ICR Additionality specifications v1.0
Summary
ICR serves as a framework for climate projects of any size, promoting environmental integrity through accelerating credible action and ensuring credibility, consistency, and transparency in quantification, monitoring, reporting, validation, and verification
Version no.
1.0
Date of Version
14. November 2025
1 Scope
These additionality specifications are aligned with the ICR program’s multilevel additionality approach and incorporate all five levels of additionality defined, ensuring compatibility with project-level and standardized additionality assessments.
These specifications set out enhanced guidelines for the demonstration of additionality. These specifications apply to project proponents and methodology developers and introduces ex-post reporting obligations to verify ex-ante assumptions during the crediting period of registered project activities.
2 Normative references
ICR definitions
ICR requirement document
ICR approved methodologies and tools
ISO 14064-2, Greenhouse gases — Part 2: Specification with guidance at the project level for quantification, monitoring and reporting of greenhouse gas emission reductions or removal enhancements.
ISO 14064-3, Greenhouse gases — Part 3: Specification with guidance for the verification and validation of greenhouse gas statements
ISO 14065, General principles and requirements for bodies validating and verifying environmental information
ISO 14066, Greenhouse gases — Competence requirements for greenhouse gas validation teams and verification teams
3 Terms and definitions
For the purposes of this document, the terms and definitions given in the ICR definitions apply in addition, definitions and acronyms from ISO 14064-2 and ISO 14064-3 apply. If there exists inconsistency in definitions, ICR definitions prevail.
Adoption potential means the maximum feasible extent to which the proposed technology or measure could be adopted in a given geographic and sectoral context, accounting for all relevant constraints.
CAPEX means the total cost of acquiring, installing, and commissioning the infrastructure or systems needed for a project to operate.
Comparable activity means activity that delivers the same type of product or service as the proposed project activity, under comparable conditions, using the same or functionally similar technology or measure.
Discount rate means the time value of money, project-specific risks, and opportunity costs, the rate at which future income or costs are "discounted" to understand their value today.
Ex-ante assumptions mean parameters used in the additionality demonstration prior to the implementation of the project.
Ex-post actuals mean realized values reported during the monitoring period.
Large-scale capital-intensive projects mean projects characterized by high upfront investment costs exceeding USD 10 million, complex infrastructure, and asset lifetimes exceeding 25 years.
Market penetration means the proportion of the total relevant market that is currently using the same technology or measure as the proposed project activity, expressed as a percentage.
Measure means a specific action, intervention, or technology applied to result in GHG emission mitigations.
Medium-scale projects mean projects with moderate capital requirements, between USD 1 million and 10 million, serving a localized or regional purpose with medium asset lifetimes of 10 to 25 years.
Non-carbon revenues mean any income a project earns from sources other than the sale of ICCs such as from co-products, services, or benefits associated with the project’s core activities and deliverables.
OPEX means the ongoing costs required to operate and maintain the project after its implementation. These are recurring expenses that ensure the project continues to generate GHG emission mitigations.
4 Principles
The principles of the ICR program are adapted from CDM/PACM, and ISO 14064-2, ISO 14064-3 and ISO 14065. All climate projects shall strive to follow these principles, and methodology development shall adopt these as fundamental principles. Applying the principles is crucial to safeguarding GHG-related information and impact as a true and fair account. The principles are the basis for and will guide the application of the requirements in the ISO 14064-2, ISO 14064-3 and of this document resulting in impactful climate projects and solutions.
Relevance - Use data, methods, criteria, and assumptions that are appropriate for the intended use of reported information.
Completeness - Consider all relevant information that may affect the accounting and quantification of GHG emission mitigations.
Consistency - Enable meaningful comparisons in GHG-related information.
Accuracy - Reduce bias and uncertainties as far as is practical/cost-effective.
Transparency - Provide clear and sufficient information for reviewers to assess the credibility and reliability of GHG emission mitigations claims.
Conservativeness - Use conservative assumptions, values, and procedures to ensure that GHG emission mitigations are not over-estimated.
Impartiality – Impartial validation and verification of GHG emission mitigations by a competent accredited 3rd party organization.
ICR sets additional requirements consistent with the CDM/PACM and other GHG programs facilitating registration of climate projects and issuances of carbon credits that can be traded and used by organizations to contribute to climate actions, to compensating for, and offsetting GHG emissions.
5 Additionality specifications
5.1 Applicability
These specifications are applicable to projects and methodologies under the ICR program. Methodologies shall strive to follow the specification for each additionality level they prescribe.
5.2 General
The ICR program recognizes five levels of additionality to demonstrate project-level additionality:
Level 1: GHG emissions additionality
Level 2: Statutory additionality
Level 3: Technology, institutional, or common practice additionality
Level 4: Financial additionality
Level 5: Policy additionality
Methodologies and projects may rely on recognized tools such as the CDM/PACM additionality tools, combined tools, or other additionality tools developed specifically as a good practice guidance for additionality testing.
The principles of relevance, completeness, consistency, accuracy, transparency, and conservativeness as outlined in the ICR requirement document shall apply. In addition:
Full disclosure of sources and justifications for all ex-ante assumptions.
Mandatory ex-post reporting of regulatory changes, adaptation rate or barriers and actual financial data.
Comparison of actual performance with projected figures.
5.3 Standardization under methodologies
When developing standardized methods, the methodology developer shall consider which levels of additionality are relevant to the methodology and derived project activities. The standardized method shall be structured in alignment with section 6.4.1 of the ICR requirement document v.6.0.
5.4 Ex-ante additionality analysis
5.4.1 Level 1 - GHG emission additionality
Actual GHG emission mitigations are fundamental to projects additionality and eligibility under the ICR program. Project proponent shall demonstrate that the project activity results in GHG emission mitigations that are additional to what would occur in the absence of the activity, relative to a valid and credible baseline scenario.
Project proponents shall describe how the project activity reduces, avoids, destroys, removes, or sequesters GHG emissions compared to a baseline scenario as stipulated in the ICR requirement document. Conformance with other applicable requirements and approved methodologies shall be considered sufficient to meet Level 1 additionality.
5.4.2 Level 2 - Statutory additionality
Projects shall demonstrate that the proposed project activity is not mandated by any law, regulation, or legally binding requirement at the national or subnational level, unless the law explicitly integrates the project activity as a compliance instrument or statutory requirements are systematically not enforced if imposed.
Project proponents shall:
Consider the implications of non-enforcement or inconsistent enforcement of applicable statutory or regulatory requirements in the project jurisdiction;
Identify any recently adopted regulations, policies, or programs relevant to the activity that have not yet taken full effect but may influence the legal baseline during the crediting period;
Identify and disclose all applicable legal and regulatory requirements that influence the decision to implement the activity;
Confirm that the activity goes beyond minimum legal compliance and is not the result of a policy obligation alone;
Describe any relevant support schemes (e.g., tax credits, feed-in tariffs, grants) and explain how they interact with the proposed project activity.
Regulatory context analysis shall be included in the PDD/PDDMR.
5.4.3 Level 3 - Technology, institutional, or common practice additionality
5.4.3.1 Common Practice Analysis
Where common practice analysis is applied to demonstrate level 3, project proponent shall demonstrate that the technology or activity implemented is not widely adopted in the relevant sector and geographic area.
The analysis shall include:
A description of the technology or measure proposed;
A clearly defined geographic and sectoral boundary for comparison;
A quantitative estimate of the market penetration or adoption rate of the technology or measure, based on official or independently verifiable sources;
An explanation and justification if assumptions, proxy data, or extrapolations are used;
References to all data sources used, including publication date and authority.
Where data availability is limited, the analysis may include expert judgment supported by documented methodologies and justification.
Projects that are a first of their kind shall not be considered common practice. If a project is first-of-its-kind, it may rely on CDM Tool 23 “Additionality of First-of-its-Kind Project Activities.”
For the common practice analysis, the project or methodology shall select either Option I or Option II, depending on applicability.
I. Comparable activity analysis
Demonstrate that the project activity is not a common practice within the applicable geographical area by applying the equation:
Where,
is common practice indicator in year y, in geographical area i.
is the number of projects that apply technology different from the technology applied by the project activities.
is the number of projects of similar nature as the project activity[1], in year y, in geographical area i.
shall be lower than 20% and 
.
When determining the following applies,
(a) The projects shall be located in the same geographical area.
(b) The projects shall apply the same measure as the proposed project activity.
(c) The projects shall use the same output as the proposed project activity.
(d) The project shall employ the same or comparable technology principle.
(e) Any additional comparability conditions as defined by applied methodology shall be followed.
Comparable activity analysis is best suited when reliable data on individual comparable activities are available, including information on their commissioning dates, scale, and technical characteristics within the relevant geographic area. [2]
II. Market penetration analysis
Demonstrate that the project activity has reached low penetration within applicable geographical area compared to the maximum capabilities applying the equation:
Where
is penetration of the project activity in year y, in geographical area i.
is adoption of the project activity in year y, in geographical area i.
is the maximum adoption potential of the project activity in year y, in geographical area i.
shall be lower than 5%.
When determining and the following applies:
(a) shall be determined for either the total stock of activities or the activities within the defined reference period reflected either in total number of units in the target market or the total installed capacity/output of the units in the target market.
(b) Determining the factors that affect adoption may be constraints imposed by the supply of raw materials or energy resources required for the activity, limitations set by the technical efficiency of the project activity, reliability or quality of service provided by the project activity compared to its alternatives, limitations based on the availability of suitable locations for executing the project activity, demand for the product or service, existing infrastructure and market price.
(c) The potential for maximum adoption is restricted by various factors, each presenting its own limitations on the overall adoption of a project activity.
(d) shall reflect the total sales, stock, the installed capacity/output, or number of units using a similar technology, measure or practice as implemented under the proposed activity.
Market penetration analysis is appropriate when comprehensive and credible aggregated market data, such as annual sales, cumulative installations, or total installed capacity, are accessible, while detailed data on individual activities are either limited, inconsistent, or unavailable. [3]
All quantitative data and information used in the common practice analysis shall be derived from reputable, independently verifiable, and transparently documented sources. Acceptable data sources include:
Official government statistics and national reports;
International organizations (e.g., IEA, FAO, IRENA, World Bank);
Publicly available industry or sectoral reports;
Verified market data, including from GHG programs;
Peer-reviewed academic research;
Validated project documentation from relevant GHG programs or schemes;
Credible expert judgment.
5.4.3.2 Barrier analysis
Where barrier analysis is used to demonstrate additionality to level 3, project proponents shall identify and substantiate the existence of specific barriers that would prevent the implementation of the project in the absence of revenues from ICCs.
The barrier analysis shall include:
A description of the type of barrier(s) applicable, which may include financial, technological, institutional, informational, or cultural/social;
The barrier analysis shall at minimum include detailed analysis of one identified barrier;
Evidence that the barrier(s) are specific to the proposed activity and not generally applicable to similar activities in the region or sector;
Documentation of how the barrier(s) would prevent implementation without the incentive from carbon markets;
Demonstration that carbon finance provides the determining factor in overcoming the identified barrier(s).
Acceptable sources of evidence include but are not limited to:
Independent studies or expert assessments;
Publicly available market or financial data;
Letters from financing institutions or governmental entities;
Case studies of similar project failures under comparable conditions.
Where financial barriers are claimed, and overlap with investment analysis, the financial implications of the barrier shall be explicitly quantified or otherwise substantiated.
The barrier analysis shall be conducted in a transparent, evidence-based, and conservative manner and be transparently documented in the PDD. Claims must be substantiated by verifiable evidence and shall not rely on anecdotal information or subjective opinion. Methodologies may define threshold criteria or exclusion conditions for barrier claims where appropriate.
For the barrier analysis projects may rely on section 6.4 of A6.4-STAN-METH-003 PACM.
5.4.4 Level 4 - Financial additionality
5.4.4.1 Level 4a
Projects seeking to align with Level 4a shall perform an investment analysis following the procedures in Section 6.3.4 to 6.3.6 of A6.4-STAN-METH-003 and any supporting tools such as Tool for Investment Analysis or Tool for the Demonstration and Assessment of Additionality. In addition, the following are required:
All key financial parameters used in the analysis, including CAPEX, OPEX, non-carbon revenues, and discount rate, shall be disclosed and include:
Parameter name
Value used
Data source (including date and reference)
Rationale for selection
Industry benchmark
A sensitivity analysis shall be conducted, varying at least CAPEX, OPEX, revenues, and the cost of capital within a reasonable range (e.g. ±10% to ±30%).
The analysis shall exclude any forecasted revenues from the sale of ICCs and any associated transaction costs, including project development, validation and verification, registration and issuance cost.
A signed statement from the financial decision-making authority shall confirm that the investment decision is dependent on expected revenues from ICC transactions.
5.4.4.2 Level 4b
Projects seeking to align with Level 4b may perform a simple cost analysis instead of a full investment analysis if gross annual revenue of the project activity, excluding revenue from the sale of carbon credits, does not exceed five percent of the capital expenditure.
For the simple cost analysis, the following are required:
Documentation showing that the project activity does not result in cost savings or non-carbon revenues under normal operations;
An expected project costs (CAPEX and OPEX) and demonstration and justification for why no market-based or cost-reducing returns are expected from the project activity.
The analysis may include associated transaction costs, including project development, validation and verification, registration and issuance cost.
A signed statement from the financial decision-making authority shall confirm that the investment decision is dependent on expected revenues from ICC transactions.
5.4.5 Level 5 - Policy additionality
Projects claiming Level 5 additionality shall demonstrate that the proposed project activity lies outside the scope of the host country's current NDC or is not reflected in the national GHG inventory.
The analysis shall include:
Reference to the most recent version of the host country’s NDC and national GHG inventory;
Identification of whether the GHG emission mitigations or removals from the project are excluded from the national GHG inventory or from the scope of mitigation measures specified in the NDC;
A description of the sector, GHG, and geographic scope of the NDC and how the proposed activity is distinct;
Justification for why the GHG benefits from the project would not otherwise be accounted for under national climate goals or reporting.
The demonstration may also include establishment of procedures for attaining a letter of confirmation for corresponding adjustment subject to section B of Annex II of COP26 decision -/CMA.3 on Article 6.2 where corresponding adjustments are requested. The project shall further follow ICR Article 6.2 procedures.
5.5 Ex-post additionality reporting
Ex-post reporting of additionality shall not affect the eligibility of projects to continue issuance within their crediting period. Instead, it serves as a transparency mechanism to inform stakeholders of any material changes in the additionality status of the project
5.5.1 Level 1 - GHG emission additionality
At each monitoring period the project participants shall report on the actual GHG emission reductions or removals achieved by the project activity relative to the established baseline.
Project proponent shall describe how the GHG emission mitigations claimed during the monitoring period were achieved.
Fulfilment of all applicable monitoring and reporting requirements and applied methodology shall be considered sufficient to demonstrate Level 1 additionality ex-post.
5.5.2 Level 2 - Statutory additionality
The project proponent shall report on continuance of statutory additionality during each monitoring period. This report shall:
a. Confirm that the project activity remains beyond compliance with national or subnational regulatory requirements;
b. Identify any statutory changes that may have impacted the activity’s legal baseline since registration or the last monitoring period;
c. Describe any enforcement actions or compliance developments;
d. Disclose whether the mechanism or associated carbon finance has been recognized or incorporated into legal frameworks since registration;
e. Include references to official regulatory documents or communications, including publication date and issuing authority.
If the regulatory environment evolves such that the project activity is no longer statutory additional the level 2 additionality status of the project is revised.
5.5.3 Level 3 - Technology, institutional, or common practice additionality
5.5.3.1 Common practice
Project proponent shall report on the evolving commonality of the technology, practice, or measure implemented by the project activity.
For each monitoring period project proponents shall report on adoption of practices that include:
A qualitative description of changes in the market or sector context related to the technology or measure;
Quantitative data on the current adoption rate of similar technologies or practices in the relevant geographic and sectoral context;
Comparison of the current adoption rate against the threshold or benchmark used in the original common practice analysis;
References to official statistics, government programs, industry reports, or registries used to justify the data;
Explanation of any changes in the enabling environment (e.g., subsidies, mandates, financing schemes).
For the reporting the project shall recreate the analysis from the ex-ante assumptions.
If the updated analysis indicates that the technology or measure surpasses the threshold common practice, level 3 additionality then the status of the project is revised accordingly.
5.5.3.2 Barrier analysis
Where a project relies on a barrier analysis to demonstrate additionality, the barrier analysis shall be reported during each monitoring period.
The report shall include:
An assessment of whether the identified barriers in the ex-ante analysis continue to be present and relevant;
Documentation of any changes in market, policy, technological, or institutional conditions that could reduce or remove the previously identified barriers or add new;
Evidence that the project still depends on the carbon market revenues to overcome one or more of the original or new barriers;
Disclosure of any enabling policies, subsidies, or financing mechanisms introduced since registration that could have changed the viability landscape;
Justification for continued eligibility of the barrier analysis, referencing updated external sources where applicable.
If the barriers originally identified in the ex-ante analysis are no longer applicable or have been mitigated, the level 3 additionality status of the project is revised.
5.5.4 Level 4 - Financial additionality
5.5.4.1 Level 4a
Where project has demonstrated alignment to level 4a the project proponent shall for each monitoring period report actual financial values for the parameters identified in the ex-ante analysis.
A summary of realized financial values shall be included for each monitoring period, showing:
Parameter name
Ex-ante value
Actual value
Percentage deviation from the ex-ante analysis
Explanation for deviations >15%
The actual IRR and NPV of the project shall be recalculated using actual financial data, excluding ICC revenues. Any material changes to project financing, subsidies, market prices, or operational structure shall be disclosed.
5.5.4.2 Level 4b
Where project has demonstrated alignment to level 4b a simple ex-post cost analysis may be performed if gross annual revenue of the project activity, excluding revenue from the sale of carbon credits, doesn’t exceed five percent of the capital expenditure.
For the simple cost analysis, the following are required:
Documentation showing that the project activity has not resulted in cost savings or non-carbon revenues under normal operations;
Actual project costs (CAPEX and OPEX) and
any market-based or cost-reducing returns from the project activity.
The analysis may include associated transaction costs, including project development, validation and verification, registration and issuance cost and aggregated revenues from ICC sales.
Upon significant divergence from ex-ante assumptions or if the project becomes financially viable without ICC, level 4 additionality status of the project is revised.
5.5.5 Level 5 - Policy additionality
During each monitoring period, the proponent shall reassess the policy context and provide an update on any policy changes, confirming that the project continues to:
Lie outside the scope of the host country’s most recent NDC; or
Remain excluded from the most recently submitted national GHG inventory.
The update shall include:
References to the latest NDC submission and national GHG inventory;
Confirmation that project-related emissions reductions or removals are still not covered or claimed therein;
Any changes in host country policy or reporting that could affect eligibility under Level 5;
Where applicable, confirmation from the host country that corresponding adjustments will continue to be applied.
Any changes to authorization of a letter of confirmation for corresponding adjustment subject to section B of Annex II of COP26 decision -/CMA.3 on Article 6.2 where corresponding adjustments have been withdrawn.
If policy changes result in the inclusion of the project’s mitigation outcomes in the NDC or national inventory, such that the project activity is no longer policy additional the level 5 additionality status of the project is revised.
6 Validity and updates
These requirements shall be applicable to all project activities applying level-based additionality assessment approach post-entry into force.
Methodologies referencing these specifications shall include provisions for:
Review and potential revision of ex-ante assumptions at each crediting period renewal;
Integration of ex-post reporting into monitoring and verification plans;
Continued alignment with evolving host country policies, NDC updates, and international guidance on additionality;
ICR may issue supplementary guidance or updates to this document to clarify interpretation, ensure consistency with any host country frameworks, or incorporate best practices from validation and verification experience.
Footnotes
[1] Including both projects registered with a GHG program and who are not, studying other GHG program registration and information available from governmental institutions or industry associations.
[2] Ref. Draft Methodological tool: Common practice analysis (A6.4-MEP008-A02) and CDM Methodological tool Common practice, v.03.1
[3] Ref. Draft Methodological tool: Common practice analysis (A6.4-MEP008-A02) and Activity penetration, Verra methodology requirements v.4.4
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