Additionality and Article 6 of the Paris Agreement

As negotiators gather in Bonn for another round of discussions on implementation of the Paris Agreement, various detailed issues are surfacing. One, which pertains to Article 6 of the Agreement, is the concept of additionality of actions implemented under the Article. In the Decision Text that accompanied the Paris Agreement, which is effectively the instruction manual for implementation, the need for additionality is referred to in relation to Article 6, Paragraph 4, the emissions mitigation mechanism. The Decision Text says;

Recommends that the Conference of the Parties serving as the meeting of the Parties to the Paris Agreement adopt rules, modalities and procedures for the mechanism established by Article 6, paragraph 4, of the Agreement on the basis of:

. . . .

(d) Reductions in emissions that are additional to any that would otherwise occur;

. . . .

. . . .

The Article 6 negotiators have already grappled with this to some extent as the concept appears in the ‘Informal document containing the draft elements’, Annex XII.D, released in mid-March. In that document three possible definitions for additionality are considered, i.e.;

An Article 6, paragraph 4, activity to be additional by demonstrating that:

Option A {reference to what would otherwise have occurred}

(a) Emissions are reduced below those that would have occurred in the absence of the activity.

Option B {definition related to activity being beyond the NDC}

(b) The reduction of emissions goes beyond what would be achieved through the delivery of the NDCs of the host Party {further development may be required for implementation}.

Option C {definition linked to scope of NDC}

(c) {further development may be required for implementation}.

The concept of additionality stems from the Clean Development Mechanism (CDM) of the Kyoto Protocol, where Article 12.5 specifies that emission reductions are only to be certified under the CDM if they are additional to any that would occur in the absence of the certified project activity. In his 2009 paper ‘Additionality in the Clean Development Mechanism: Why and What?’, Benito Müller outlined a number of different ways in which additionality constraints under the CDM can be argued for. For example, there are arguments (i) from ‘environmental integrity’, (ii) from implementing Article 4.7 (of the Convention), and (iii) from the need to safeguard Annex I domestic mitigation efforts. Müller notes that the most important and widely used argument, is that additionality is needed to protect the environmental integrity of the regime. Being an offset mechanism, the CDM requires additionality to ensure that any ton emitted in developed countries against a CER must not increase the level of emissions permitted under the regime.

Under the CDM, additionality became something of a quasi-science, with baselines established for projects against which assessments could be made. The UNFCCC developed a toolkit, which recommended a scenario based approach for determination of additionality. But despite the effort put in, the analysis is largely subjective in nature. It all depended on what the assessor thought the future might bring, versus an objective numerical approach based on specific goals. The reason behind this is that developing countries didn’t have targets under the Kyoto Protocol, so environmental integrity could only be assessed, rather than measured.

Translating this concept to the Paris Agreement argues for new thinking on additionality in that the structure behind Paris requires all participating countries to have some form of target or goal embedded within their respective Nationally Determined Contributions (NDC). Paragraph 5 of Article 6 also specifies that emission reductions resulting from the 6.4 mechanism shall not be used to demonstrate achievement of the host Party’s nationally determined contribution if used by another Party to demonstrate achievement of its nationally determined contribution. This would happen if reduction units created under the mechanism were transferred to another Party without an accounting protocol. Doing so, would be classified as double counting. Within the Decision Text, there is a further requirement that double counting is avoided on the basis of a corresponding adjustment by both Parties for anthropogenic emissions by sources and/or removals by sinks covered by their nationally determined contributions under the Agreement.

The above discussion points to a more numerical and therefore objective approach to accounting for transfers under the Paris Agreement, in that corresponding adjustments are most easily executed when NDCs are quantified. I discussed this at length here. It also means that the more traditional complex assessment of additionality can be avoided, in that the corresponding adjustments ensure that environmental integrity is maintained.

If such a corresponding adjustment is made, then in the case of the host Party, the transferred quantity must be additional. This is because the host Party, having made the transfer, must find further, presumably lower cost, mitigation opportunities in their own economy to meet the stated goal of their NDC. This in turn means that the transferred actions were in addition to the requirements of the NDC, hence additionality can always be claimed. The quantification of systems is ideally done in units of CO2, but could even be in units of clean electricity or capacity in the case of renewable energy based NDCs.

Attempting any other assessment process to establish whether an activity goes beyond the NDC of the host Party is fraught with difficulty. In most instances this will be almost impossible to assess due to the difficulty of establishing the contribution of a single activity to the overall national emission pathway. Even if assessment is possible, it may be an extended period before the assessment can be made due to the need to collect and collate all the greenhouse gas data for the whole NDC. This will lead to any emission reduction units from the activity being untradeable in that they will carry considerable performance risk related to the outcome of an assessment that will be both uncertain and take a year or more to be delivered.

An extension of this approach to additionality is that units created under the 6.4 mechanism don’t require the same level of scrutiny as units created under the CDM. Should an activity produce an abundance of units which are then sold outside the host county, always a concern under the CDM through the application of a generous baseline, then the corresponding adjustment will act as a deterrent by demanding even greater mitigation efforts by the host. Although this isn’t a desirable way to operate the mechanism, it is nevertheless self-correcting.

The current informal text under consideration in Bonn doesn’t clearly identify the above route towards assessing additionality, but presumably Option B could fill this need. The text might then read;

• The reduction of emissions goes beyond what would be achieved through the delivery of the NDC of the host Party. The host Party’s nationally determined contribution is adjusted numerically by an amount corresponding to any use of the emission reduction of said activity by another Party to achieve its nationally determined contribution, ensuring that additionality is established.

As the negotiators get down to their tasks in Bonn, they need to rethink additionality, jettison the model founded for good reasons under the Kyoto Protocol, and embrace a more quantified and objective approach to this subject.