Your neighbour comes over and asks a favour.
“Hey, for God’s sake would you mow your lawn,” she says with a degree of urgency that crosses every boundary known to civilised man. “We’re selling and, well this lawn just… It’s a neighbourhood disgrace.”
“Yes. Look, I’ll pay you $100 if you get it done by Friday.”
“Sure, why not,” you say. What’s not to like about $100 for a job you would do anyway.
If you were the laziest resident of the district, you would mow your lawn in the future, even if it was after a couple of nasty letters from the local council urging you to get on with it.
The payment from your overzealous neighbour did not change the fact that the lawn would be clipped sooner or later. All the payment did was bring the event into her timeframe.
This is a classic example of additionality failure, non-additionality.
The payment made no material difference to the lawn mowing outcome.
What is additionality?
Additionality is a concept that lives in the carbon markets.
The idea is simple enough. Market mechanisms must work to reduce net greenhouse gas emissions compared to business as usual. This can happen through fewer GHG emissions, the sequestration of carbon into vegetation and soil, the mechanical removal of CO2 from the atmosphere, or some combination of these activities.
The critical word is net.
Actions that the market promotes must result in a net reduction in greenhouse gases over what would have happened if the market mechanism was absent — the business as usual or baseline scenario.
Approved activities can earn credits for reducing emissions or pulling carbon from the atmosphere. When plants do this, we call it sequestration, and some of that carbon also goes into the soil.
These credits are placed in an official registry and can be purchased by entities with a carbon liability. This could be an individual who wants to offset a flight or a company with a heavy emissions profile that they cannot reduce, such as an aluminium smelter.
A key feature of approved activities that generate credits is that they only happen because of finance from the sale of credits. If there were no return from credits, the activity wouldn’t happen.
In other words, they are additional to business as usual.
Here is the formal definition for additionality
Project activity is additional if it can be demonstrated that the activity results in emission reductions or removals that are in excess of what would be achieved under a “business as usual” scenario and the activity would not have occurred in the absence of the incentive provided by the carbon markets.
All the carbon registries that hold or trade carbon credits have some form of this additionality concept built into their program.
Sometimes the activity is approved as additional by the registry. More typically each project that generates credits has to demonstrate that the project activity is additional through a barrier analysis, a way of testing to see if it would happen anyway.
This is the mowing the lawn example.
My neighbour paid for an action that would have happened under business as usual. It would be part of a baseline of activity because the lawn is mown every three weeks or so in summer.
Giving me a financial incentive to cut the lawn is not additional.
Permanence and risk reversal
Additionality is not the same as permanence or risk of reversal. There are rules for these attributes too.
Carbon credits come with a defined lifetime that depends on the registry’s requirements. This is usually called a permanence obligation that requires the carbon stored by a project must be maintained for the chosen period, typically 25 years, 100 years or even in perpetuity.
Some carbon projects could go belly up. The trees might die, a wildfire could destroy the vegetation, or a drought might reduce the grass cover. There are many reasons why a project might not sequester all the carbon it claims.
Carbon registries get around this risk of failure problem through a risk of reversal buffer that reduces the carbon credits issued to a project, typically 5%, sometimes more for riskier projects.
The risk of reversal buffer is not an insurance option for the project. It is insurance for the integrity of the registry. The project owner must reestablish carbon from fire or natural disturbance in most instances.
Soil carbon additionality.
After dithering on climate action for over a decade, the Australian government has conceded that agriculture has a role in carbon sequestration and has decided to focus on encouraging practices that increase soil carbon.
Sustainably FED likes this idea.
Most agricultural soils are depleted in carbon relative to their local potential. Sustainably FED always advocates for more carbon in soil because it fuels biological activity and improves soil health — the sequestration potential is a bonus.
The government scheme means farmers will receive $400 million in payments for soil carbon in 2050. This sounds like a substantial sum but is only 0.3% of the predicted $131 billion agricultural output.
Some academics suggest that this income level will be a decisive trigger for practice change in only a tiny minority of cases.
Recall that for sequestration to be real in carbon market terms it must be additional to business as usual. The extra carbon storage in soil from keeping cover crops, reduced tillage, changes to grazing would be incentivized by the carbon payment.
The problem is that farming practices that increase soil carbon sequestration generate sufficient private benefits for some (but not all) farmers to adopt them without payments because of a simple and general rule — improved soil health increases yield and resilience to climate extremes.
And adding carbon to soil increases soil health.
As the researchers suggest
If these farmers receive payments for adopting these sequestering practices, such payments would contribute nothing to our sequestration targets, because the farmers would have adopted the practices anyway, without the payments (i.e., the sequestration is “non-additional”).
Thamo, T. and Pannell, D.J. (2016). Challenges in developing effective policy for soil carbon sequestration: perspectives on additionality, leakage, and permanence, Climate Policy 16, 973–992.
This example reads like the farmer needs the financial incentive from carbon farming to change practice.
Peter Yench, a cattle, lamb and feral goat farmer south of Cobar in Western NSW, also uses 22,000 of his 122,000 acres for carbon farming. Yench said carbon farming is beneficial as it gives him the chance to make some of his rougher country productive, which he usually wouldn’t earn any income off. He values it especially as a continuous, guaranteed income, enabling farmers to use the income to make the property more viable.
But if the land wasn’t productive before and is now, why wouldn’t other farmers change practices anyway.
In the carbon markets, this is the problem of baseline setting when we know that practices will change over time, meaning the baseline business as usual changes too.
Soil carbon measurement
It used to be the measurement of carbon in soils that prevented market adoption of this sequestration option.
If the soil carbon was technically difficult or cumbersome because the innate variability of soil required a huge sampling to obtain a reliable estimate of average carbon content, then it was expensive to measure directly.
The cost of estimation became prohibitive given the volume of sequestration and the price per ton of credits. Many farmers couldn’t recover the cost of establishing a project.
Recent technical advances in measurement, including remote sensing, have eased this constraint.
More importantly, the market mechanism has allowed the modelling of soil carbon to predict sequestration followed by measurement to validate predictions as an alternative method of accounting.
This is a substantive step forward.
But as Michael Crwawford noted
The reality of soil carbon is that it is highly variable, hard to measure, shift, and easy to lose.
We are back to additionality, actions that are over and above business as usual that not only need carbon finance but actually result in soil carbon gains within the permanence and risk reversal rules.
We must not let these realities stop us from trying.
Soil carbon gains are not just essential to tackle climate change; they are critical to food production.
What sustainably FED suggests
Humans are very clever. We can invent tools and tricks to achieve just about anything, constrained only by cost and the laws of physics.
Market mechanisms to alter behaviour is one of our clever, convoluted and capricious inventions. Works well in theory but every nuance and rule creates opportunity for interpretation and risk of failure.
Additionality is essential for a carbon market to achieve emission reduction. It ensures that activity change happens because of the mechanism.
Mowing the lawn a few days early is not additional.
Ensuring that reforestation, avoided deforestation, carbon registration into soil and other AFOLU practices would not happen anyway. They all improve soil, and ecosystem services delivery is a big ask.
The irony is that, as with the lawn mowing, they must happen anyway.