Understanding Additionality in the Carbon Market

October 11, 2023 | By ForGround by Bayer

Carbon markets represent a unique opportunity for farmers to potentially enhance their income by adopting regenerative practices that also benefit their soil health. One of the key concepts within the voluntary carbon market that farmers need to understand is “additionality.”

Additionality is the principle that a carbon offset project must lead to real and measurable greenhouse gas emissions reductions that wouldn’t have occurred if the project hadn’t been carried out. In this article, we explore the concept of additionality and how it relates to regenerative agriculture.

The Carbon Market for Farmers: An Overview

The carbon market has emerged as a tool to help combat climate change by placing a value on carbon emissions reductions. It operates on the principle that organizations, governments or individuals can earn carbon credits for taking actions that reduce emissions. These credits can then be traded or sold to offset emissions, creating a financial incentive for adopting carbon-sequestering practices.

Farmers are in a unique position to take advantage of the carbon market’s income potential. Carbon programs incentivize farmers to adopt select regenerative practices, such as cover crops and reduced tillage, that generate carbon credits by sequestering carbon in the soil. Carbon credits are sold on the carbon market after those practices are verified and carbon removal is measured.

Here's where the concept of carbon credits and additionality comes into play.

The Role of Additionality: Proving a Change Has Occurred

It’s important for farmers considering the transition to regenerative practices to understand additionality. Additionality refers to the notion that projects or practices eligible for carbon credit generation must go beyond business-as-usual activities. In other words, they need to result in emissions reductions or carbon sequestration that wouldn’t have happened in their absence. Said simply, there needs to be a verifiable change from normal, baseline practices.

When evaluating whether a particular field-level practice qualifies for carbon programs, farmers should gauge whether the practice is a departure from their usual approach. It should result in a measurable increase in carbon sequestration compared to conventional farming methods. Companies like Bayer provide this service to farmers to help them through the process.

How Carbon Programs Demonstrate Additionality

Demonstrating additionality can be complex. It requires comparing the emissions reductions or carbon sequestration achieved through a specific practice with a credible baseline scenario. This baseline – sometimes referred to as foot printing – represents the emissions or sequestration that would have occurred without the regenerative practice in place.

Several methods are used to calculate additionality so that only truly impactful practices are eligible for carbon programs. Project-based methods and standards-based methods are the two most common. The project-based method considers each project’s unique circumstances and barriers. The standards-based method compares a project’s performance to a predefined baseline.

To demonstrate additionality, certain criteria must be met:

Baseline scenario: A clear baseline scenario should be established first. This baseline serves as a reference point to measure against emissions reductions achieved by implementing the regenerative practice.
Investment analysis: This involves evaluating whether the project faced economic barriers or challenges that required additional funding from carbon credits to make it viable.
Leakage: Additionality tests also consider the potential for “leakage,” which is a term for when emissions are reduced in one area but inadvertently increased in another.
Common practice: This means demonstrating that the project isn’t common practice (or is distinct from similar activities that are) or legally required. It’s usually for this reason why certain counties could lose carbon program eligibility when more than 50% of farmers are doing regenerative practices already.

When farmers participate in carbon farming programs, they’re required to gather data, monitor changes in their agricultural systems and collaborate with experts to verify additionality. The verification process takes time, but the potential benefits to farmers – both environmentally and economically – make it worth the effort. Programs like the Bayer Carbon Program recognize this and are specifically designed to simplify the verification process for farmers.

Beyond Carbon Credits: The Advantages of Regenerative Agriculture

While carbon programs provide a potential financial incentive for farmers to adopt regenerative practices, the benefits extend beyond the carbon market. Practicing strip-till/no-till and planting cover crops can help support soil health, enhance water retention and reduce soil erosion.

Participating in the carbon market is a huge opportunity for farmers who adopt regenerative practices. Grasping the concept of additionality first is essential to understanding how the carbon market works and how enrolling in a carbon program can help farmers potentially increase their income while realizing the benefits of healthier soils.

Legal Statements:  This Bayer Carbon Program described in this material is subject to the current version of the Bayer Carbon-Smart Practices Master Agreement. The information is to aid in the understanding of the Bayer Carbon Program and does not change or modify the Bayer Carbon-Smart Practices Master Agreement in any way.