CLEAN DEVELOPMENT MECHANISM TOOL01 Methodological tool Tool for the demonstration and assessment of additionality Version 07.0.0 TOOL01 Methodological tool: Tool for the demonstration and assessment of additionality Version 07.0.0 TABLE OF CONTENTS Page 1. INTRODUCTION .................................................................................. 3 2. SCOPE, APPLICABILITY, AND ENTRY INTO FORCE ...................... 3 2.1. Scope .......................................................................................... 3 2.2. Applicability ................................................................................. 4 2.3. Entry into force ............................................................................ 4 3. DEFINITIONS ....................................................................................... 4 4. METHODOLOGY PROCEDURE.......................................................... 7 4.1. Step 0: Demonstration whether the proposed project activity is the first-of-its-kind .................................................................... 7 Step 1: Identification of alternatives to the project activity consistent with current laws and regulations ............................... 7 4.3. Step 2: Investment analysis ........................................................ 9 4.4. Step 3: Barrier analysis ............................................................... 11 4.5. Step 4: Common practice analysis .............................................. 13 4.2. 2 of 16 TOOL01 Methodological tool: Tool for the demonstration and assessment of additionality Version 07.0.0 1. Introduction 1. The tool provides a step-wise approach to demonstrate and assess the additionality of a CDM project. These steps are: (a) Step 0 Demonstration whether the proposed project activity is the first-of-its-kind; (b) Step 1 Identification of alternatives to the project activity; (c) Step 2 Investment analysis; (d) Step 3 Barriers analysis; and (e) Step 4 Common practice analysis. 2. Scope, applicability, and entry into force 2.1. Scope 2. This tool provides for a step-wise approach to demonstrate and assess additionality. These steps include: (a) Demonstration whether the proposed project activity is the first-of-its-kind; (b) Identification of alternatives to the project activity; (c) Investment analysis to determine that the proposed project activity is either: 1) not the most economically or financially attractive, or 2) not economically or financially feasible; (d) Barriers analysis; and (e) Common practice analysis. 3. Based on the information about activities similar to the proposed project activity, the common practice analysis is to complement and reinforce the investment and/or barriers analysis.1 The steps are summarized in Figure 1. 4. The document provides a general framework for demonstrating and assessing additionality and is applicable to a wide range of project types. Some project types may require adjustments to this general framework. 5. This tool does not replace the need for the baseline methodology to provide a step-wise approach to identify the baseline scenario. Project participants that propose new baseline methodologies shall ensure consistency between the determination of additionality of a project activity and the determination of a baseline scenario. Project participants can also use the “Combined tool to identify the baseline scenario and demonstrate additionality”, which provides a procedure for baseline scenario identification as well as additionality demonstration. 1 Project participants can use either investment analysis or barrier analysis step. They may, if they so wish, use both investment and barrier analysis step. 3 of 16 TOOL01 Methodological tool: Tool for the demonstration and assessment of additionality Version 07.0.0 6. In validating the application of this tool, Designated Operation Entities (DOEs) shall carefully assess and verify the reliability and creditability of all data, rationales, assumptions, justifications and documentation provided by project participants to support the demonstration of additionality. The elements checked during this assessment and the conclusions shall be documented transparently in the validation report. 7. Project activities with a start date before the date of validation shall specifically take into account the guidance provided in Chapter B “Specific gui