Additionality & Carbon Neutrality: Insufficient for Real Climate Impact

Many institutions want to eliminate their contribution to climate change, but not all are critically evaluating the actual climate impact of their actions. Well intentioned organizations risk falling into a trap of thinking they are making a difference by purchasing financial instruments, such as carbon credits, with unclear climate impacts. Even carbon credits certified as “additional” may not have a real climate impact, as I will illustrate with an example of a carbon credits project that I led.

I propose a new distinction between “absolute additionality” and “relative additionality.” Many carbon credits possess relative additionality in that they go beyond business as usual, are legitimate for emissions trading purposes, and reward "good actors." But purchasing such credits does not clearly impact the climate system. In contrast, credits with absolute additionality come from projects that were only possible because of the revenue from selling carbon credits. Purchasing such credits goes beyond emissions trading and genuinely offsets the buyer's emissions in the climate system.

I further propose a new distinction between “carbon neutral” and “fossil fuel free” organizations. Carbon neutrality can be achieved without a real climate impact, (e.g., by buying relatively additional carbon credits and unbundled RECs). In contrast, a fossil fuel free organization has no Scope 1 or Scope 2 emissions: this requires significant steps like converting energy systems and entering into long-term PPAs. In my opinion, all organizations should aspire to be fossil fuel free...and indeed they must be if we are to avoid catastrophic climate change.