Definition of additionality debate

When setting up a project that reduces greenhouse gas emissions, one of the key criteria for eligibility is that a project would not have gone ahead without the extra funds available from the sale of the carbon credits.

This rule was meant to guard against companies gaining an additional source of income from an already profitable venture.

Companies complain it can be subjective and that it is hard to estimate whether a project would be financially viable without the extra income.

To gain private sector funding, companies are often caught in a dilemma. Many are asked to prove that a project would be financially viable without credits, because potential lenders and investors are nervous about their price volatility. Thus companies may end up with one set of estimates for banks and another for the mechanism’s board.  [1]

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