Carbon accounting rules | Additionality

No matter how you spell it, additionality always gets underlined in red when you type it onto a computer screen. This is because it is a carbon accounting rule and a jargon term that has not yet made it into the dictionary. 

It is the rule that says...

any activity that claims to reduce greenhouse gas emissions [or capture CO2] would not take place under business as usual — the activity [and hence the greenhouse gas abatement] is additional.

Its extra to what would have happened anyway.

Carbon accounting rules

Before we get to the tricky details of additionality here is a quick recap on carbon accounting rules. 

The global policy response to climate change, and especially global warming, is to reduce greenhouse gas emissions through many specific  activities such as...

• use of alternative energy sources
• capture of landfill gas
• the management of fertilizers
• forest management

Only to know exactly how much emission reduction can occur from these activities two things are needed:

1. a unit of measurement
2. a set of accounting rules 

The unit of measurement, carbon dioxide equivalents (CO2e) measured in tonnes (tCO2e), was easily chosen.  All the greenhouse gases that make a difference to global warming are easily converted to CO2 equivalents (hence the 'e'). 

Next a set of accounting rules were created to ensure that each tCO2e in a carbon project, or even on a national carbon balance sheet, is accurately measured and accounted. 

A decade of working with and refining these rules means that  emission reduction is readily measured and recorded from a wide range of activities — and with sufficient confidence to create reliable carbon accounts. 

Several accounting rules become very important in carbon accounting because we need to be sure that any emission reduction is real. In other words it...

• actually happened
• would not have happened anyway
• was not shifted somewhere else 

Additionality is the second one on this short list and is applied to carbon offset projects.

It is the requirement for any activity that claims an amount of emission reduction to be over and above what would have happened in the absence of a carbon market incentive.

In other words the activity wouldn’t happen unless there was a cost either financial or technical to carrying out the emission reduction activity. 

It also means that previously, when greenhouse gas emissions were not a consideration, there would be no value or necessity to carry out the activity. 

A simple illustration

Suppose that in your home there is no cost to having the lights on. Electricity is free and the light bulbs cost nothing to replace. 

Common practice would be to leave the lights on each evening until you went to bed. And even then no need to worry about leaving the lights on in the kitchen and living room all night. With no power bill you would only turn the lights off if the brightness affected your sleep.

Now suppose that carbon credits from emission reduction could be earned by taking a trip to the local hardware store to purchase and install a timer switch for the downstairs lights.  

This little device turns off the lights automatically at 11pm every night.

Not having the lights on all night saves electricity. The amount of energy saved is easily converted to tCO2e and is the emission reduction of the activity.

You could even be given carbon credits equivalent to the tCO2e not emitted to the atmosphere. 

So is this activity additional?

Yes.

There is a cost of this new activity because you have to travel to the hardware store and purchase a timer and take the trouble to have it installed.

And as energy is free, there is no reason you would spend this extra time and money to turn the lights off. Most people would just leave them on.

The activity to have a timer installed would not be 'common practice' and wouldn't happen unless you had the intention of reducing emissions.

It is this extra trouble and cost that makes the activity additional. 

How is additionality determined?

There are two ways to assess additionality in carbon accounting when it is applied to bigger emission reduction and biosequestration projects

1 |  Apply a test to each activity. 

This approach requires that each carbon project undergoes a detailed assessment or test to provide evidence that the activity is over and above business as usual.

This may involve some form of audit by an independent third party and is the project-based approach that is used in the Clean Development Mechanism (CDM) that determines compliance under the Kyoto protocol. 

It is also the approach taken by the major voluntary market carbon accounting standards such as the Verified Carbon Standard.

2 | Make certain activities automatically additional.

This is the so-called ‘positive list’ approach where activities are assessed and designated as additional by some certification process.

Projects do not have to be assessed for additionality if the activity undertaken for emission reduction or sequestration is on the positive list.

Making a list simplifies things but begs the question of what activities should make the list and how such a decision is made. 

The peculiar carbon accounting rule

Carbon accounting rules are designed to cover a number of different things.

We want them to ensure accuracy so that any emissions reductions are real and where money can be made we want to make it hard to game the system.  

Additionality is a key rule that at first glance seems counter intuitive. It sets a barrier that has to be hurdled before a claim on emission reduction is real. This makes the whole process harder. and may not be efficient if an emission reduction target is set.

Plus, if we all turned our lights off when we went to bed there would be no net benefit to overall emission reduction from installation of timer switches... just a saving in energy use. 

Links to the science and policy

If you would like to find out more, click on the authors below that link to some scientific papers on this topic...

Schneider, L. (2009). Assessing the additionality of CDM projects: practical experiences and lessons learned. Climate Policy 9(3) 242-254

Shrestha, R. M., & Timilsina, G. R. (2002). The additionality criterion for identifying clean development mechanism projects under the Kyoto Protocol. Energy Policy, 30(1), 73–79.

Zhang, J., & Wang, C. (2011). Co-benefits and additionality of the clean development mechanism: An empirical analysis. Journal of Environmental Economics and Management, 62(2), 140–154.

Usually the links go to the websites of the publishers of this material. In some cases it is possible to find out more by entering the title of the paper into Google Scholar.