In terms of carbon offsetting, it is crucial for a project to generate additional emission reductions that would not have been possible without the extra funding from certificate sales.
In other words, there is a direct link between funding through certificates and the viability of the project. A project that is economically viable and not dependent on certificate sales can be carried out anyway and does therefore not qualify as a carbon-offsetting project.
It is important to ascertain the additionality of a carbon offsetting project as one of its main quality characteristics. However, the question whether a climate project would have gone ahead without revenue from offsetting certificates is hypothetical by nature. Some critics doubt if it is at all possible to ascertain the additionality of offsetting projects.
In Clean Development Project (CDM) or Joint Implemnentation (JI) climate projects the problem is solved by a rigorous, multi-step assessment process. Not only is the validity of the reference scenario scrutinized, but the economic appeal of the project is also assessed as well as potential difficulties a project might encounter. The assessment also looks at how many similar projects are hosted in the region.
Supporting sustainable development
Projects from various categories may be funded by certificates. Depending on the type of project, their significance for sustainable development in the host country may vary. Even within a project category, there may be considerable variation, as the effectiveness of a project lies in the detail. Some of the existing quality standards require the thorough examination of a project's contribution to sustainable development, based on reliable evidence.
Social Sustainability can be promoted by projects that create jobs, protect indigenous communities and/or involve the civil society and local population in the planning and implementation of the project, or by projects preserving cultural heritage. Another example of promoting social sustainability as a by-product of a carbon-offsetting project would be to provide electricity to a rural community that has had no electricity supply in the past.
Ecological Sustainability can be supported by protecting biodiversity in forest projects, by avoiding interference with ecosystems or improving regional air and water quality. Further examples of ecological sustainability are the reduction of noxious substances released in fossil energy generation, or reducing the risk of explosions from uncontrolled methane emissions.
Economic Sustainability can be achieved by supporting and building up local economic cycles and long-term investment that makes ecological as well as economic sense. Avoiding expenses for fossil fuel could be one example of economic sustainability.
Assessing project categories in view of their sustainability is a difficult and highly political process. There may be large differences in sustainability within the same project category. Generally, however, it can be said that community-based projects usually are more conducive to sustainable development than industry-based projects.