Climate finance

Additionality

The requirement that an intervention creates a result beyond what would otherwise have occurred.

Example

A project assessment examines regulation, finances and likely alternatives.

The catch

Additionality is a counterfactual judgement that needs supporting evidence.

Related terms

Counterfactual, Abatement cost, Baseline scenario, Beyond value chain mitigation, Buffer pool, Carbon allowance

In more depth

Additionality, explained.

Additionality is the test that decides whether a carbon credit paid for a change in the world. If the reduction would have happened anyway, the credit adds nothing, and a buyer who counts it against their own emissions reports a cut the atmosphere never saw. The ICVCM makes additionality one of its Core Carbon Principles, under which the reductions must depend on the incentive that carbon credit revenue creates.

Programmes examine it from several angles. A regulatory check comes first. If the law already requires the activity, the project fails that check, and landfill gas collection, for instance, is mandatory at many regulated sites. Financial analysis then asks whether the project could earn an acceptable return without carbon income. Some programmes also look for barriers that credit revenue helps overcome, or check whether the technology is already common practice in the region, since one more copy of a widespread project is hard to attribute to carbon finance.

A frequent confusion is with the baseline scenario. The baseline estimates what emissions would have been, while additionality asks whether the project itself would have gone ahead. A project can pass one test and fail the other, so a credible credit needs both. Use the word about a specific activity, judged against a stated counterfactual and backed by documents such as the financial model and the legal review.