Defining Investment Additionality for CDM projects—practical approaches

By S. Greiner, A. Michaelowa. 2003

146 citations recorded by the source corpus.

The environmental integrity of the CDM under the Kyoto Protocol depends on the possibility to avoid giving emission credits to projects that would have happened anyway. Whether and how ?Investment Additionality? of CDM projects has to be determined is currently part of climate negotiations. We discuss the rationale of companies to invest in projects and analyse possible criteria to determine Investment Additionality from a theoretical point of view. A number of case studies is used to show the implications of the different criteria. The use of a single criterion is not possible, especially due to the importance of non-monetary barriers. However, some criteria are better than others. Moreover, the institutional framework for the selection and application of criteria is very important. Concluding, we suggest a combination of a threshold Internal Rate of Return with a risk factor as primary criterion. To take nonmonetary barriers into account, additional criteria could be used such as the existence of similar privately financed projects in the host country. If no explicit criterion is politically feasible, stringent baseline methodologies could at least capture some aspects of Investment Additionality.

Subfields: Economics and Econometrics, Environmental Engineering

View Paper: https://www.semanticscholar.org/paper/7dbae58bdb2c0e86caf244854cbffbadbc3017cc

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Economics and Econometrics

1. A. Michaelowa
2. F. Jotzo
3. L. Schneider
4. Julian F. Kölbel
5. Christopher Sutter
6. Timo Busch
7. D. Brescia
8. I. Shishlov

In Environmental Engineering

1. A. Michaelowa
2. L. Schneider
3. F. Jotzo
4. Timo Busch

Citations in the corpus

• Can Sustainable Investing Save the World? Reviewing the Mechanisms of Investor Impact (2020, background): “The last requirement is also referred to as additionality (see, e.g., Greiner & Michaelowa, 2003).”
• Estimating the CDM market under the Marrakech Accords (2002, background): “Whether no-regrets projects will be eligible under the CDM depends on how strictly and comprehensively the investment additionality test will be applied (Sugiyama and Michaelowa, 2001; Langrock et al., 2001).”
• Does the current Clean Development Mechanism (CDM) deliver its sustainable development claim? An analysis of officially registered CDM projects (2007, background): “4 On the different concepts of additionality see e.g. Greiner and Michaelowa (2003) .”
• Environmental integrity of international carbon market mechanisms under the Paris Agreement (2018, unknown): “…12 of the Protocol focussed on the additionality of projects (Cames et al., 2017; Erickson, Lazarus, & SpaldingFecher, 2014; Gillenwater, 2011; Greiner & Michaelowa, 2003; Haya & Parekh, 2011; He & Morse, 2013; Michaelowa & Purohit, 2007; Schneider, 2009b; Spalding-Fecher et al., 2012; Stua,…”
• Assessing the additionality of CDM projects: practical experiences and lessons learned (2009, background): “See, for example, Rentz (1998), Meyers (1999), Greiner and Michaelowa (2003), Pearson and Loong (2003), Kartha et al. (2005) and Michaelowa (2005).”