Sounds like a boring topic, right? We don’t blame you, it kind of is! But it’s also one of the most important principles to understand to effectively combat climate change. If you implement the concept of additionality in your decision making, it could be the difference between making a real change, or falling victim to greenwashing.

WARNING: If you finish this article, you’ll be taking the ‘red pill’. This means you’ll have Neo-like knowledge and powers to stop greenwashing organisations in their tracks.

Swallowed the red pill? Good choice! Now to the nitty gritty. In this article, we’ll cover:

1. What is additionality?
2. Why is additionality important when choosing to plant trees or buy carbon credits?
3. Who determines what qualifies as additionality/who enforces it?
4. How can I spot when an organisation isn’t following the principle of additionality?

What is additionality?

In the context of climate change, additionality can mean two things:

• When Planting Trees: Without my donation, would the tree have still been planted? In other words, does my donation equate to an additional tree in the ground?

OR

• When Purchasing Carbon Offsets: Does this offset represent an emission reduction or carbon removal relative to a counterfactual baseline that would not have taken place but for the offsetting activity?[1] In other words, credits can only be issued for new projects, not forests that were/would have already been planted without the prospect of receiving carbon credits.

Let’s break that down. Additionality when planting trees is relatively straightforward – you want to make sure that your donation will actually plant a new tree. A tree that wouldn’t have been planted anyway. So, for the rest of this article, we’ll focus mainly on carbon offsets.

This might be a good time to note that TreeTime doesn’t sell carbon credits, so we have no horse in this race! We just want the best result for you and the environment.

Additionality in the carbon offset space is more complex and open to a greater degree of subjectivity when considering the counterfactual baseline. But when we know what to look for, and avoid the red flags (discussed later), we can confidently make this assessment.

An example of an additional offset:

• ABC offsetting limited finances a forestry project in 2022 for the purposes of permanently sequestering carbon to be sold as carbon credits. If you purchase a carbon offset from ABC’s project, you are purchasing an additional credit. ABC’s project wouldn’t have been planted without the prospect of your carbon purchase.

N.B. This example also summarises how a carbon credit is supposed to work. The purpose of a carbon credit (in the forestry context) is to incentivise and reward landowners and entrepreneurs for sequestering carbon. Emitters, such as companies and individuals like yourself, purchase these credits to offset their carbon footprints.

An example of a non-additional offset:

• A local farmer, Cady, has had native forest growing on her farm for 30 years. XYZ offsetting limited comes along and offers to create and sell sequestration from Cady’s Forest as carbon credits. Cady happily accepts this free money, and XYZ sells her carbon credits to you and takes a hefty commission. There is no additionality here. Your carbon credit purchase made no difference to the environment, as it did not result in, or incentivise, any new sequestration.

Why is additionality important when choosing to buy carbon credits?

You may be thinking, shouldn’t all sequestration be rewarded with carbon credits? Isn’t a tonne of carbon removed equal to a tonne of carbon removed, period? It’s a perfectly good question. But unfortunately, not all sequestration is equal.

N.B. there are different types of projects from which carbon credits are issued. For example, many people will pay a premium for sequestration generated from a native tree project due to the additional biodiversity values. Other credits may be from an exotic plantation, which sequesters carbon faster but has less net benefits to the environment.

To explain the difference between sequestration from an additionality perspective, it’s important to know why carbon credits exist. As mentioned above, they exist as functional mechanism to incentivise carbon removal activities (like tree planting), and disincentivise carbon emitting.

We don’t want to get too sidetracked here, but there are two types of carbon markets. One is a compulsory market, where certain industries and emitters are forced by law to purchase carbon credits to offset their emissions. In New Zealand this comes under the Emissions Trading Scheme (ETS).

The other is the voluntary market. As the name would suggest, businesses outside of the compulsory market scope, as well as individuals like yourself, can purchase carbon credits optionally. The voluntary market has been picking up traction over the last few years, as consumers have become more demanding with sustainable practices. For example, a business can become ‘carbon-neutral’ by purchasing as many credits as it emits.

N.B. Carbon offsets in the voluntary market are largely unregulated (currently). They are issued through private certifiers, instead of central government. These certifiers will usually issue carbon credits to a project when it meets their internal standards for environmental integrity, although often a third-party standard is used. Certifiers are usually the organisations you purchase credits from. Make sure the standard they use includes additionality as a prerequisite (more on that later).

So, what does all this have to do with additionality and sequestration from old vs new forests?

Firstly, the simple answer is that environmentally it’s a better result when your offset purchase comes from new activities like tree planting. New activities = new sequestration = more sequestration. More is better!

The other reason that additionality is so important, and why offsets should be limited to only new sequestration, has to do with money. That’s right, cold hard cash!

Let us explain. The price of carbon credits fluctuates like any market mechanism, based on demand and supply. As people who care about the environment, You and I want demand for carbon credits to outweigh supply, which causes the price to rise. A higher carbon price means more incentive for landowners and businesses to plant trees or undertake other carbon reduction activities. This means a better result for Mother Earth!

By limiting the issue of carbon credits only to those who undertake new (additional) activities, we are ensuring the supply side of the equation will result in a better outcome for the environment by way new (additional) carbon reduction. It also incentivises people and organisations to create or finance carbon reduction projects who otherwise wouldn’t. This is what we need to combat climate change. Additionality limits supply, keeping the price higher and therefore incentivising greater net sequestration.

So, what happens when people start creating credits out of thin air for existing forests? Simply put, this does not help the environment further at a carbon level, as those trees were already planted and sequestering carbon anyway. It actually has a detrimental effect by creating a further supply of carbon credits therefore pushing the price down. This can make all the difference when it comes to investors planting new forests.

You also need to factor in the opportunity cost of buying a credit issued for an old forest. Because you’ve offset your footprint with non-additional credits, you now no longer need to buy additional credits. On a larger scale, this reduced demand has a serious impact on the feasibility of new projects, particularly as new projects require capital to get off the ground (and are therefore usually more expensive).

At this point you may be thinking, hold on – this all sounds very capitalistic, didn’t capitalism get us into this mess? Well, there may be some truth in that, but we’re not here to get political! We all want our respective governments to do the heavy lifting and introduce effective climate policy, but this is often wishful thinking. The carbon credit market is a way for individuals and businesses alike to take action. Higher prices put pressure on emitters to change the way they operate and become more sustainable.

 

Who determines what qualifies as additionality, and who enforces it?

Look, we’re going to be honest with you here… we started composing the answers to these questions, but quickly realised to do it justice it will require a whole (large!) blog post in itself. We realise this is a bit of a tease, but we promise to follow up with this shortly!

In the meantime, we’ll whet your appetite with a brief overview.

At a basic level, the actual definition of additionality is somewhat fluid and changes slightly depending on the authority. However, the importance of the principle has been constantly advocated for by organisations such as the United Nations, top universities and climate scientists, central governments, reputable certifiers, and non-profits. See some material linked at the bottom of this article for more info on this!

At an enforcement level, central governments around the world have different methods of regulating the voluntary carbon market. In many cases no real enforcement exists, as regulations are tenuous, or non-existent (currently!).

However, we’re happy to tell you that regulations surrounding the voluntary market are changing annually, if not monthly. This is very good news, as greater regulation equates to carbon credits with a higher standard of environmental integrity.

At the current point in time, the simplest answer is that YOU ensure a credit you purchase meets the additionality test, and it’s up to you to enforce this with your wallet. 

 

How can I spot when an organisation isn’t following the principle of additionality?

Now that you have a firm understanding of additionality, you’ll be able to put your skills to use when choosing to offset your carbon footprint.

If you are dealing with a tree planting organisation, look for a mention of additionality on their website, or other proof evidencing unique trees resulting from donations. If in doubt, ask the provider directly. It’s a simple yes or no question in this context. If they can’t say yes, or goes all Jack Nicholson on you, the truth is really no!

When choosing to purchaser a carbon offset, it gets a bit more complicated. This is because the provider has to show that their project would not have occurred without the prospect of receiving credits. But don’t let that deter you! According to a 2021 investigation by Quartz, 48% of offset providers manage to reach this high standard.[2]

So without further ado, here are the red flags to look out for:

• No mention of additionality on their website:

Organisations that meet the principle of additionality are usually more than happy to share that information with you. Generally, they will have an explanation of how their project meets the ‘new’ threshold. If you can’t find the word ‘additional’ on their website, or no explanation of how and when their project was initiated, they probably don’t meet the standard!

• They try to persuade you that additionality isn’t important:

Sometimes an organisation will come under fire for not meeting the additionality threshold. They may try to convince you that additionality isn’t important. Take this with a grain of salt. At the end of the day though, it’s up to you to decide.

• When the price seems too good to be true…:

You know what they say… and it’s no different when it comes to carbon offsets. The truth is, carbon reduction via new projects is an expensive task, particularly forestry. You have to account for land, seedling costs, planting costs, weeding, maintenance, fencing, pest control, administration/salaries, replacing tree mortality, carbon assessments, technical costs, tax etc. You get the picture. If you are being offered a credit for an absurdly low price (i.e < $10), it is almost certainly a non-additional credit.

There you have it, thanks for reading! If you are wanting to buy carbon credits and would like recommendations on some reputable providers, get in touch! We’ll be happy to point you in the direction of some amazing organisations!

If you’d like to know more about additionality, or want to dive into more technical resources, feel free to check these out:

Oxford

https://www.smithschool.ox.ac.uk/sites/default/files/2022-01/Oxford-Offsetting-Principles-2020.pdf

https://qz.com/2009746/not-all-carbon-offsets-are-a-scam-but-many-still-are/

https://www.un-redd.org/glossary/additionality

https://www.goldstandard.org/sites/default/files/additionality_under_article_6.2_of_the_paris_agreement.pdf