The Climate Trust determines project additionality on a project-by-project basis. The applicant must present their case for a project's additionality to be assessed by The Climate Trust.
Additionality Guidance
Additionality is the criteria used to define a carbon offset project. The term comes from describing carbon offset emission reductions as those that occur in addition to business-as-usual.
Applicants are encouraged to use a barriers test to demonstrate additionality. In essence, this test is a discussion of the barriers faced by the proposed project and how The Climate Trust's carbon funds will be used to overcome those barriers. Barriers may include:
Investment barriers:
Debt funding is typically not available for the project.
Lack of access to capital markets due to perceived risks.
Real and/or perceived risk associated with the technology prevent investment.
Technology barriers:
The project is one of the first applications of the particular technology in the country/region.
Labor resources needed to operate and maintain the technology are not available.
Country/region does not have infrastructure needed to implement project.
Other barriers:
Management lacks experience using the project’s technologies.
Lack of awareness of the environmental benefits of the project.
Key additionality points:
Economic returns do not necessarily make a project non-additional. There are instances where projects with high rates of return remain unimplemented – the energy efficiency sector is the most well know of these examples. To demonstrate additionality for projects that generate rates of return, it can be useful to describe the barriers faced by the project. Include a clear explanation of the project's return rate with a proforma financial analysis showing both the with and without project case.
For example, Company Y typically does not pursue project activities unless they provide a 25% rate of return. An energy efficiency upgrade at the facility will generate a 15% rate of return. The additionality case is that Climate Trust carbon funding can be used to increase the return of the efficiency measures to a level that is acceptable to management.
"Future Requirement": Another essential offset project element related to additionality is The Climate Trust’s requirement for future implementation. This means that project activities cannot start until they receive Climate Trust funding.
This graphic (.pdf) illustrates at which point in the project development cycle it is best to seek offset funding.
Guidance for Developing a Baseline
The baseline provides a clear understanding of the carbon dioxide emissions that would occur without an offset project being put into place. Often referred to as the "business-as-usual" case, a baseline is the existing or projected greenhouse gas emissions in the absence of the project. The quantity of offsets generated by a project is the difference between the "with-project" emissions baseline, and the "without-project" emissions baseline.
The baseline methodology must explain the most likely "without-project" scenario. In an effort to reduce the project preparation costs for Phase I project applicants, the Trust does not require an extensive baseline study be performed for each project. Instead, the Trust requires project applicants to develop their own project baseline using best available data with the understanding there may be a degree of uncertainty involved. Final baseline development takes place in the later stages of the project selection process.
Information that can help support the presentation of a project baseline:
Experiences from similar projects. For example, if a particular inefficient technology is the industry standard it can be used as the baseline case.
Studies or surveys that demonstrate that the project differs from prevailing practice.
Communications or minutes from meetings from the developer indicating that the baseline case is the most likely scenario for the project.
Independent expert assessments.
Clearly stated references for all data and assumptions used in the baseline.
Other Resources on Additionality and Baselines
The Greenhouse Gas Protocol: This collaboration between the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD) has created a variety of resources for project developers.
The Project Quantification Standard (.pdf) is the result of the GHG Protocol’s collaborative effort to develop standards for carbon offset projects. This Document contains guidance on how to perform a barriers test as well as resources for baseline development and carbon offset quantification.
Prototype Carbon Fund: The World Bank’s Prototype Carbon Fund is one of the world’s largest buyers of carbon offsets. The Project section of their Website contains information on the carbon offset standards and measures used for each of their projects.
Clean Development Mechanism (CDM): Part of the Kyoto Protocol, this body reviews and approves project based offsets located in developing countries.
This link contains project-specific information on baselines and monitoring and verification.
The CDM website also has a helpful guide (.pdf) on how to assess additionality (note: The Climate Trust does not require a project’s additionality presentation to be as detailed as is required in this document).
OECD Framework for Baseline Development: This report (.pdf) by the Organization of Economic Development (OECD) describes the main approaches and issues involved in developing a baseline.
