Additionality, common practice and incentive schemes for the uptake of innovations

Abstract

Crucial components of carbon offset trading schemes are the determination of whether a technology or practice is innovative (i.e. not common practice), and whether the practice is adopted as a result of incentives (termed additional). Under schemes such as the Clean Development Mechanism (CDM), early adopters of carbon reducing technologies receive tradable carbon credits that can be sold to businesses to offset their emissions. However, frameworks for distinguishing early adopters are inconsistent, and the effect of incentive schemes on uptake is poorly understood. In this study we: 1) review measures of common practice taken from the literature with the purpose of informing a standardised approach; and 2) using the Bass model we explore the effects of incentive schemes on adoption with the purpose of establishing the proportion of uptake attributable to the scheme. We found that a fixed common practice threshold of approximately 20% adoption is well supported by a wide range of approaches, and that 85–95% (approximately) of early adoption can be attributed to incentives, such as offset schemes. Although we focussed on carbon reducing technologies, our results have broad implications for general practice and product diffusion, and the effect of promotions on adoption.