By Jennifer Weiss, Vice President, Communications and Business Outreach, Climate Action Reserve
In order for greenhouse gas (GHG) emissions reductions to earn offset credits, the GHG reductions must be real (have actually occurred), permanent (provide lasting benefits to the environment, often defined as 100-years of sequestration or reduction), verified (reductions are confirmed by an independent, accredited third party), enforceable (reductions are subject to penalties for non-compliance and reversal), and additional (reductions occurred because of the incentives associated with the carbon market and are above business as usual practices).
Additionality is a key tenet of a carbon offset project. Carbon offsets represent GHG reductions that have been achieved through voluntary implementation as a result of the financial incentives provided by the carbon market. By requiring that offsets are not generated for GHG reductions that would have occurred anyway and issued only for activities above business as usual, additionality provides value and credibility to carbon offsets and carbon markets.
So how can additionality be determined?
The Reserve employs the performance standard threshold to assess project additionality. Under the performance standard approach, research is conducted up front to determine common practice and activities above common practice. GHG reduction activities that fall within the “business as usual” class are presumed to be financially viable without access to GHG credits, meaning they are not additional. GHG reduction activities above and beyond business as usual activities are presumed to be additional. Benefits of employing a performance standard for offset programs include:
Project-level financial additionality assessments may seem like a valuable barrier analysis for proving the additionality of projects; in practice, requiring such assessments is counter-productive, for the following reasons:
The Climate Action Reserve has taken a standardized baseline approach to development of our protocols to address the question of financial additionality and take this aspect of project development out of the hands of project developers, who may have the incentive to select the financial scenario that best supports maximizing the quantity of credits (or receiving any credits at all). Our high quality credits represent the credibility, value, and efficiency of setting a high quality performance standard for GHG reduction activities.
When considering offsets and the processes under which they were developed and issued, it’s critical to look at the level of additionality and the method used to determine the additionality. Offset credits that are not additional are not true offset credits.
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