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Complicated Additionality
By Catrinus J. Jepma
In the beginning of the COP-negotiations the additionality concept seemed to be so simple: environmental additionality implied that only project emissions below an accepted baseline could be credited; financial additionality only referred to the understanding that international climate policy should not be financed from the ODA-budgets. Since then the concept has become subject of an interpretation process that has been at times been rather fuzzy and obscure. Probably, the main reason for this is that those who wanted to twist the definition of additionality have portrayed the issue as being technical, i.e. something to be decided by experts and expert panels. In reality, however, the interpretation of additionality is at the heart of the political debate and one of the most crucial elements of the Kyoto Protocol.
While additionality was still hanging between the domains of policy decision-making and interpretation by technical experts, the Executive Board got hold of the concept, further to the advise of their expert panel, and de facto introduced a third additionality concept: project additionality, i.e. the project is creditable if would not have taken place in absence of the credits. This move has led to a wave of criticism because: the legal texts did not allow for such a de facto project eligibility check; the expert panel that introduced this new barrier to CDM implementation was in effect politically active while not politically responsible; but, most of all, it undermined most of the still fragile early appetite for initiating CDM initiatives.
One can only guess why this odd move – which seems unnecessary because environmental integrity can be covered by setting baselines conservatively - was made. One explanation may be that it satisfies some environmentalists’ views; another explanation could be that it follows those institutions, notably (development) banks that require financial data-based business plans anyhow and hope to derive a competitive edge in the lucrative market of CDM intermediation from this eligibility check. Anyhow, in the meantime about a year and a half since have passed the first submission of methodologies, 49 baseline and monitoring methodologies have been submitted and only 9 of them have so far been approved (9 were not approved; 31 are under consideration). If things go on like this, the CDM, Kyoto’s cornerstone, is close to a dead born child.
However, it is not only the overemphasis on this new eligibility check that fuels pessimism about the CDM-potential. Also the CDM-EB’s logic is not always clear. When looking at the 9 methodologies approved, a number of seemingly similar methods have been accepted. The same holds for the methodologies not approved. Some methodologies have been approved (e.g. AM0003) that ‘show’ additionality by demonstrating that a more economically attractive alternative exists (in fact this comes close to proving that from a business perspective one is acting like an idiot); other project methodologies (e.g. AM0001) have been accepted because they ‘show’ that without the credit sales the project is not economically viable (making acceptance dependent of not-yet-known and variable credit prices; do I hear some bankers and accountants snigger?), while still other methodologies (e.g. AM0004) have been accepted based on a barriers test. Although the latter development – accepting a barriers test – should be welcomed, it still raises more questions than it provides answers. For example: is such a test acceptable for all project types; when does one have to demonstrate the existence of more than one barrier, and should such barriers be prohibitive (whatever that may be); is proof necessary that credits are indispensable to overcome the barriers; and will the fact that the proposed technology is new in the country always be accepted as a barrier; etc.?
In short, the first bad news is that one is still struggling with the issue which methodologies are acceptable. Other and related bad news is that as a result validators seem reluctant to validate project designs even if the methodology used for a project seems close to an approved one. They do not want to run the risk to be confronted later on in the registration process with corrective action or public objections. This does not contribute to getting the CDM-machinery convincingly in motion either.
The final bad news of the present overemphasis on the project additionality test is that attention is distracted from aspects that seem much more important, also for the integrity of the CDM. Namely: a) setting the first steps to standardization of both baseline procedures and baselines (see the soon to be published special issue of Mitigation and Adaptation Strategies for Global Change), and b) dealing with the perverse incentive issue related to the CDM. With respect to the latter Christiana Figueres recently raised this old issue again. She argued in a study – based on some cases in Latin America (see also p.15 of this issue): “the current interpretation of additionality is a disincentive for developing countries to develop decarbonising policies”. On this she is perfectly right. It is these issues and not the fuzzy process around a non-starter concept as project additionality that should be the focus of attention.
Let’s hope that the yet to be established JI Supervisory Committee will not also fall in the project additionality pitfall.
Catrinus J. Jepma
Chief editor
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