Additionality is a crucial - yet often overlooked - measure of true sustainability. Scientific consensus on the importance of additionality is growing and for good reason: without additionality, efforts to reduce emissions risk having no real impact. This blog post explores the concept of additionality and how it reflects the climate impact of renewable electricity purchases.
What is additionality?
An action or investment is additional when it has a real world impact that would not have occurred otherwise.
To better understand additionality, let’s look at the choices a company typically has when purchasing renewable energy:
1) It can buy certificates that represent energy from an existing solar park; or,
2) It can buy energy directly from an energy developer that will build a new solar park only if the company commits to buying its energy.
The first option is less additional - and less impactful - because the solar energy will be produced whether the company buys it or not. In contrast, the second option is highly additional because the company’s purchase is the reason the new solar park will be built, leading to more renewable energy being produced.
In the example above, the additionality of an action depends on its responsibility for the production of renewable energy. To evaluate whether something is additional, consider these critical questions:
1) Does my investment or action create a new outcome? If yes, your investment or action is additional.
2) Would this outcome exist without my investment or action? If yes, your investment or action is highly additional.
How additional is the 'green' electricity you buy?
Additionality is often missing from the 'green' electricity companies purchase.
The most popular and least additional way companies buy 'green' electricity is to purchase renewable energy certificates (i.e., Guarantees of Origin). Unfortunately, these certificates do not result in more renewable energy, despite allowing companies to claim emission reductions on paper (Read: The problem with green energy certificates).
There is another, more impactful way companies can purchase 'green' electricity, and that’s through a Power Purchase Agreement (PPA). These electricity contracts ensure that a new solar or wind park is constructed - a park that needed the PPA to be built. When companies sign these highly additional PPAs, they help accelerate the energy transition, making a tangible difference in the world (Read: The most effective green power solution for business).
The importance of additionality
Additionality is essential for validating sustainability claims. Without it, claims of reducing emissions or having had other positive impacts may be viewed as empty promises, leading to accusations of greenwashing. For instance, numerous articles in The Washington Post, Børsen, TV2, and EuroNews call out the lack of real-world impact from buying renewable energy certificates.
Major standards and reporting frameworks are also taking note of additionality. The Greenhouse Gas Protocol and Science Based Targets Initiative are both reviewing the legitimacy of non-additional sustainability claims. It is widely anticipated that these standards will soon require proof of additionality in companies’ sustainability claims.
Beyond the corporate realm, a lack of additionality threatens climate progress. When it comes to electricity procurement, a failure to consider the additionality of energy purchases means that over 40% of committed emission reductions tied to electricity consumption won’t happen. Meanwhile, we need to reach net-zero emissions in our energy sector by 2050, a goal that requires meaningful corporate action.
As we see temperatures rise, and increasing climate risks to human lives, nature and business, there is little space for sustainability decisions that fail to deliver the impact they promise.
