In this post, you’ll find:

• Why additionality is the most important factor in evaluating carbon credit quality
• An overview of additionality and its role in ensuring genuine environmental impact
• Key methods for assessing additionality, including financial, regulatory, and common practice factors
• The challenges of evaluating additionality in real-world projects and the need for thorough due diligence
• How CNaught ensures the additionality of projects

Want to learn more? Sign up to receive our 5 part “Carbon Credits 101” email series.

‍Understanding Additionality

For companies purchasing carbon credits to meet their climate goals, ensuring that those credits come from high quality projects is crucial. While there are many factors to consider when evaluating project quality, additionality is by far the most important. Understanding this principle is fundamental because it directly impacts the quality and integrity of carbon credits. If a carbon credit is not additional, it effectively has no impact and does not bring your company or our planet closer to net zero. Relying on non-additional credits for climate claims can also expose your company to accusations of greenwashing and other reputational risks.

In this blog, we deep dive into what additionality actually means, challenges in the assessment process, and how you can ensure your projects are additional. You can also see our blogpost on "What are Carbon Credits?" to get a refresher on the basics.

What does additionality mean?

A carbon project is considered additional when its emissions reductions or removals would not have occurred without the funding from carbon credits. The project must go beyond 'business as usual,' and provide genuine environmental benefits that would not otherwise have happened. Additionality is complex to measure as there are multiple factors that impact it; we dive into some considerations below.

How to assess additionality

Additionality is not easy to assess. Doing it correctly requires one to compare the real world where the project exists, to a hypothetical world in which the project does not exist. Because it is impossible to know what would have happened if a project did not exist, we instead conduct multiple assessments that get at the comparison to the counterfactual. For instance, we examine:

• Common practice additionality: Are the project’s activities already standard in its region or sector? If similar initiatives are widespread without carbon funding, the project may not be additional. 
• Financial additionality: Did the project require revenue from carbon credits to be financially viable? If the project required this funding, it is more likely to be additional. 
• Regulatory additionality: Are the project's activities required by law or other regulations? If a project is merely complying with legal requirements, it cannot be additional.

Let’s put this into practice with some simple examples.

Example of a Non-Additional Carbon Project

A project developer in the United States seeks to develop a wind farm project that, with support from government tax credits and investors, should generate meaningful profits. The developer wonders whether they might sell carbon credits to boost their profit margin even further.

This project is not additional because the emissions reductions would have happened regardless of the carbon credits. Purchasing credits from this project would not contribute to additional environmental benefits.

It is important to note that this does not mean the project is no longer good for the environment. We love wind projects! But additionality requires more than positive climate impact; it requires positive climate impact that would not have happened without carbon credits.

Example of an Additional Carbon Project

A project developer initiates a reforestation project in a region where deforestation is a significant problem. The project aims to restore a degraded forest area, which requires significant investment in tree planting, community engagement, and long-term maintenance. However, the government neither requires nor subsidizes the reforestation, and without carbon credits, there is no financing to carry out the project.

This reforestation project is additional because the carbon credits provide necessary funding for the project. The emissions reductions achieved by capturing CO2 through tree growth are directly tied to the carbon market. Without the income from selling carbon credits, the forest restoration, and its associated environmental benefits, could not occur.

You understand additionality. Now what?

Unfortunately, evaluating the additionality of a real carbon project is far more complicated than these simple examples. Doing this work properly entails extensive documentation review, research, and technical analysis. It’s almost never good enough to rely on simple heuristics, like a project being listed on a carbon registry or permissible for a standard. This in-depth due diligence often requires more capacity and resources than a small sustainability team has.

We’re here to help! At CNaught, we make it easy for you to follow additionality best practices. Every project in our public portfolios has been carefully vetted for additionality, both by our internal science team and by top third-party rating agencies. We help you save time and make more informed, responsible carbon credit purchasing decisions.

To learn more about how CNaught can help reduce your carbon footprint, reach out to our team here. And make sure to sign up for our newsletter so you don’t miss the next post in our “Carbon Credits 101: Understanding the Basics” blog series!