Additionality and Quantification Procedures

Table 4 shows the different approaches to additionality assessment and quantification procedures across various offset programs.

The design elements most fundamental to ensuring that offset projects are ‘real’ and ‘quantifiable’ have also been the most contentious. In theory, additionality answers a very simple question: ‘Would the activity have occurred, holding all else constant, if the activity were not implemented as an offset project’? In practice, however, determining whether an offset is ‘real’ through additionality requirements presents a significant design challenge. Quantification of an offset project’s GHG benefits relies on the development of a baseline scenario, a hypothetical scenario of emissions that would have occurred had the activity not been implemented as an offset project. By definition, this baseline scenario will never occur; instead, the offset credits generated from a project are quantified with incomplete certainty based on the difference in emissions between the offset project and the baseline scenario.

Project-based versus Standardized Additionality Testing

There are two broad design approaches to evaluating additionality: project-specific and standardized (often called ‘performance standards’). The project-specific approach involves the evaluation of individual projects based on one or more additionality tests.  These project-specific additionality tests are commonly based on the ‘CDM additionality tool’ (see figure below), which evaluates whether the offset project is dependent on offset project revenue (‘investment test’) or whether it has overcome significant implementation barriers ( ‘barriers test’).  In addition, the CDM tool requires that the technology or practice used by the project must not be in common use (‘common practice test’).  Most programs also require projects to be ‘regulatory surplus’, that is, that they exceed existing legal requirements. 

Due in part to concerns regarding the partly subjective nature of some project-based methods, several offset programs and protocols incorporate or rely exclusively on standardized methods to assess additionality.  Standardized methods include, among others, performance thresholds (emission rates or other characteristics defined based on similar activities) and clearly defined common practice tests (e.g. lower than a specified level of market penetration for similar activities).  Standardized approaches have the advantage of streamlining the process and increasing transparency. The disadvantage of standardized approaches is that they are less flexible and do not allow site specific conditions to be taken into account. This means, the broader these standardized project protocols are defined (e.g. geographic scope) the more generalized the conditions they apply will be (e.g. forestry conditions in California can expected to be quite distinct from forestry conditions that are generalized for the whole of the US).  Also, depending on how rigorous the parameters of standardized protocols are, they may allow a non-trivial number of free-riders (non-additional offsets) to enter the offset project stream. Climate Leaders, Climate Action Reserve, and RGGI are among the programs and protocols that rely more heavily on standardized approaches. It is worth noting that these programs have mostly chosen offset project types for which additionality is not highly contentious (e.g. agricultural and landfill methane, industrial gases). For these project types, a standardized additionality determination is less likely to lead to a significant number of free riders, unlike other project types where additionality claims are more difficult to establish (e.g. renewable energy).

Text Box: CDM Additionality Tool     Investment Analysis  Revenue from the carbon offsets must be a primary driver for project implementation; or    Barriers Analysis  Project implementation must require the ability to exceed implementation barriers, such as local resistance, lack of know-how and institutional barriers; and    Common Practice Analysis  Projects must employ technology that is not commonly used.

Baselines and Quantification Procedures

Offset programs also differ significantly in how emission reductions or removals are quantified for individual offset projects.  The expansion of offset programs in recent years has led to a proliferation of baseline and monitoring quantification protocols, which are now far too abundant for them all to be described in detail here.  For example, the CDM includes many approved methodologies for different project types. Table 4 therefore focuses on the process by which quantification protocols are developed. Programs designed to accommodate an expanding set of offset project technologies have tended to opt for a bottom-up approach, the CDM being the classic example. Others, such as RGGI, have opted for a more top-down prescriptive approach. Both top-down and bottom-up programs vary in their use of project-specific or performance standard approaches to determining baselines.

Table 4 shows the different approaches to additionality assessment and quantification procedures across various offset programs.

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