For all of our Help Build™ projects and others that we develop, NativeEnergy uses the project-specific additionality criteria described below. We believe this approach provides the strongest assurances to a buyer that his or her purchase truly is making a difference.
“Additional” encompasses several criteria:
First, the carbon project was not required by law.
Second, the project could not have been built without the existence of a carbon market. In other words, additionality means the project goes beyond business as usual and the carbon offsets represent incremental reductions in greenhouse gas pollution.
Third, the technology underlying the project produces less greenhouse gas than the technology that is typically used in comparable circumstances.
Performance Standards Versus Project-Specific Additionality
One commonly employed tool to assess is called the “performance standard.” This standard involves certification of offsets from CO2 reductions created by projects whose emissions rate is lower than a predetermined benchmark rate—the performance standard.
Performance standards also incorporate the legal test, cited above, and require offsets to be real, permanent, measurable, unique, and verifiable.
So under a performance standard, almost all renewable energy generation qualifies without regard to whether the REC or carbon value of the project’s production is essential to getting it financed.
The assessment of a project under a performance standard tends to be relatively straightforward, so performance standards encourage the development of carbon-reducing technologies.
Several highly regarded offset standards also evaluate the financing of the specific project under consideration. This project-specific additionality test is put in place to ensure that the offset project definitely relies on the carbon market to be developed, ensuring that the offsets are coming only from reductions that go beyond business as usual.
Questions related to project-specific additionality include:
- Without offset revenues, is the return on project investment too low for the project owner to make the investment? If so, does the prospect of offset revenues raise the expected return to an adequate level? If the answer is yes, the project is additional.
- Without offset revenues, does the project owner lack access to the capital to make the investment? If so, do the offset revenues provide the necessary capital or enable access to it? If yes, the project is additional.
- Are there other barriers to implementation—technical barriers, for example—that offset revenues can overcome? If yes, the project is additional.
- Is the project the first or substantially the first of its kind in the particular market or region? If it is the first of its kind, it is by definition not business as usual, and so it is additional.
Achieving the Right Balance
Project-specific additionality standards have their detractors. The principal concern is that strict insistence on the literal use of these standards can be a barrier to the implementation of CO2 mitigation projects. Conducting an additionality assessment using these tests on a project-by-project basis can be time consuming and costly.
For all of our Help Build™ projects and others that we develop, NativeEnergy uses the project-specific additionality criteria described above. We believe this approach provides the strongest assurances to a buyer that his or her purchase truly is making a difference.
There are several well-regarded performance standards, notably those developed by Climate Action Reserve and the American Carbon Registry. A number of leaders in sustainability rely on these standards, and at NativeEnergy, we source and sell offsets from projects developed by others that meet these well-established protocols to satisfy the requirements of specific customers.