Carbon Credit Additionality
Definition
Additionality is the requirement that a carbon credit represents emissions reductions or removals that would not have happened without the carbon-finance incentive.
Why it matters
If a project would have happened anyway, the credit does not offset or remove incremental emissions. Additionality is one of the central quality tests in voluntary carbon markets.
Technical details
How it is tested
Project developers usually compare the project against a baseline scenario.
Common tests include financial additionality, regulatory surplus, common-practice analysis, and barrier analysis.
The hardest question is whether carbon revenue genuinely changed the project's economics or behavior.
Investor diligence
Review the methodology, baseline assumptions, project start date, crediting-period rules, and whether the same activity is already required by law, subsidy, mandate, or normal market practice.