This proposed new tool provides procedures and requirements to assess the additionality of project activities, including an a barrier analysis, investment analysis, and common practice analysis.
This tool replaces the CDM TOOL01 Tool for the demonstration and assessment of additionality (external) for project activities in the VCS Program and consolidates the procedures and requirements of the following CDM tools and guidelines:
- TOOL24 Common practice (external);
- TOOL27 Investment analysis (external); and
- Guidelines for Objective Demonstration and Assessment of Barriers (external).
This proposed tool aligns with the Core Carbon Principles (CCPs) Assessment Framework of the Integrity Council for the Voluntary Carbon Market (ICVCM). If approved by ICVCM, the new tool will allow VCS projects to qualify for CCP labels, provided the methodology meets all other criteria.
The VCS Program rules and requirements will specify which methodologies must use this tool.
Project activities applying a methodology that uses the CDM TOOL21 Demonstration of additionality of small-scale project activities may also apply all applicable steps of this tool (including the common practice analysis) to comply with the CCP requirements.
Per Verra’s Methodology Change and Requantification Procedure (currently under development), existing projects may also use the new tool to demonstrate additionality, and if the new tool and associated methodology is approved by the ICVCM, obtain the CCP label for past and future issuances.
Updates in the proposed new tool include:
- New requirement for the benchmark analysis to demonstrate that carbon credit revenues decisively increase the economic performance of the project and raise the financial indicator (such as Internal Rate of Return) to or above the required financial benchmark
- New requirement that assumptions, data, and conclusions in the investment analysis must be consistent with information presented to the company’s decision-making management and investors/lenders
- Removal of the “technological barriers”
- New requirement to provide verifiable evidence to demonstrate each identified barrier to the implementation of the project and proof that that revenues from the sale of carbon credits are the decisive element in overcoming each identified barrier
- Removal of the “first-of-its-kind” additionality test
- Other improvements and edits to enhance clarity
Summary of Development
The proposed new tool is developed by Verra following an alternative process, per Section 2.1.2 of the VCS Methodology Development and Review Process, v4.4 (PDF). The proposed tool is currently at Step 6: Final Verra Review of the VCS Methodology Development and Review Process, v4.4 (PDF)
The consultation for this proposed tool is open from August 21 – September 23, 2024.
View the Consultation Announcement: New VCS Tools for Additionality announcement.