The Contentious Debate Around Additionality in Carbon Offsetting Explained

By Matthew Carpenter-Arévalo

One of the exciting parts of participating in the development of an entirely new industry like voluntary carbon markets is that there continues to be a lot of philosophical debate about basic concepts.

In other words, we’ve yet to manufacture consent, as Chomsky would say, around a lot of really important topics. What’s more, there are a lot of smart people contributing to those debates.

When we consider the voluntary carbon market as a whole, probably no topic deserves more debate than the topic of additionality. Before I dive in, let me briefly go over some of the logic behind additionality in case you’re new here.

Offsetting is a means by which companies that pollute as a consequence of their operations can pay others to offset or compensate for their carbon footprint. In its most basic form, if a company emits ten tonnes of carbon dioxide as part of its operations, it can pay someone else to sequester ten additional tonnes of carbon.

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A lot of people find carbon offsetting to be troubling from the get-go because they believe that companies should not offset but instead reduce their carbon impact. In truth, companies participating in the voluntary carbon market (some would prefer to refer to it as the verified carbon market and I agree), usually have a blended approach.

A company’s emissions can be classified in three different scopes.

Scope 1 emissions come directly from the company’s operations, like keeping the lights on and producing things.

Scope 2 emissions come from the secondary effects of their operations, say the emissions coming from providers delivering goods to a warehouse, etc.

Scope 3 emissions are everything else that happens as a result of a company producing something. When I think of scope 3, I often think of plastic floating in the great pacific garbage patch; Scope 3 is a similar tertiary effect that is difficult for the company to control

If you’re interested in learning more about this classification system, Toucan does a better job than me explaining the difference here.

For a company seeking to achieve net zero emissions, meaning that their overall impact on carbon emissions is zero, scope 1 and scope 2 are good places to start, whereas scope 3, though still within the company’s realm of responsibility, are much more difficult to control. The company can therefore start working towards reducing scope 1 and scope 2 emissions and offsetting scope 3 emissions.

Before moving forward, I want to make a quick caveat: we’re assuming here that it’s actually possible and easy to measure scope 1, scope 2, and scope 3 emissions, and the truth is that it’s actually quite hard. Second, a company’s impact on the environment will not always be measured in carbon emissions. For example, if a company uses an electric vehicle to dump toxic chemicals into a river, we’re creating a negative environmental impact that may not necessarily register within the scope of a carbon offsetting program.

So now that we’ve considered that even the committed companies require offsetting as part of a larger emissions reductions program, we come back to the question of additionality, mainly: how do we expand the planet’s ability to sequester carbon?

To answer the question in a straightforward manner, I am not going to talk about oceans or soils, or minerals, all of which important are important sources of natural carbon sequestration. Instead, I am going to focus on forests for the sake of simplicity.

Forests are great carbon sinks because they can scale cheaply and easily.

We can plant trees through manual and automated processes quickly and at a low cost. (I would note that a collection of trees is not necessarily a forest because it doesn’t necessarily support a flourishing ecosystem that includes biodiversity, but let’s just forget about that for a moment). Having said that, forests are also not zero-risk, because they can be cut down or burned to the ground fairly easily.

When we want to increase carbon sequestration through forests we have three main options: afforestation, reforestation, and improved forest management.

Afforestation is creating a forest where one didn’t previously exist.

Reforestation is regenerating an existing forest and reversing its trend from declining density to increased density.

Improved forest management, which means managing our forests better so they increase their ability to sequester carbon.

All three of the aforementioned methodologies have problems. For example, if you’re planting native species, they often require shade to grow. If you’re attempting to do reforestation or aforestation, it can be a challenge to ensure enough shade exists to allow for those species to flourish.

When they work, however, all three are increasing the planet’s ability to sequester carbon, and thus additionality is easier to prove.

When we get to the topic of additionality and forest conservation, however, additionality becomes more complicated, because when we’re conserving a forest we’re not necessarily increasing the planet’s sequestration capacity, though we are keeping a lot of carbon in the ground.

Some people take a hard line on the topic of conservation and additionality and with good reason. The Nature Conservancy famously sold carbon credits against land holdings that were neither increasing sequestration capacity nor under any type of threat. Stories like these lead many toinsist that carbon credits should never be derived from conservation, or at least forests not under an imminent threat.

When we talk about carbon sequestration in conservation, therefore, some people ask the question would this project happen if there were no new funds coming from carbon sequestration?

For example, it used to be that a lot of carbon credits were derived from renewable energy projects. If you replace a coal plant with a hydroelectric plant, for example, you’ve reduced the world’s carbon emissions. Whereas the answer to that question in the past may have been “yes”, now, because renewable energy is cheaper than non-renewable energy, renewable energy does not require funding from carbon credits to finance itself. The market for renewable-derived carbon credits is drying up.

Posing the “would this happen otherwise” question to prove additionality creates a huge, murky and subjective space in carbon markets that is difficult to externally verify.

You can use satellite technology to measure local deforestation, but then we can ask the question “what constitutes local?”. If we create a conservation project in one area but we simply force tree cutters to move 25, 50, or 100 kilometers away, have we reduced deforestation? Some people think we should use global deforestation rates as a baseline as the only way to get around this question.

Still, others push back on the notion that forests need to be under threat in order to qualify for compensation.

For example, throughout Latin America indigenous groups have been fighting to retain forested areas against both loggers as well as mineral-hungry governments. They do this work for free: should they not be compensated?

If a wealthy philanthropist in South America decides to purchase thousands of hectares of land that connect two forests and create a natural bio-corridor, should she not be allowed to participate in carbon markets? Why do we have to create a threat in order to activate the financial mechanisms that enable further protection?

Part of the problem in answering this question is the context of the person contemplating it.

In the United States, a national or private reserve has realistically very few threats aside from forest fires.

In the global south, on the other hand, both national and private reserves can be threatened by illegal loggers or other nefarious actors, and the government may not have the will or the ability to enforce its will across vast territories. If we open these projects to carbon markets, they can finance their own protection. In other words, the additionality question looks very different in the global north and the global south.

Lastly, there’s a larger, philosophical question at the heart of what we’re discussing: if the Amazon rainforest provides massive benefits to the planet, including controlling weather patterns that enable agriculture in the global north, should the north not pay for the services it is receiving? The alternative is that the Amazonian countries can monetize the forest by cutting it down and turning it over to cattle farmers eager for grazing land in order to sell more meat to the global north.

On the surface, additionality may seem like a straightforward topic, but as we’ve shown, it’s not.

There are similar questions that require debate: for example, many carbon sequestration projects create co-benefits for local communities because, in part, carbon credit buyers demand or are interested in co-benefits.

Some might push back against co-benefits by saying: a.) polluting companies should not have the luxury of demanding more from those who are making up for the damage their operations are creating and b.) co-benefits may spread the reward but also spread the risk. If a carbon sequestration project fails, for example, the community that was promised to benefit from co-benefits also experiences a major setback. What’s more, if the co-benefits supply essential services to needy communities, how hard will it be to admit and recognize that a project has failed?

My purpose here is not to come down hard on one side of the additionality or the co-benefits questions: I am clearly still formulating my own opinions on these topics. What I think will have to happen is that we expand our conception of how ecosystem service markets can work: for example, maybe a healthy offset portfolio includes carbon credits, conservation credits, and biodiversity credits. In my opinion, biodiversity credits and conservation credits work together more harmoniously than conservation credits and carbon offsetting credits. Again, I’m learning and sharing the results in real-time and my opinions may change.

We will also have to recognize that carbon markets can solve some, but not all environmental problems. Maybe it’s difficult to measure how much carbon a restored corral reef can sequester, but that doesn’t mean there isn’t value in restoring coral reefs. The current explosion of interest and entrepreneurship in the space can help develop solutions to solving lots of different types of environmental challenges.

I would conclude by saying that the presence of a debate around these topics is not a point against carbon markets; rather, it’s a point in favor of bottoms-up, demand-driven solutions. Ultimately demand will get us to answers: if the buyers of carbon credits believe there is value in conserving lands without additionality and possibly even without counting against their net-zero goals then the market will rally around that narrative. Demand will also be influenced by protests and other types of pressure. Eventually, we’ll get to a solution that works.

In the meantime, we should seek to enrich and push forward the debate, since no amount of technological innovation can solve it for us.

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