rcire’s Recent Comments

• Click here to view comment in original post

  Seriously

  Everyone seems to be on the same page in that additionality is a necessary beast in the voluntary market.  No, there aren't iron-clad rules to determine what is additional and what is not.  It does involve a bit of common sense to make an objective determination of additionality and I think that is reasonable when the credibility, as Capster points out, of the marketplace is at stake.  

  Naturescene, the CDM does not base additionality solely on investment analysis.  The CDM additionality steps simply seek to determine whether a project is UNLIKELY to be financially attractive and then moves on to consider additional barriers (regulatory, common practice, etc).  No, there is no definitive hurdle rate associated with financial additionality, but that doesn't automatically make it a poor concept which is the implication from Naturscene and Sean.  I still don't understand Sean's argument that financial additionality results in suboptimal investment.  That is purely a theoretical construct that, as yet, is not borne out in practice (at least in the voluntary carbon market).  The fact of the matter is that companies generally have financial principles in place that define metrics such as IRR and if there is a persuasive case to be made that a project is financially additional (i.e., a project doesn't clear that hurdle w/o revenue from carbon credits), you simply move on to the subsequent barriers analysis.  To quote Capster, this..."ain't that damn hard".    On When additionality always matters posted 1 year, 7 months ago 18 Responses

• Click here to view comment in original post

  Strips

  I am referring generally to those playing an "aggregator" role (locking in prices for a fixed amount of time for rights to the emissions reductions). I am surprised that you cannot find buyers willing to pay for more than a year's output. Is there an underlying reason beyond future uncertainty? On Spots vs. strips posted 1 year, 8 months ago 19 Responses

• Click here to view comment in original post

  Spot v. Strip in U.S. voluntary market

  Maybe I am misunderstanding the following from your entry Sean:
  "Here's the salient point. As of today, the only way you can buy or sell carbon (in the U.S.) in voluntary markets is on a spot basis."

  You are omitting a significant portion of the market that includes participants engaging in long-term transactions identical to the definition that you provide as a "strip" market.  Numerous parties engage in long term transactions to purchase VER's on a regular basis.  Am I missing something here?On Spots vs. strips posted 1 year, 8 months ago 19 Responses

• Click here to view comment in original post

  Question clarification

  The question was a bit vague.  I'll clarify.  The concept of additionality encompasses more than just financial "tests" and often includes other hurdles such as regulatory and common practice tests.  Your argument is essentially saying that to level the playing field and reduce the potential for suboptimal investment, a project that reduces GHG emissions should have access to carbon markets regardless of its "financial additionality".  My point in asking the question is that if investors can access carbon markets through projects that would have occurred anyway (without the advantage of carbon credits), where does it end?  

  Obviously, regulated projects would have occurred anyway so what is the difference between your argument (carbon credits resulting from projects occurring anyway for the purpose of maximizing investment return) and allowing mandated projects access to the carbon markets?  

  If there are no controls that lead to and protect the credibility of the voluntary carbon market, we have come full circle to the point made by ngoddard...essentially any carbon reducing activity would be eligible.     On Does additionality matter? posted 1 year, 8 months ago 29 Responses

• Click here to view comment in original post

  Again, theory or practice

  Sean, I understand your argument, but don't believe that the concept of additionality is leading to suboptimal investment.  The rationale behind the argument makes a certain amount of sense theoretically, but the connection between prohibiting certain projects that make good economic sense already and those that may need a bit of help is loose at best.  

  Do you also believe that those projects mandated by regulation should have access to carbon markets or is your criticism of additionality based solely on "financial additionality"? On Does additionality matter? posted 1 year, 8 months ago 29 Responses