As a starting point for our review of project additionality, it’s worth stepping back for a second and posing a motivating question: what’s the big deal about additionality?
It’s helpful to define terms, so here once again is a stock definition of additionality:
Additionality: Emissions reductions are “additional” if they occur because of the incentives associated with the existence of GHG markets. A variety of additionality “tests” have been proposed, but at its root demonstrating additionality means showing that the emissions reductions being used as offsets are not “business as usual.”
The concept has intuitive appeal — of course you want your money to fund greenhouse gas reductions that wouldn’t have happened otherwise. But some have argued that additionality in its purest form is more of a noble ideal than a practicable concept, and ultimately the quest for additionality serves to distract us from the higher order goal of improving the environment.
Critics of additionality come at the issue from a few different angles. The first is that strict additionality doesn’t really matter, as long as the money from offsets goes to activities that we want to encourage. If we want to see more wind farms, for example, we should create new revenue streams for wind developers by allowing offsets to be sold from wind energy.
According to this view, offsets should be thought of like any other subsidy. We know that traditional subsidies reward some behavior that would have happened anyway, but it’s logical to assume that, on the margin, subsidies tend to encourage more of the activity being subsidized. Even if individual projects don’t meet strict additionality tests, in aggregate the channeling of funds to a given sector should help that sector to thrive.
The Bonneville Environmental Foundation succinctly expresses this point:
We believe that replacing an objective, independently verifiable record of the value of renewable generation — fundamentally, that any megawatt-hour of renewable generation is offsetting a megawatt-hour of fossil-fired generation — provides a far more sound basis for quantifying and commodifying carbon offsets than any subjective evaluation of “additionality.”
The quote is a little dense, but the gist of it is: clean energy good, fossil-fired energy bad. Allow developers to sell offsets from any megawatt of clean energy, and stop butting heads in an endless debate over whether the clean energy would have happened anyway. The end result will be more clean megawatts.
Note that many consumers seem to implicitly endorse this view when they sign up for their utility’s green power program. These green power programs are exactly the same as one-third of TerraPass’ portfolio. We use Renewable Energy Credits (RECs) as a carbon offsetting mechanism — the same RECs that utilities sell as green power to their customers.
But until carbon offset retailers came along, no one much bothered to raise questions about the additionality of green power purchasing. Environmental policy types may have been asking these questions, but journalists and consumers didn’t seem too bothered.
Why is that? Maybe it’s just a question of timing, but more likely it’s because green power purchasing feels like a traditional subsidy. When you check the box, you feel as though you’re paying a surcharge to support a more expensive form of electricity generation. The additionality of your few pennies per kilowatt isn’t particularly salient. (Note that I am not suggesting green power programs would fail an additionality test. I’m just pointing out that very few seem really to care about the question.)
So the offset-as-subsidy argument is one critique of the strict definition of additionality. A second critique is conceptually related, but springs from a very different source. Namely, some critics don’t like the concept of additionality because they think the whole idea of a market in carbon emissions is bunk. They acknowledge that many carbon-reducing projects are good causes, but they object to the way that such projects are used to offset emissions from polluting industries. The solution, they feel, is to rescue the worthy projects from the market by abolishing the notion of additionality (and offsets) altogether.
Tree-planting projects are a useful case in point. Poor trees. There was a time several years ago when we liked trees on their own merits. We wanted to protect virgin growth forests, safeguard tropical areas, and plant new trees where old ones had been cut down. We liked trees because they do all sorts of useful things, such as creating oxygen and providing habitat for diverse species.
They also happen to sequester carbon. Which allowed them to get looped into the carbon markets. Which encouraged some bad tree-planting projects (along with the good ones) and plenty of dubious claims about the global warming impact of reforestation. Which led to a lot of bad press for trees.
The solution, according to some critics, is to stop making claims about additionality. Uncouple projects from markets, and allow people to support the projects on their own merits if they so choose. In this view, the concept of additionality is a form of annoying rhetorical overreach that otherwise worthy projects couldn’t hope to live up to.
So that’s the case against against worrying about additionality. Next up: the case for additionality.