Assess and verify the carbon project where the aim is reducing the emissions, the auditors ensure that the project adheres to accepted methodologies, accurately measures and reports emissions.
- Carbon credit registry: This helps to get a real register about how many credits are issued and prevent the double counting.
- Standards: The standardization schemes of carbon credits are really important to get transparency in the process, set the guidelines, requirements and criteria for the types of projects and emission reductions eligible for offsets.
Current view of carbon credits in additionality and transparency
Nowadays, companies and organisations that purchase carbon credits ensure that they offset with “quality” credits, which is why standards, rating methodologies, project developers, sellers and buyers make sure to guarantee fair prices in the market, including and constantly modifying criteria that make the market more truthful.
From the pre-feasibility stage, new carbon projects need to incorporate the concept of additionality, which is currently required by the market and stakeholders.
In recent times, an increasing number of companies have expressed interest in gaining insights into the projects they purchase. They seek to understand the project implementation process, identify the actual beneficiaries, and establish their own criteria for assessing the carbon credits’ quality.
Carbon credit traceability
Although the carbon market standards have robust and structured methodologies, there is a gap that hasn’t yet been filled.
There is currently no standard approach for evaluating the quality and efficacy of carbon offset projects under a unified regulatory framework. Additionally, the criteria utilized by various certification programs can differ significantly. This lack of consistency makes it challenging for consumers to accurately assess the genuine impact of the carbon offset projects they choose to invest in.
In order to evaluate a project’s additionality and establish a clear traceability of carbon credits from creation to sale, transparency should be a crucial aspect of any regulation governing carbon markets. However, given the technical nature of the documentation provided by project owners, it can be challenging to verify credit traceability at first glance.
Project owners and developers now have the capability to provide comprehensive and user-friendly information about their projects to sellers, buyers, brokers, and anyone who wishes to verify its details. With the advent of cutting-edge carbon marketplaces, transparency can now be achieved to showcase the quality of credits.
At ALLCOT Trading, our mission is to promote additional sustainable impact with every transaction, guaranteeing a trustable guide by the hand of all our environment experts. If you want to achieve this in a fair, transparent and win-win scenario, contact us and together we will make it happen.