carbonparadox.org

How wonderful that we have met with a paradox. 

Now we have some hope of making progress. (Niels Bohr)

Day 7: Additionality Paradox

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A full week has passed, and we haven’t discussed additionality yet. Today, we need to catch up. 

A project can only earn carbon credits if considered “additional.” This means that carbon finance made the project possible (although that doesn’t necessarily mean it paid for every element of the project). 

Carbon finance can de-risk speculative investments in some cases, while in others, it is used to jump-start new activities that will become profitable over time. In very few cases, it pays for an activity, such as industrial carbon capture and storage, that wouldn’t exist if not for carbon finance. 

Here is the paradox: The most efficient, impactful projects—those that bring significant benefits to local communities—often face the highest risk of not qualifying as “additional.” 

Conversely, the projects deemed most “additional” frequently lack a business case and remain fully dependent on ongoing carbon credit funding to stay viable. 

This is one of the most fundamental paradoxes of carbon credits–what’s your view?

Comments

4 responses to “Day 7: Additionality Paradox”

  1. H. Gijs J. Van den Dool Avatar
    H. Gijs J. Van den Dool

    Great discussion ongoing under the LinkedIn post:
    https://www.linkedin.com/posts/renat-heuberger_carboncredits-cdr-carbonmarket-activity-7271087197947109376-Iuwx

    Additionality is one of the more complex aspects of Carbon Accounting and is not easy to understand.

    Reply
  2. Tim Reutemann Avatar
    Tim Reutemann

    Additionality is some deep nonesense and deserves unpacking.

    Financiers want a project (e.g. Chinese Windmill) that requires exactly one additional dollar to be viable and account for a million tCO2 reduced. Obviously, that project is also the most likely to lie about needing that extra dollar.

    On the other hand, clear additionality is only given when 100% of the project cost are covered by sale of carbon. Those projects tend to come to an end when the crediting period is over and be unable to maintain long term transformation operation.

    In theory, additionality is a property of each individual ton – so the first project should only receive enough carbon to create exactly one dollar – something like 0.03 tCO2. And once those 30 kg are issued, any further reductions by the same windmill are now the baseline. Noobody does this, and it is not really viable as no buyer is willing to name prices that could serve as reference for the number of tons needed to make the project viable.

    In operationalisation, additionality is just a numbers manipulation game with a LOT of arbitrary and more or less random decision (most prominently, lengths of the crediting period). To be honest, I think the concept needs to go out the window and be replaced by something simpler and less manipulable like simple national whitelist of project types.

    Reply
    1. Chetan Aggarwal Avatar
      Chetan Aggarwal

      I agree to an extent – I personally would prefer the requirement of on-going financial need at every renewal of crediting period (5 year). Unfortunately, not many standards have that. Gold Standard has it, but is a bit rudimentary in my opinon

      Reply
  3. Marco Avatar
    Marco

    There is yet another paradox hidden in the Additionality Paradox – let’s call it the Success Paradox:
    It highlights the contradiction where the success of a carbon-credit-enabled technology ultimately undermines its qualification for additionality, leading to public skepticism.

    Let’s say a certain type of renewable energy project is deemed additional in year X. Carbon credits subsidize its proliferation, helping it achieve scale. Over time, the project type becomes so successful (partially due to carbon credits tipping it over the tipping point) that it is no longer deemed additional. The public may then retroactively claim that these projects were never additional in the first place, ignoring the crucial role carbon credits played in creating that success.

    Reply

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