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The Concept of Additionality under the UNFCCC and the Kyoto Protocol:
Implications for Environmental Integrity and Equity
Charlotte Streck
1. Introduction
The concept of additionality is a recurrent theme in discussions of international and domestic climate
legislation and investments. Additionality in the context of the UN Framework Convention on Climate
Change (UNFCCC) 1 refers to an effort that is supplemental to the business-as-usual (BAU) scenario in at
least two areas: (i) the additionality of financial contributions of developed countries to mitigate climate
change in developing countries; and (ii) the additionality of greenhouse gas (GHG) emissions generated
by mitigation activities.
Additionality of financial resources is the price that developing countries demand for their participation to
resolve global environmental problems in the context of the UNFCCC and the Kyoto Protocol (KP) 2 . 3
While the additionality of finance is difficult to establish, it is less controversial than GHG additionality, in
particular where such emission reductions are used to offset emissions in developed countries. Over the
last decade the definition of additionality of GHG reductions has become increasingly restrictive. Today,
additionality most commonly refers to the causality between international financial support for an activity
and the extent to which the activity would have happened in the absence of such support. Where a GHG
reducing activity would have been implemented in the absence of carbon finance, the project or program
disqualifies as non-additional, regardless of the number of emission reductions it yields.
Despite a decade of attempts to define additionality, the concept continues to be poorly understood and
its application contested. The most important reason for the controversies around additionality lies in its
counterfactual nature that makes it impossible to ever prove additionality. The testing of additionality
generally involves the establishment counterfactual reference scenario against which reality is gauged.
Unfortunately, international negotiations have rarely defined guidelines for the establishment of reference
scenarios and the application of the additionality criterion has proven treacherous in practice.
The desire not to compromise environmental integrity of GHG emission reductions has led to extensive
elaboration of the application of additionality under the Kyoto Protocol’s clean development mechanism
(CDM). The CDM’s governing body, its executive board, advocates a strict interpretation of additionality
and requires the project-specific proving that carbon finance is causal for a project. An increasingly
restrictive interpretation of additionality reduces the supply of offsets from the CDM, a political goal that
has been welcomed to stimulate emission reductions in the industrialized world. However, the restrictive
interpretation of additionality under the CDM also reduces the funding of the GHG reducing projects in
the developing world. While financial flows under the CDM have effectively been restricted by
additionality, additionality of finance of contributions of developing countries to international climate
В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В UN Doc Distr General A/AC.237/18 (Part II)/Add.1, 15 May 1992.
FCCC/CP/1997/L.7/Add.1,Decision 1/CP.3 Adoption of the Kyoto Protocol to the United Nations Framework
Convention on Climate Change, Annex, reprinted in (1998) 37 International Legal Materials (ILM) 22.
3 Andrew Jordan, Jacob Werksman, Additional Funds, Incremental Costs and the Global Environment, RECIEL,
Volume 3, Numbers 2/3, pg.81-87, 83.
1
2
1В В funds has rarely been checked. Neither has the environmental risks of offsetting of emissions in developed
countries through land-use activities received much attention.
The negotiations of the architecture of a post-2012 climate agreement call for a reform existing
mechanisms, such as the CDM, and require the design of new and effective institutions to govern
significant financial flows into the low carbon development of developing countries. While the concept
remains contentious, additionality is likely to continue to be an important criterion for climate finance
beyond 2012. The ongoing climate negotiations therefore provide an important opportunity to clarify the
application of additionality in finance as well as with respect to GHG reducing activities.
This paper aims at informing the ongoing negotiations by summarizing the main arguments underlying
the debate around additionality in the CDM. The argument supported by this paper is that establishing
additionality is inherently political. Instead of trying to make the case for additionality in each single case
through the application of quasi-scientific criteria, it is argued that the testing of additionality should
consist in a testing against a list of eligibility criteria. Such criteria would enable policy makers to exclude
certain, non-additional activities from carbon finance, while creating transparency and predictability for
all stakeholders. The paper argues that the establishment of additionality through clearly defined and
objective requirements will lead to better and more predictable outcomes than the current project-specific
additionality test of the CDM executive board and strengthen the overall legitimacy of the mechanism.
This paper is organized into three parts. The first part summarizes the evolution of the concept of
additionality under the UNFCCC and the Kyoto Protocol. The second part reviews the discussion around
the additionality concept and refutes some common errors about the additionality debate. The third part
reviews and proposes methods to establish additionality of GHG reductions with a view of creating an
applicable and acceptable concept that mutes the persisting controversy on additionality.
2. Defining Additionality in International Climate Policy
2.1. Financial Additionality
The 1992 UN Conference on Environment and Development (UNCED) marked a shift in the history of
international environmental law. For the first time, consideration of development was explicitly
introduced into international environmental policy. 4 Complex environmental problems such as climate
change require engagement with developing countries for long-term sustainable management of natural
resources. However, developing countries refused responsibility for global problems they attributed that
were the tainted legacy of developed countries’ historical patterns of industrialization and consumption.
Consequently, developing countries made their actions conditional on the availability of new and
additional resources for global environmental action from developed counties (financial additionality). 5
Since the early 1990s, the access to “new and additional” funds has been a central demand of developing
countries’ negotiation strategy in international environmental talks. 6 As such, the term “additional” refers
В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В 4
 Dan Bodansky (2010), The Art and Craft of International Environmental Law, Harvard University Press.  The 1990 London Amendment of the Montreal Protocol, for example, expressly state that fund contributions “shall
be additional to other financial transfers to” developing countries Report of the Second Meetings of the Parties to the
Montreal Protocol on Substances that Deplete the Ozone Layer, U.N. Doc UNEP/OzL.Pro.2/3 (June 29, 1990), Annex
II, art. 10, para. 6; http://ozone.unep.org/Ratification_status/london_amendment.shtml (accessed 22 September
2010).
6 Jordan, Werksman, p. 82.
5
2В В to funding supplemental to existing financial transfers of existing development aid. 7 / 8 Establishing the
additionality of finance remains challenging; so far no clear criteria have been defined to distinguish
“new” budget allocations from the diversion of existing official development funds. Until today, it remains
unclear how much of the financial contributions of developed to developing countries under the UNFCCC
is indeed additional. 9 Nevertheless, the current discussions of a post-2012 climate agreement and the
need for enhanced resources for climate change mitigation and adaptation have revived the discussion of
additionality of finance. The 2009 Copenhagen Accord negotiated at the 15th session of the conference of
the parties to the UNFCCC (CP) reads:
The collective commitment by developed countries is to provide new and additional resources,
[…] through international institutions, approaching USD 30 billion for the period 2010 –2012. 10
To ensure the availability of finance for mitigation and adaptation, developing countries demand the
measurement, reporting and verification (MRV) of financial support next to the MRV of mitigation action
in developing countries. 11 However additionality of finance is not only relevant at the point of mobilizing
resources. It is equally difficult to grasp at the point of delivery. The transfer of financial resources to
developing countries under the UNFCCC was proposed to offset the various costs of implementing the
Convention’s general commitments as well as to compensate for the costs of adaptation. 12 While the
Convention makes the contribution of financial resources to developing countries mandatory, it does not
identify specific level of funding. According to Article 4.3 and 4.7 of the UNFCCC as well as Article 11.2 (a)
and 13.4 (g) of the Kyoto Protocol, the implementation of climate change mitigation measures by
                                                            UNEP, Interpretations of Phrases “Adequate, New and Additional”, “New and Additional” and “Adequate and
Additional” Financial Resources, Note by the Secretariat, UNEP, Bio.Div./N4/Inc2, Forth Session of the
Intergovernmental Negotiating Committee for a Convention on Biological Biodiversity, Nairobi 23 September – 2
October 1991.
8 In 1999, EU commission had issued guidance to CDM investors by stating that “official development finance and
GEF should only be supplementary to private funding.[...] ODA within the framework of [the] CDM [...] would have
to be targeted to areas where the public sector has a comparative advantage over private investment and where
additional social benefits are to be expected.” But the Commission made also clear that ODA should not be used to
finance the acquisition of certified emission reductions (CERs). (EU Commission (1999), EC economic and
development co-operation responding to the new challenge of climate change, Brussels: Working document of 3
November 1999, p. 11 and 12.) The result was understood to be in many cases equivalent to the incremental cost
approach of the GEF, though with a more transparent treatment of incremental benefits. See: Kenneth M. Chomnitz,
Baselines for Greenhouse Gas Reductions: Problems, Precedents, Solutions; prepared for the Carbon Offsets Unit,
World Bank, Draft for discussion: rev.1.4, 16 July 1998. During the negotiations of the Marrakesh Accords developed
countries concurred – and ultimately prevailed – on a very broad definition of financial additionality. The CDM
modalities and procedures states that “public funding for clean development mechanism projects from Parties in
Annex I is not to result in the diversion of official development assistance and is to be separate from and not counted
towards the financial obligations of Parties included in Annex I. Preamble of Decision 3/CMP.1 (CDM modalities and
procedures), CMP 2005.
9 The European Union, through the European Council’s Economic and Financial Committee and Economic Policy
Committee Joint Working Group on the Financial Aspects of Climate Change, is currently waging another attempt to
formulate definitions to assess �additional’ international public finance for climate change. EU Presidency
Questionnaire on fast start finance (2010) EFC EPC Joint Working Group on the economic and financial aspects of
climate change, Brussels, 9 April, 2010. The Development Assistance Committee of the OECD has made several
attempts to issue guidance on how to account for transfers of funds and achieving additionality, but the term remains
vague and additionality of finance almost impossibly to prove. For a review of the various possible definitions, see:
Jessica Brown, Neil Bird and Liane Schalatek (2010), Climate finance additionality: emerging definitions and their
implications, Climate Finance Policy Brief No 2, Heinrich Boell Stiftung North America,
http://www.boell.org/downloads/Schalatek_Climate_Finance_Additionality_6-2010.pdf (accessed 18 July 2010).
10 Copenhagen Accord, 2/CP15, FCCC/CP/2009/11/Add.1, 30 March 2010.
11В В [add source]
12 Daniel Bodansky (1993), The United Nations Framework Convention on Climate Change: A Commentary, Yale
Journal of International Law, Vol. 18: 451-554, 523, 1993
7
3В В developing countries depends on the availability of finance provided by developed to the benefit of
developing countries:
They [developed countries] shall also provide such financial resources, including for the transfer
of technology, needed by the developing country Parties to meet the agreed full incremental
costs of implementing measures that are covered by paragraph 1 of this Article and that are
agreed between a developing country Party and the international entity or entities referred to
in Article 11, in accordance with that Article. (UNFCCC Article 4.3) 13
Eager to keep demands under control, developed countries traditionally have been careful to limit the size
of payment to developing countries to the costs of complying with environmental treaties. The concept of
incremental costs was introduced to exclude the financing of baseline costs and to limit claims to
financing the benefits of the global environment. The underlying assumption of the incremental cost
principle is that the relevant costs for complying with the UNFCCC are incremental rather than total.
Using financial or behavioral methods, the activity that is eligible to receive financing is to be compared to
the baseline scenario, to the activity it replaces or makes redundant. The difference in costs between the
realization of the two activities is the incremental cost. 14 The incremental costs are not only the measure
for eligible finance, they are also associated with the global environmental benefit of an activity, assuming
that the incremental costs and the global environmental benefits are corresponding concepts.
Although the general concept of incremental costs is fairly well understood, identifying the relevant costs
associated with a particular activity, can be very difficult, in particular where there are no baseline costs
from which to measure a country’s incremental costs. For that reason, the more pragmatic approach is to
agree on specific categories of costs to be funded rather than on a detailed methodology to define
“incremental costs”. 15 While the Global Environment Facility (GEF) that administers the financial
mechanism of the UNFCCC has never established a positive list on incremental costs, such approach was
taken under the London Amendments to the Montreal Protocol, where an enumerated list of incremental
costs was adopted by a decision of the parties. 16
2.2. Mitigation Additionality
Next to the financial additionality, Kyoto Protocol introduces a second meaning of “additionality”, namely
the additionality of GHG emission reductions (mitigation additionality). As in the case of additionality of
financial contributions of developed countries, measuring mitigation additionality requires the
establishment of a baseline. When used in the context of evaluating and calculating GHG-reducing or
removing activities, the requirement of additionality is expected to filter the positive net global
environmental benefits associated with such activity.
В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В 13
В Article 11.2 (a) of the Kyoto Protocol confirms that developed country Parties and other Parties included in Annex
II to the Convention shall “provide new and additional financial resources to meet the agreed full costs incurred by
developing country Parties in advancing the implementation of existing commitments under Article 4, paragraph 1(a),
of the Convention that are covered in Article 10, subparagraph (a)”. 14 GEF Council Document, GEF/C.4/10, Incremental Costs and Financing Modalities, 30 April 1995.
15 Daniel Bodansky, The United Nations Framework Convention on Climate Change: A Commentary, Yale Journal of
International Law, Vol. 18: 451-554, 526, 1993
16 UNEP, Ozone Secretariat, Handbook for the Montreal Protocol on Substances That Deplete the Ozone Layer 96
(1991); J.M. Patlis (1992),The Multilateral Fund of the Montreal Protocol, Cornell International Law Report, vol. 25
no. 1 , p. 181-230.
4В В Mitigation additionality is mentioned in Article 3.4 (relating to using land-use emission reductions to
offset industrial emissions in developed countries), 17 Article 6.1 (relating to joint implementation (JI) and
the transfer of emission reductions generated by investments in developed countries among those
countries), 18 and Article 12.5 (relating to the CDM and the creation of transferable emission reductions
generated by investments in developing countries to developed countries) of the Kyoto Protocol. In all
three cases, additionality refers to an activity reducing emissions (Art. 3.4) or the actual reduction in
emissions (Art.6.1 and 12.5) that need to be additional to what would happen in the absence of the
activity. The Kyoto Protocol refers to additionality both with respect to activities implemented in
developed (Art.3.4 and 6.1) as well as in developing (Art. 12.5) countries. The concept has gained most
prominence in the context of the CDM. In comparison, it has received comparatively little attention with
respect to JI and, surprisingly taking into account the relevance for the integrity of the Kyoto Protocol,
almost none with respect to using emission reductions and removals from land-use activities within
industrialized countries. In the CDM, in contrast, additionality has become the key concept defining the
environmental integrity of the mechanism.
2.2.1. Defining Additionality in the CDM
The Kyoto Protocol mandates that each certified emission reduction (CER) issued for a CDM project
should represent a real, measurable and additional emission reduction. Emission reductions under the
CDM must be “additional to any that would occur in the absence of the certified project activity”. 19 The
test of additionality is thus not identical and congruent with or fully covered and encompassed by the
requirement of “real, measurable, and long-term benefits” as mandated by Article 12.5 (b) Kyoto
Protocol; it is supplemental. Such testing mandates the establishment of a baseline scenario and the
assessment of emission reductions against that scenario. The mitigation benefits of a CDM activity have to
be measured against the counterfactual case of a world in which the activity or project would not take
place. Additional emission reductions (or removals) therefore describe the climate benefits of the relative
activity compared to the effects of displacement and leakage that relate to carbon effects outside of the
established boundary of the activity and which have to be deducted from the measured emission
reductions.
The 1997 Kyoto Protocol defines the concept of additionality but fails to operationalize it. The first
interpretations of additionality where brought forward by project proponents who developed early CDM
projects in anticipation of the Protocol entering into force. Early project proponents, in particular the
World Bank through its carbon funds and the Government of the Netherlands through its emission
reduction purchase tenders, read the CDM provisions and the additionality criterion as mandate to
establish a conservative BAU scenario (the baseline). On top of this, they applied the traditional concept
of financial additionality to CDM projects, which meant that no public money that would have been spent
anyway on climate-related action in developing countries could be relabeled as CDM. They did not think
that a separate additionality test was required. 20 This view seemed to be supported by interpretations of
the EU Commission that had issued guidance in 1999 clarifying that ODA should not be used to finance
the acquisition of certified emission reductions (CERs). 21 The Commission also stated that “official
                                                            17….“how,
and which, additional human-induced activities related to changes in greenhouse gas emissions by
sources and removals by sinks in the agricultural soils and the land-use change and forestry categories shall be
added to, or subtracted from, the assigned amounts for Parties included in Annex I..” Article 3.4 Kyoto Protocol.
18 …“Any such project provides a reduction in emissions by sources, or an enhancement of removals by sinks, that is
additional to any that would otherwise occur;..” Article 6.1 (b) Kyoto Protocol.
19 Article 12(5)(c) Kyoto Protocol.В 20 Terms of Reference, CER Purchase Tender (CERUPT), 1 November 2001.
21В EU Commission (1999), EC economic and development co-operation responding to the new
challenge of climate change, Brussels: Working document of 3 November 1999, p. 11 and 12.
5В В development finance and GEF should only be supplementary to private funding.[...] ODA within the
framework of [the] CDM [...] would have to be targeted to areas where the public sector has a
comparative advantage over private investment and where additional social benefits are to be
expected.” 22 The result was understood to be in many cases equivalent to the incremental cost approach of
the GEF, though with a more transparent treatment of incremental benefits. 23
In 2001 the CP interpreted additionality in the context of the Marrakech Accords that formulate, among
others, a set of decisions that guide the implementation of the CDM . 24 / 25 The Accords diverge in their
definition from the additionality concept of Article 12(5) KP when they replace the reference to the
additionality of the emission reductions of the Kyoto Protocol by a reference to the additionality of the
individual CDM project activity:
“A CDM project activity is additional if anthropogenic emissions of greenhouse gases by sources
are reduced below those that would have occurred in the absence of the registered CDM project
activity”. 26
In the light of the language of the Kyoto Protocol and as further elaborated by the CDM modalities of the
Marrakesh Accords, additionality can now be understood as the “requirement that the greenhouse gas
emissions after implementation of a CDM project activity are lower than those that would have
occurred in the most plausible alternative scenario to the implementation of the CDM project activity.
This alternative scenario may be the business-as-usual case (that is, the continuation of current
emission levels in the absence of the CDM project activity), or it may be some other scenario which
involves a gradual lowering of emissions intensity.” 27
However, the most powerful influence on the interpretation of additionality had the CDM executive
board, the body in charge of the daily administration of the mechanism. The executive board decided that
in addition to generating emission reductions below the baseline, a project activity would have to
demonstrate that it falls outside of the baseline scenario to be additional. 28 Project proponents have to
prove that the CDM was causal for the decision to implement or finance a project. In 2004, the board
adopted the “Tool for the demonstration and assessment of additionality” (the additionality tool, see Text
Box 1) as a general framework for establishing additionality. 29 The project-based additionality test
В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В 22В Ibid.
p. 12.
Kenneth M. Chomnitz, Baselines for Greenhouse Gas Reductions: Problems, Precedents, Solutions; prepared for
the Carbon Offsets Unit, World Bank, Draft for discussion: rev.1.4, 16 July 1998.
24 The Marrakesh Accords were adopted by the 7th session of the UNFCCC COP held in Marrakesh, Morocco, in
December 2001 and confirmed by the 1st session of the COP/MOP in Montreal in December 2005
FCCC/KP/2008/8/Add.1 Decision 3/CMP.1 (Modalities and procedures for a clean development mechanism as
defined in article 12 of the Kyoto Protocol).
25 The limited provisions Article 12 KP do not provide sufficient guidance for the creation of an operational
mechanism as complex as the CDM. Article 12(7) recognizes this by mandating the “The Conference of the Parties
serving as the meeting of the Parties to this Protocol [CMP] shall, at its first session, elaborate modalities and
procedures with the objective of ensuring transparency, efficiency and accountability through independent auditing
and verification of project activities.” The CMP is an assembly of all the Parties to the Protocol which convenes
annually and is the governing body of the Kyoto Protocol. The mandate of the CMP is broadly drafted. Article 13(4) of
the Protocol states that the CMP “…shall keep under regular review the implementation of this Protocol and shall
make, within its mandate, the decisions necessary to promote its effective implementation”.  26 Decision 3/CMP.1, Annex, para. 43 (CDM modalities and procedures), CMP 2005.
27 Baker & McKenzie, CDM Rule Book, Additionality, page 84: http://cdmrulebook.org/84, accessed 18 July 2010.
28 EB 8, Annex 1.
29 EB 39, Annex 10. This version replaces EB 36, Annex 13 (Version 04), EB 29, Annex 5 (Version 03), EB 22, Annex 8
(Version 2) and EB 16, Annex 1 (Version 1). See Baker & McKenzie, CDM Rule Book, Establishing additionality – the
additionality tool, page 86: http://cdmrulebook.org/86, accessed 18 July 2010. The latest version of the additionality
tool (Version 05) was adopted at the 39th session of the executive board.
23
6В В devised by the CDM executive board is to net off emission reductions that form part of the BAU baseline
but would happen also in the absence of the CDM.
The investment analysis sits at the core of the board’s additionality test. It requires that project
proponents demonstrate that the proposed project activity is economically less attractive than alternatives
or a financial benchmark. Proving investment additionality turns the incremental cost argument on its
head: Instead of establishing the incremental costs to quantify the size of the payment that developing
countries may receive from industrialized countries for their contribution to restore and limit harm to the
global environment, the investment analysis limits access to international payment if they are not
essential for the project. The incremental cost calculation is thereby relative to the overall investment
while the additionality test as required today implies a binary test which deprives non-additional projects
and activities from the benefit of international climate finance.
Text Box 1: The CDM Additionality Tool
The additionality tool sets out the following steps to demonstrate and assess additionality: 30
п‚·
Step 1: Identification of alternatives to the project activity
Step 1 involves two sub-steps. Sub-step 1(a) is directed towards the identification of realistic and
credible alternatives to the project scenario. In particular, project participants are required to
identify realistic and credible alternative(s) available to the project participants or similar project
developers that provide outputs or services comparable with the proposed CDM project activity.
Sub-step 1(b) is directed towards ensuring compliance with all mandatory laws and regulations.
This sub-step does not consider national and local policies that do not have legally-binding status.
Where analysis shows that there is widespread non-compliance in a country or region with
mandatory laws and policies, then a scenario involving non-compliance is a valid one which may
be considered.
п‚·
Step 2: Investment analysis
The investment analysis serves to determine that the proposed project activity is either (a) not the
most economically or financially attractive or (b) not economically or financially feasible.
Step 2 involves determining whether the proposed project activity without the revenue from the
sale of CERs is either (a) not the most economically or financially attractive or (b) not
economically or financially feasible. Undertaking the investment analysis involves several substeps (e.g. selection simple cost analysis, investment comparison analysis or benchmark analysis,
and the comparison of the financial indicators of the proposed project activity and the alternatives
identified in step 1; as well as a sensitivity analysis). A project activity will only satisfy the
requirements of step 2 (investment analysis) if it can be shown that implementation of the project
would not be the most financially/economically attractive option in any case.
п‚·
Step 3: Barrier analysis
Step 3 involves determining whether the proposed project activity faces barriers that:
-prevent the implementation of this type of proposed project activity; and
-do not prevent the implementation of at least one of the alternatives (EB 39, Annex 10).
В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В 30
 Adapted from: Baker & McKenzie, CDM Rule Book, Establishing additionality – the additionality tool, page 86:
http://cdmrulebook.org/86, accessed 18 July 2010.В 7В В In order for a project activity to meet the requirements of this step, these barriers must prevent
the project from being implemented unless it is registered under the CDM.
п‚·
Step 4: Common practice analysis
Step 4 complements steps 1, 2 and 3 (as applicable) with an analysis of the extent to which the
proposed project type (e.g. technology or practice) has already diffused in the relevant sector and
region. This step is a credibility check, in that if similar activities are widely observed and
commonly carried out, it calls into question the claim that the proposed project activity is
financially/economically unattractive or faces barriers.
The evaluation of investment barriers or existing incentive structures and common-practices are auxiliary
tools to establish project additionality.
The CP serving as the meeting of the Parties of the Kyoto Protocol (CMP), the supreme body of the Kyoto
Protocol, has been skeptical from the start towards the board’s approach to additionality. It has repeatedly
stressed that the additionality tool is not mandatory in its application and called for alternative
interpretations. 31 Complying with the CMP mandate, the executive board has encouraged project
participants to present clear and precise ways to propose alternatives to establish additionality as a part of
proposed new methodologies. 32 Being aware of the executive board’s reluctance to reduce the applicability
of the additionality test, project proponents have refused to take the risk of developing alternative
methods to prove additionality. The general sluggishness of the CDM approval process, the tense
relationship between verifiers and the executive board, the unpredictability of decisions of the board and
the evaluation practice of the review panels of the CDM 33 limit the appetite for additional risks-taking
among project proponents. Consequently, the application of the additionality tool, and the application of
the investment analysis as its core, has become de facto mandatory in the vast majority of CDM project
activities and - as the CDM administration become more and more overwhelmed and critical reports in
the press picked up - has increased in stringency over time. 34 Applying the additionality tool reflects a low
risk choice and project developers are not willing to take the risk of submitting alternative additionality
approaches. In the absence of project developer activity, the executive board has -in a top down approach
- considered benchmarks as additionality test for energy-efficient refrigerators. 35
                                                            Decisions 7/CMP.1, paras 25-28, The CMP “Confirms that, as stipulated in decision 12/CP.10, the use of the "tool
for the demonstration and assessment of additionality" is not mandatory for project participants, and that in all
cases the project participants may propose alternative methods to demonstrate additionality for consideration by
the Executive Board, including those cases where the "tool for the demonstration and assessment of additionality" is
attached to an approved methodology” (7/CMP.1, paragraph 28); and decision 1/CMP.2 para 16(c). 7/CMP.1,
paragraph 28 confirms that the use of the tool for the demonstration and assessment of additionality is not
mandatory.
32 EB 28, paragraph 21.
33 Charlotte Streck (2007), The governance of the Clean Development Mechanism – the case for strength and stability
in David Freestone and Charlotte Streck (eds), “The Kyoto Protocol – current legal status of carbon finance and the
flexible mechanisms”, Special Issue Environmental Liability Journal, vol. 15, Issue 2, 2007, p. 91. See also IETA,
“2006 State of the CDM”, IETA Position on the CDM for COP/MOP2, available at
http://www.ieta.org/ieta/www/pages/getfile.php?docID=1931 (accessed 18 July 2010).
34 Axel Michaelowa (2009), Interpreting the Additionality of CDM Projects: Changes in Additionality Definitions and
Regulatory Practices over time, in, David Freestone and Charlotte Streck (Eds.), Legal Aspects of Carbon Trading:
Kyoto, Copenhagen and Beyond (Oxford University Press, 2009), p. 248-271, 254, 255. The mandatory character of
the tool has however repeatedly been rejected by the CMP. Decision 12/CP. 10, paras 9. 28; decision 7/CMP.1
35 See Approved Methodology (AM) 0070 (http://cdm.unfccc.int/methodologies/PAmethodologies/approved.html
accessed 9 September 2010).
31
8В В 3. Critical Review of Additionality in the CDM
3.1. Environmental Integrity and the CDM Additionality Test
Additionality has become a matter of concern because of BAU emission reductions which may not be
contributable to the individual project and the climate finance component of it. 36 These emission
reductions that may be real and measurable are causally not linked to the CDM and part of the BAU
scenario. Taking into account the offsetting character of the CDM, it has been concluded that “those cases
where projects would have taken place anyway, the end result is an overall rise in global GHG
emissions” 37 and only a strict interpretation of project additionality would address the risk of creating
“fictitious CERs”. 38
Other than in the case of JI, CERs are newly created trading units and not covered by an allowance to emit
from the host country’s assigned amount. The cap-and-trade architecture of the Kyoto Protocol is target
based and international emission trading allows the exchange of assigned amount units within the capped
system. This is generally considered harmless and it is not tested whether the system results in real
emission reductions or not. The CDM however operates outside established absolute emission limitations.
CDM baselines are therefore establishing project-level reference cases that try to model what would
happen in the absence of the mechanism. There is a concern if emission reductions in developing
countries are not additional they lead to an increase of the overall cap of emissions established by
commitments of developed country (Annex I) Parties to the Kyoto Protocol.
The CDM executive board has responded to these concerns with devising the additionality test. But the
test has not protected the CDM against further blame. Among the many complaints about the CDM, 39
those that claim that a large number of non-additional projects had been registered over time and that
these projects create fake, fraudulent, or non-genuine emission reductions have received particular
attention. 40 Reacting to these reports, the CDM executive board set up the “registration and issuance
В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В 36 Benito Mueller (2009), Additionality in the Clean Development Mechanism, Why and What?, Oxford Institute for
Energy Studies EV 44, March 2009, p.8.
37 Mark C. Trexler, D.J. Broekhoff, L.H. Kosloff (2006), A statically-driven approach to offset-based GHG
additionality determinations: What can we learn? Sustainable Development Law & Policy, 4 (2), p. 30-30; Johannes
Alexew, Linda Bergset, Kristin Meyer, Juliane Petersen, Lambert Schneider, Charlotte Unger, 2010, An analysis of the
relationship between the additionality of CDM projects and their contribution to sustainable development, Int
Environ Agreements DOI 10.1007/s10784-010-9121-y, published online on 3 March 2010.
38 Axel Michaelowa, 2009, Interpreting the Additionality of CDM Projects: Changes in Additionality Definitions and
Regulatory Practices over time, in, David Freestone and Charlotte Streck (Eds.), Legal Aspects of Carbon Trading:
Kyoto, Copenhagen and Beyond (Oxford University Press, 2009), p. 248-271, 249.
39 Ben Pearson, Yin Shao Loong (2003), The CDM: Reducing Greenhouse Gas Emissions or Relabeling Business as
Usual?, CDM Watch, Third World Network, http://www.twnside.org.sg/title/cdm.doc (accessed 18 July 2010); A.
Michaelowa and P. Purohit, “Additionality Determination of Indian Projects, Can Indian CDM Project Developers
Outwit the CDM Executive Board?”, 2007, available at
http://medias.lemonde.fr/mmpub/edt/doc/20070608/920594_additionality_determination_of_indian_cdm_proje
cts.pdf. In 2007, there has been an intense media debate on additionality and sustainability benefits of the CDM.
Download articles in the "Guardian" at
http://www.guardian.co.uk/frontpage/story/0,,2093837,00.html and
http://environment.guardian.co.uk/climatechange/story/0,,2093815,00.html,
"Le Monde" (French) at www.lemonde.fr/web/article/0,[email protected],36-920043,0.html,
"Tagesanzeiger" (German) at http://tages-anzeiger.ch/dyn/news/print/ausland/758571.html
and the comment by the International Emission Trading Association (hereinafter “IETA”) on the Guardian article at
http://www.ieta.org/ieta/www/pages/getfile.php?docID=2408. The Stockholm Environment Institute has also
compiled a list of publications that that criticize the CDM for its lack of additionality (compiled by Barbara Haya).
http://www.co2offsetresearch.org/PDF/AdditionalityLackCDM.pdf (all accessed 18 September 2010).
40 Axel Michaelowa, Pallaw Pundit, 2007, Additionality determination of Indian CDM projects. Can Indian project
developers outwit the CDM Executive Board? Discussion Paper CDM-1, Climate Strategies, London, 2007; Lambert
9  team” and the UNFCCC secretariat hired more dedicated CDM staff to review project applications with a
particular focus on the credibility of the additionality argument. By 2008, lack of additionality accounted
for the absolute majority of all rejections of projects submitted for registration. 41
But the restrictions of access to the CDM through the tightening of the additionality testing has still not
muted those that see the CDM as principally flawed. While indisputably restricting access to CDM
finance, there are many concerns with the environmental argument backing the executive board’s
additionality test:
п‚·
п‚·
п‚·
The current additionality test relies on assumptions that hardly can be verified. 42 It is hence
subjective and creates unpredictable outcomes. Demonstrating the intent of project developers is
impossible and beyond the mandate given by the CMP. 43
The establishment of project additionality is generally ill suited to take into account the political
economy of the host country, in particular in non-liberalized economies, which implement and
systematically support economic decisions according to national planning processes. 44
The conversion of additionality in a binary eligibility tool that assumes that causality between the
project sponsor’s decision to realize a project and the CDM eliminates degrees of additionality. 45
Proponents of the executive board’s approach to additionality testing defend the quantitative nature of
testing investment additionality as more objective than qualitative tests of investment barriers 46 and
environmentally more rigorous than benchmarks. Those criticizing the test argue the opposite: they
condemn the subjective nature of establishing the reasons for an investment decision. 47 As early as 1999,
В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В Schneider (2007), Is the CDM fulfilling its environmental and sustainable development objectives? An evaluation of
the CDM and options for improvement. Oeko Institut: Berlin 2007. Michael W. Wara, David G. Victor (2008), A
Realistic Policy on International Carbon Offsets, Stanford Unviersity, Energy and Sustainable Development Working
Paper #74, April 2008, available at:
http://pesd.stanford.edu/publications/a_realistic_policy_on_international_carbon_offsets/ (accessed 22
September 2010). [PLUS MAINSTREAM PRESS]
41 UNFCCC website: http://cdm.unfccc.int/Projects/rejected.html (accessed 22 September 2010).
41 K. Umamaheswaran, Axel Michaelowa,2006, Additionality and Sustainable Development Issues Regarding CDM
Projects in Energy Efficiency Sector, HWWA Discussion Paper 346, Hamburg 2006, Axel Michaelowa, 2009,
Interpreting the Additionality of CDM Projects: Changes in Additionality Definitions and Regulatory Practices over
time, in, David Freestone and Charlotte Streck (Eds.), Legal Aspects of Carbon Trading: Kyoto, Copenhagen and
Beyond (Oxford University Press, 2009), p. 248-271, 257.
42 Joelle de Sepibus (2009), The environmental integrity of the CDM mechanism – A legal analysis of its institutional
and procedural shortcomings, nccr trade regulation, swiss national center of competence in research, Working Paper
No 2009/24.
43 IETA, 2007, Submission to the UNFCCC regarding the best practice examples on the demonstration of
additionality to assist the development of project design documents, in particular for small-scale project activities,
2007, http://cdm.unfccc.int/public_inputs/dev_PDDs/index.html; IETA objects to the additionality which
exposes every project “to a highly subjective assessment of its CDM eligibility and allows for secondguessing by the EB” (accessed 8 September 2010).
44 Michael W. Wara, 2008, Measuring the Clean Development Mechanism’s Performance and Potential, Stanford Law
School, Working Paper Series, available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1086242 (accessed
10 May 2010).
45 H.W. Au Yong, 2009, Technical Paper: Investment Additionality in the CDM, ecometrica paper, January 2009.
46 Sandra Greiner; Axel Michaelowa, (2003): Defining Investment Additionality for CDM projects practical approaches, in: Energy Policy, 31, p. 1007-1015; H.W. Au Yong (2009), Technical Paper: Investment
Additionality in the CDM, ecometrica paper, January 2009; Johannes Alexeew, Linda Bergset, Kristin Meyer, Juliane
Petersen, Lambert Schneider, Charlotte Unger, 2010, An analysis of the relationship between the additionality of
CDM projects and their contribution to sustainable development, Int Environ Agreements DOI 10.1007/s10784-0109121-y, published online on 3 March 2010.
47
В IETA Position on Additionality, Position Paper of the International Emission Trading Organization,
http://www.ieta.org/ieta/www/pages/download.php?docID=1243 (accessed 18 July 2010); Catrinus Jepma (2003):
Credits for Mozart, in: Joint Implementation Quarterly, 9, 1, p. 1; Mark C. Trexler, D.J. Broekhoff, L.H. Kosloff
10  the subjectivity of investment additionality has been identified and it was suggested to refer “behavioral”
additionality instead, since it is the behavior of the actors that is at issue. 48 The conduction of
independent financial analysis requires the disclosure of information, which companies may be as
reluctant as governments to disclose. The reliance on aggregated information provided by the project
sponsors makes independent review difficult and may open more opportunity for cheating. 49 The
additionality testing of GHG activities is therefore prone to commit two types of errors: approval of nonadditional and exclusion of valid activities. 50
Today, additionality testing has become an �arms race’ between the project proponents and the regulators.
Regulators learn to understand and detect arguments that have low credibility while project participants
try to find loopholes and weaken the rules. 51 In such atmosphere, the objectivity of the testing has become
secondary. While the additionality test limits the number of overall CER supply, it is almost impossible to
say whether the projects that pass the test are all additional. This is particularly true as even supporters of
the current additionality test concede that the executive board’s tendency to follow �fashions’ of rejecting
certain project types without prior warning, gives reasons for concern. 52 Almost 15 years after the
adoption of the Kyoto Protocol, the investment analysis still waits to be replaced by more objective
evaluation methods.
3.2. Equity Implications of the CDM Additionality Test
Additionality concerns in the CDM are based on the argument that the CDM as offsetting mechanism does
not create any additional environmental benefits over the reductions mandated by the Kyoto Protocol in
industrialized countries. The CDM is thus described as �zero sum’ game for the atmosphere. This
argument implies that emission reductions taken by measures applied within the cap are contributing to
the overall reduction of GHG emissions, while those outside of the cap do not. Those that fear that CERs
could have an inflationary effect on the emissions budget of the entire Kyoto system 53 start from the
assumption that the integrity of activities implemented within the context of the emission caps
established by the Kyoto systems is higher than those implemented without that system. This is however
only true if the overall cap on emissions is
п‚·
ambitious enough to lead to an overall reduction of emissions;
В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В (2006), A stasticallt-driven approach to offset-based GHG additionality determinations: What can we learn?
Sustainable Development Law & Policy, 4 (2), p. 30-30.В 48 Stephen Meyers (1999), Additionality of Emissions Reductions From Clean Development Mechanism Projects:
Issues and Options for Project-Level Assessment; LBNL-43704, work supported by the U.S. Environmental
Protection Agency through the U.S. Department of Energy under Contract No. DE-AC03-76SFOO098.
49 It is important to note that the risk of cheating is not new to the Kyoto Protocol whether applying to finance or GHG
emissions. The lack of good-faith requirements governing funding requests has also been identified as risk under the
Montreal Protocol. J.M. Patlis (1992),The Multilateral Fund of the Montreal Protocol, Cornell International Law
Report, vol. 25 no. 1 , p. 181-230, 205.
50 Kenneth Chomitz, 1998, Baselines for Greenhouse Gas Reductions: Problems, Precedents, Solutions, prepared for
the World Bank Carbon Offsets Unit, Development Research Group, World Bank, Washington, DC.
51 Axel Michaelowa, 2009, Interpreting the Additionality of CDM Projects: Changes in Additionality Definitions and
Regulatory Practices over time, in, David Freestone and Charlotte Streck (Eds.), Legal Aspects of Carbon Trading:
Kyoto, Copenhagen and Beyond (Oxford University Press, 2009), p. 248-271, 270.
52 Axel Michaelowa, 2009, Interpreting the Additionality of CDM Projects: Changes in Additionality Definitions and
Regulatory Practices over time, in, David Freestone and Charlotte Streck (Eds.), Legal Aspects of Carbon Trading:
Kyoto, Copenhagen and Beyond (Oxford University Press, 2009), p. 248-271, 270. [check]
53 Axel Michaelowa, 2009, Interpreting the Additionality of CDM Projects: Changes in Additionality Definitions and
Regulatory Practices over time, in, David Freestone and Charlotte Streck (Eds.), Legal Aspects of Carbon Trading:
Kyoto, Copenhagen and Beyond (Oxford University Press, 2009), p. 248-271, 249.
11В В п‚·
п‚·
real, enforceable and likely to incentivize compliance among Annex-B Kyoto parties;
the offsets created and traded among Annex I parties need to be real and additional.
These conditions are not fulfilled in the current Kyoto commitment period where a hefty overallocation of
assigned amount units to economies in transition, most notably Ukraine and the Russian Federation
creates an overall surplus of assigned amounts. Canada, an Annex I party, has openly stated that it would
not meet its Kyoto target. 54 The absence of a strict enforcement mechanism may leave such instance of
willing and planned incompliance unsanctioned. Whether the offsets created within Annex-B Kyoto
parties, in particular those created under Article 3.4 of the Kyoto Protocol are real and measurable
remains also doubtful. There is a risk that large amount of non-additional offsets from land-use activities
are counted towards Annex I targets. 55
The overallocation of assigned amount units, the lack of enforcement mechanisms, and loosely controlled
land-use offsets create serious problems for the environmental integrity of the Kyoto system. These
problems do justify not any largesse with respect to individual CDM projects, but they at least allow
raising the question of double standards. It seems that emission reductions in developing countries are
required to be of a much higher environmental quality than those in developed countries. Such finding is
at a minimum surprising in the light of the accepted principle of common-but-differentiated
responsibilities; the polluter pays principle; and the mandated additionality of finance.
While environmental integrity has to be at the core of any emission trading system, the current
interpretation of additionality in the CDM puts into question the premise of the Kyoto Protocol that
developing countries would be exempt from emission reduction targets. BAU emissions in developing
countries are permitted under the Kyoto Protocol and hence legitimate objects for offsetting activities. 56
The CDM additionality test establishes that BAU emission reductions could not serve as offsets for
Annex I countries. By not crediting these emission reductions, the current CDM practice introduces de
facto a crediting baseline as developing country target. The fact that developing countries have not
adopted emission reduction targets influences the debate on CDM and additionality since there seems to
be a sentiment among many that countries that have not adopted (whatever lose) target should not
profiteer from the CDM, in particular not when the projects are stake are very profitable or have few
obvious sustainable development benefits.
4. Way Forward
The negotiations of a post-2012 climate agreement open the door for a reform of the existing mechanisms
and the definition of new incentive mechanisms for emission reductions in developed and developing
countries. At this point it is uncertain on whether the CDM in its current form will survive beyond 2012.
It is strongly supported by developing countries, but receives harsh critique from many industrialized
countries, in particular the within the US. 57 But with or without CDM, the discussion on additionality of
emission reductions (and finance) is almost certain to continue. The current negotiations under the
В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В 54В Canada
is unable to achieve this level of greenhouse gas reduction, then Environment Minister Rona Ambrose said
В at a 2006 United Nations meeting in Nairobi, Kenya.
В 55 The complete absence of a discussion around the application of Article 3.4 Kyoto Protocol remains surprising.
Article 3.4 regulates the offsetting emissions within the Annex I cap by Annex I emission reductions from the land-use
sector generated outside the cap. It deals also with possibly large quantities of emissions burdened by measurements
plagued by inconsistencies and errors.
56 Benito Mueller, Additionality in the Clean Development Mechanism, Why and What?, Oxford Institute for Energy
Studies EV 44, March 1999, p.9.
57
В [add source]В 12В В UNFCCC and the Kyoto Protocol therefore open the door for a critical review and reform of additionality
testing.
There is no uniform or proven way to test additionality. Existing mandatory and voluntary carbon
standards apply at least dozen different interpretations, tests and criteria for proving the additionality of
emission reductions. 58 Regulators and private standard organizations have adopted and adapted the
additionality principle and testing of the CDM to their particular requirements, needs and world view. The
various types of additionality reflect the attempt to ensure that climate benefits are supplemental and real,
but they also reflect the choice and preference of a standard towards particular project types. Table 1
summarizes the most common forms of addititionality. 59 Different standards apply subsets of the list in
combination or as alternative.
TableВ 1В AdditionalityВ Tests
Category
Environmental aspects
Type of additionality
GHG additionality
Unit additionality
Project additionality
Financial and investment aspects
Investment additionality
Sales or capital additionality
Legal, regulatory and
institutional aspects applying to
regulators and states
Legal, regulatory and
institutional aspects applying to
non-state actors
Reporting additionality
Compliance additionality
Incentive additionality
Technological additionality
Barrier additionality
Common-practice additionality
Test
Activity results in GHG emission
reductions or removals compared
to the baseline scenario
Activity reduces GHG emissions
below levels of technologies
normally used to produce the
same product
Activity happens because of
carbon finance
Activity needs to be economically
viable, or an attractive
investment proposition, only
when taking carbon finance into
account
Activity would not have been
undertaken without revenues
from the sale of carbon credits
Accounting on national level
avoids double crediting of
emission reductions or removals
Activities need to be additional to
statutory requirements.
Activities need to go beyond
existing incentives (eg subsidies)
Activities need to apply a
particular technologies
Activity overcomes particular
implementation barriers
Activity employs technologies or
practices that are not already in
common use.
В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В Gregory Valatin, Carbon Additionality: A review , Discussion Paper, Forest Research, November 2009.
The table is based on the categorization of Gregory Valatin, Carbon Additionality: A review, Discussion Paper,
Forest Research, November 2009. It has been updated and modified by the author.
58
59
13В В Institutional additionality
Date additionality
Jurisdiction additionality
Activity is undertaken outside of
statutory emission reduction
targets
Activities starts after a particular
date
Activities is implemented in a
particular area or by a particular
group
The criteria of the various standards reflect less a proven truth but policy choices that steer behavior and
investments into a particular direction. Additionality is therefore always a reflection of political choices.
Additionality testing plays a crucial role in determining every aspect of market supply (i.e. the nature and
supply of recognized reductions or GHG credits), including:
п‚·
п‚·
п‚·
п‚·
The quantity of supply of offsets available to the market;
The costs of the offsets available;
The nature of projects that qualify for offset finance;
The quantity of “non-additional” emission reductions in the final supply pool and the
quantity of real emission reductions not eligible for offset supply.
At the end, there is no right way to test additionality. The example of the CDM shows that policy makers
cannot bypass this obligation by simply directing a technical body to design additionality standards. 60
Recognizing that the testing of additionality is inherently political, allows the regulator to apply political
considerations that steer investment into offsets and open new sources of supply. Other than in the
current CDM, where additionality pretends to be objective while the CDM executive board may reduce
supply through the tightening of review and interpretation of additionality, an open discussion about
CDM project criteria and supply control would introduce transparency and objectivity into the debate
around additionality.
There are various paths that potentially lead improving the current system of GHG additionality testing:
The WWF has proposed to make the additionality tool mandatory (confirming positively the current
status quo), to tighten the test further and provide clear guidance of the requirements. 61 The International
Emissions Trading Organization (IETA) on the other hand advocates the idea of establishing sectoral
benchmarks, which should be used to demonstrate additionality as well as defining the baselines in the
CDM. IETA claims that benchmarks would bring objectivity, transparency and integrity in the
demonstration of additionality, the setting of the baseline and validation of projects. 62 Benito Mueller
proposes to rely on historic trend interpretation that would define permissible emissions and any
В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В 60 Mark C. Trexler, Derik J. Broekhoff, Laura Kosloff (2006), Statistically-Driven Approach to Offset-Based GHG
Additionality Determinations: What Can We Learn, Vol 6 Sustainable Dev. L. & Pol'y 30 (2005-2006), p. 30.
61 Axel Michaelowa, 2007, Submission to the UNFCCC regarding the best practice examples on the demonstration of
additionality to assist the development of project design documents, in particular for small-scale project activities,
2007, http://cdm.unfccc.int/public_inputs/dev_PDDs/index.html (accessed 8 Mat 2010, submission y Kirsty Clough
for the WWF). Some of such requirements fall however outside of what is realistically possible to provide by
project participants. Such as the requirement of providing written proof from the three largest commercial banks in
the host country and one international commercial bank that they are not willing to provide a loan or other financing
to the project despite its high IRR. Experience shows that banks are generally reluctant to provide such letter.
62 http://cdm.unfccc.int/public_inputs/dev_PDDs/index.html (Catherine Sachweh for IETA).
14В В reduction below that integrity baseline would be defined be additional. 63 The main difference between
that method and the “what would happen otherwise” approach is that the forecast can be assessed with
regards to their accuracy, once the future has happened, as it were. The superior transparency of such
approach would probably even outweigh receiving less CERs in cases which would be additional under
both interpretations. 64
All proposed methods have their particular problems associated with it. However, the establishment of
criteria establishing positive additionality of particular technologies, project types or groups is easy to
implement and, if applied conservatively, less prone to continuous controversy than the project-by-project
additionality testing. Standardized approaches are, if generally accepted, less controversial in their
implementation than project specific testing methods. An example for a clearly regulated additionality
test could be found in the cap-and-trade system discussed in the context of the proposal for an American
Clean Energy and Security Act (ACESA) from the year 2009. 65 ACESA mandates the development of a
standardized additionality test based on the following criteria:
To qualify as offsets under ACESA, GHG activities are
п‚·
п‚·
п‚·
п‚·
not required by or undertaken to comply with any law, including any regulation or consent order;
were (generally) not commenced prior to January 1, 2009;
are not receiving support of particular subsidies; and
exceed the activity GHG baseline. 66
ACESA would have required a qualified test of GHG additionality by adding the requirement of a specific
project start date and regulatory additionality. Such additionality testing is less vague and puts emphasis
on standardized testing methods. 67 Standardized approaches have the advantage of streamlining the
process and increasing transparency. 68 The disadvantage of standardized approaches is that they are less
flexible do not allow site specific conditions to be taken into account.
5. Conclusions
The UNFCCC and the Kyoto Protocol use additionality in difference contexts, but neither of the two
treaties bothers to define the term. The UNFCCC requires additionality of financial support for developing
countries; the Kyoto Protocol adds the demand of additionality of emission reductions for their eligibility
to offset emissions that fall under the target of developed country parties. In both cases the requirement is
vague and hard to operationalize. But the question whether the financial resources of developed countries
are truly additional has never received the same level of attention, intellectual and ideological engagement
as the question on whether CDM emission reductions are truly additional.
В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В Benito Mueller, Additionality in the Clean Development Mechanism, Why and What?, Oxford Institute for Energy
Studies EV 44, March 1999, p.15.
64 Benito Mueller, Additionality in the Clean Development Mechanism, Why and What?, Oxford Institute for Energy
Studies EV 44, March 1999, p.16.
65
В The American Clean Energy and Security Act, which was passed by the U.S. House on Friday, June 26th;
http://energycommerce.house.gov/index.php?option=com_content&task=view&id=1560&Itemid=1 (accessed 18
July 2010).В 66 ACESA, Sec. 734.
67
В Generally, positive lists and clear standards point towards an easier and less controversial establishment of
additionality (see also the London Amendments to the Montreal Protocol).В 68
В Climate Leaders, Climate Action Registry, CCX, RGGI and NSW GGAS are among the programs and protocols that
rely more heavily on standardized approaches.В 63
15В В The failure to apply clear definitions has proven to be more damaging in the context of the concrete
investments of the CDM than in relation to public budgeting, which remains discretionary and beyond
reach of the international and national audiences. Investments and projects in contrary are tangible. They
relate to actors and action which evoke feelings, opinions, and sentiments (Who wants a chemical giant
make money out of slightly less contaminating practice by claiming carbon credits?); short subjectivity.
The CDM’s relative transparency compared to the opaque budgeting processes of developed country
governments makes the struggle to come to a satisfactory solution only more obvious; and the CDM more
prone and vulnerable to criticism.
The establishment of clear criteria for CDM additionality would address the insecurities that are
associated with the current additionality testing. Project proponents have generally argued in favour of
GHG additionality. 69 Their concerns do not relate so much to the testing per-se, but to a process that has
become increasingly lengthy and unpredictable. 70 Provided that criteria for additionality are sufficiently
conservative, they would safeguard the environmental integrity of offsets and could even generate a
surplus for the atmosphere. At the same time, predictability would remove investment risk and channel
more funds into emission reducing activities, a win-win for development and the global climate.
В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В В IETA, 2005, Position on Additionality, Geneva 2006.
Matthias Krey and Heike Santen, 2009, Trying to Catch up with the Executive Board: Regulatory Decision-Making
and its Impact on CDM Performance, in: David Freestone and Charlotte Streck (Eds.), Legal Aspects of Carbon
Trading: Kyoto, Copenhagen and Beyond (Oxford University Press, 2009), p. 232-257, 232.
69
70
16В В 
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