Voluntary Carbon Market Transition Framework
Ensuring integrity and relevance for projects in the voluntary carbon market. This hub aims to provide the most up-to-date information on what changes are expected, why they are needed, and how you can take action to move your projects forward and take advantage of new opportunities.
EVOLUTION AND OPPORTUNITY IN THE VOLUNTARY CARBON MARKET
The voluntary carbon market is in the midst of a number of major changes and developments that affect its operation now and into the future. This means that our rules, and consequently, your projects, will need to adapt to ensure they are able to access and remain eligible for market opportunities, continue to represent best practice and are protected from reputational risk.
2021 marks a transition point from the international framework of the Kyoto Protocol to that of the Paris Agreement. It is also the year in which governments are expected to adopt rules to bring to life carbon trading under ‘Article 6’. Aligning with the Paris Agreement can maximise the market opportunities for Gold Standard-certified projects, while minimising the risk of inadvertently undermining ambition and damaging the reputation of the voluntary carbon market.
We’d like to make sure we're working proactively with all our partners and stakeholders in this changing context. This hub therefore provides the most up-to-date information on what changes are expected, why they are needed, and how you can take action to move your projects forward.
The hub currently reflects proposals outlined in Gold Standard's February 2021 consultation, Integrity for Scale: Aligning Gold Standard projects with the Paris Agreement. It will be updated as and when rule changes are implemented.
This work is supported by the German Ministry of the Environment, Nature Conservation and Nuclear Safety (BMU), and developed in partnership with atmosfair.
We understand this is a period of great change, if you have any concerns, questions or feedback, email email@example.com
KEY ELEMENTS FOR VOLUNTARY CARBON PROJECTS TRANSITIONING TO THE POST-2020 ERA
1. Transitioning and renewal of existing projects
Gold Standard wants to ensure that existing high-quality projects can continue operations in the post-2020 period, delivering benefits for the climate and sustainable development. We have made available guidance for projects wishing to transition to Gold Standard from other certification schemes, as well as a streamlined template for project developers.
As part of this, projects will have to demonstrate a risk of discontinuation when transitioning to Gold Standard from CDM or other standards. Meanwhile Gold Standard has proposed that existing projects will be required to demonstrate ongoing financial need to renew their crediting period post-2020 (subject to consultation). Both are important to ensure that projects continue to require revenue from the sale of carbon credits, to ensure carbon finance goes to projects that rely on it rather than those that are financially sustainable in its absence.
- Transitioning and renewal of existing projects
Transitioning and renewal of existing projects
To ensure that existing high-quality projects can continue operations in the post-2020 period, we’ve updated our rules to better support projects that are faced with uncertainty related to the continuation of the Clean Development Mechanism (CDM) and at risk of discontinuation post-2020. This section presents a summary to transition projects to Gold Standard. For the full requirements, which take precedence, please see Annex B of the GHG Emission Reduction and Sequestration Product Requirements. These updates support our commitment to environmental integrity and channeling carbon finance where it has the greatest impact.
RECENT UPDATES TO SUPPORT PROJECT TRANSITION
Gold Standard has streamlined its requirements to enable a smoother transition for eligible climate projects/PoAs seeking to move from other certification schemes, including CDM, to Gold Standard for the Global Goals.
The objectives of these updates are to:
- Ensure that work already completed within previous standards is retained to the extent possible when transitioning to Gold Standard – lowering time/costs
- Provide more clarity on the different pathways that are possible for projects wanting to transition Key updates and benefits include:
Projects transitioning from other standards can continue using their current methodology until the time of renewal of their crediting period. This update reduces the complexity currently associated with transitioning projects, while still retaining our core principles for safeguards, stakeholder engagement and contributing to multiple SDGs.
PERIOD OF RETROACTIVE CREDITING AMENDED
Projects that transition to Gold Standard for the Global Goals are eligible for retroactive crediting prior to the preliminary review submission date, rather than the transition approval date. This ensures continuity and provides more certainty for project developers on when you can start claiming credits.
TRANSITION REQUEST FORM UPDATED TO SIMPLIFY + ACCELERATE PRELIMARY REVIEW PROCESS
A new template helps you submit a transition request in a simple, standardised, way populating the information required for a prompt preliminary review. This allows project developers to demonstrate potential compliance with the transition requirements without the need to re-design their project documentation (e.g. PDD). It also enables quick and easy review by SustainCERT. To further reduce the transition certification time and cost, we have also introduced an option to combine preliminary review, validation and design review for transition projects.
SUMMARY OF KEY REQUIREMENTS FOR TRANSITIONING A PROJECT
The below section highlights some key requirements for projects transitioning from the CDM or other standards to GS4GG. For the full requirements, which take precedence, please see Annex B of the GHG emission reduction and sequestration product requirements.
The requirements outlined below are applicable to projects that intend to:
a) Issue new GSVERs
b) Convert emission reductions already issued under another standard to GSVERs
- Projects can claim emission reductions of a given vintage only once and under one standard only. A declaration, in writing, must be provided in the monitoring report.
- Projects transitioning must provide Gold Standard specific project documentation, or the project documentation provided under the other carbon certification scheme together with the Transition Request Form. This form includes a transition checklist that helps project developers easily identify any gaps between the other certification scheme and the requirements for Gold Standard, providing a clear path for transition.
DEREGISTRATION FROM THE OTHER STANDARD
- Eligible CDM energy or waste project/PoAs are not required to deregister from CDM
- Eligible CDM A/R projects are required to deregister from CDM to issue GSVERs
- Projects registered under a standard other than CDM need to deregister and provide evidence of deregistration to their VVB before submission for design review
FINANCIAL ADDITIONALITY, RISK OF DISCONTINUATION AND ONGOING FINANCIAL NEED
- CDM projects/PoAs are not required to carry out an additional assessment for demonstration of additionality, unless the project falls into a category that is deemed non-additional in applicable activity requirements
- Projects transitioning from standards, other than CDM, are required to undergo additionality revalidation to re-establish the validity of the underlying assumptions
- As applicable to all GS4GG projects, projects will need to demonstrate ongoing financial need, at time of renewal of the crediting period
The rules have been updated to allow projects transitioning from other standard to continue using their current methodology until the time of renewal of their crediting period.
Projects can choose to apply the latest version of the Gold Standard-approved CDM methodology or methodology tool available. In such cases, the VVB will validate updated project documents.
MEETING GOLD STANDARD CORE PRINCIPLES
- Compliance with safeguards, stakeholder engagement and contributing to multiple Sustainable Development Goals (SDGs) are core principles for Gold Standard certification.
- Projects need to demonstrate compliance with the Safeguarding Principles and Stakeholder Consultation and Engagement Requirements. More guidance can be found in the !!!!!!!!!Transition Request Form !!!!!!!
- All Gold Standard projects must make demonstrable, positive impacts to at least three Sustainable Development Goals (SDGs), one of which must be SDG 13 Climate Action. We have recently launched a new SDG Impact Tool, that helps project developers more efficiently monitor, quantify and verify a project's contributions to the SDGs.
- Projects cannot change scale at the time of transition
- When the scale of a project changes due to circumstances outside of the control of the project developer, the Design Change Requirements shall be followed.
- Credits can be issued for the maximum crediting period allowed as per the Gold Standard activity requirements, or the crediting period under the project’s previous standard, whichever ends first. The crediting period registered with the previous standard cannot be extended.
- The crediting period start date remains unchanged, i.e. the date as registered with the previous standard.
- The start date for PoAs transitioning is the crediting period start date of the earliest CPA transitioning to Gold Standard for the Global Goals
Fixed crediting period i.e. 10 years: Standard X + GS4GG crediting period must remain within 10 years. If project has issued credits for 3 years under standard X, it can issue GSVERs for the remaining 7 years.
Renewable crediting period. For example. RE activity requirements allows issuance of GSVERs for max 15 years. An eligible RE projects that has claimed emission reductions for 5 years under Standard X, can issue credits for 10 more years under GS4GG.
ISSUANCE FOR RETROACTIVE PERIOD
- A project that transitions to Gold Standard for the Global Goals will be eligible for retroactive crediting prior to the preliminary review submission date, rather than the transition approval date. This provides continuity and therefore more certainty for when credits can start to be claimed.
- Projects that have transitioned to GS4GG need to follow the certification cycle for crediting period renewal (e.g. 5 years) in order to issue or convert issued emission reductions to GSVERs. The first crediting period renewal under GS4GG considers the crediting years already issued with the other standard.
For example, if a project crediting period start date with standard X is 01 Jan 2019, the project shall renew its crediting period with GS4GG on or before 01 Jan 2024, irrespective of date of transition approval with GS4GG.
PROJECT DESIGN CHANGE
- Permanent changes in the project design shall be assessed as per the Design Change Requirements.
- How to transition your project
How to transition your project
Projects can transition at a project/PoA level or, in some cases, convert emissions reductions at a credit level. The bullet lists below provide simple instructions on how to transition your project for different scenarios. More guidance is located throughout the Transition Request Form.
To transition a project from other standards to Gold Standard for the Global Goals to issue GSVERs
GSCERs to GSVERs conversion procedure
For CDM projects that are also certified to Gold Standard for the Global Goals, projects can convert issued Gold Standard labelled CERs to GSVERs, by following these steps:
- Submit a Transition Request Form
- Follow project cycle procedure as provided in the relevant requirements
- Transfer the issued CERs to the Gold Standard Swiss CDM Registry Account.
- Gold Standard retires the transferred CERs
- Project developer pays the relevant fee
- Gold Standard issues an equivalent number of GSVERs to the project in the Impact Registry
Converting issued emission reductions from other standards to GSVERs
Projects transitioning from standards other than CDM should reach out to Gold Standard/SustainCERT to confirm the procedure for conversion of issued emission reduction units to GSVERs.
CDM projects wishing to issue GSCERs
Due to uncertainty over future issuances under the CDM, project developers are encouraged to reach out to Gold Standard/SustainCERT if considering this option.
- Determining vulnerability and ongoing financial need
Additionality is a prerequisite for the environmental integrity of any carbon credit, protecting the buyer’s claim to have enabled climate mitigation and underpinning the integrity of offsetting and other financial claims. It is expected, based on draft Article 6 decisions developed at COP25, to be a required attribute of internationally transferred mitigation outcomes (ITMOs) under Article 6.2 and also required in the design of activities under the Article 6.4 mechanism.
2. Using voluntary carbon credits in the new era
Gold Standard wants to ensure that units can be used legitimately and with integrity, without the risk of double claiming. Corresponding adjustments -- by which the national government hosting a project adjusts its international accounting so as not to count an emission impact -- are the most robust way to ensure this where units are used towards voluntary 'offsetting' or 'carbon neutrality' claims in the future.
In order for these claims to be authorised by Gold Standard, we have proposed that units must have corresponding adjustment approvals associated with them. We have proposed introducing this on a staggered basis, starting with developed countries with vintages starting 01 January 2021 for new projects and 01 May 2021 for existing projects.
Projects will have the opportunity to continue operating as usual without corresponding adjustments, where units are used for purposes where this is not required, such as voluntary ‘financing’ claims where buyers do not claim to be offsetting their emissions. Gold Standard will work with partners to build the case for such claims among corporate buyers.
- Summary of our proposed approach to claims and corresponding adjustments
Summary of our proposed approach to claims and corresponding adjustments
The avoidance of double counting is a core principle for carbon markets, and is essential to the integrity of carbon units and claims made by entities buying them. Gold Standard has existing rules in place to address double counting. However the new international framework and context under the Paris Agreement requires us to introduce new rules in order to ensure the same principle – the avoidance of double counting – is met.
Towards that end, we have proposed:
- Corresponding adjustments for voluntary offsetting claims: Introducing a requirement that approval of a corresponding adjustments must be in place when Gold Standard credits are retired in order for these to be authorised for voluntary offsetting claims. We propose to introduce this in a staggered way, focusing first in developed countries where in most cases Gold Standard already requires adjustments (see Annex A) to address double claiming. We intend to take special care to protect vulnerable projects, and so do not plan to require adjustments in LDCs, LLDCs, SIDS and conflict zones until vintages from 01 January 2025, subject to an assessment of whether circumstances allow.
- Alternative claims for credits without corresponding adjustments: Working with partners and stakeholders to further clarify and advocate for new clear, credible and compelling corporate financing claims and mechanisms for financing emission reductions and removals beyond boundaries – alongside traditional offsetting or carbon neutral claims.
- Enabling our registry to distinguish between the differing claims and use cases that a given credit is eligible for. In this way, buyers could clearly identify and acquire the appropriate credits for their intended use case.
Through this proposed approach, Gold Standard intends to ensure that potential risks – environmental and reputational – related to double claiming are avoided, and that credits can be issued and used with integrity. We believe that this approach would strike the right balance to protect environmental integrity and thus the reputation of the voluntary market while still enabling finance to reach projects delivering transformative benefits on the ground.
We welcome further engagement with stakeholders on this issue at firstname.lastname@example.org
- Avoiding double claiming when offsetting – our proposed approach
our proposed approach for introducing corresponding adjustments for voluntary offsetting claims
- Why corresponding adjustments are important for voluntary offsetting claims
Preserving the premise of carbon offsetting
Voluntary action now takes place in the context of the Paris Agreement, under which all countries – developed and developing – must take action to limit global warming in the form of Nationally Determined Contributions (NDCs). National governments will put in place policies and measures to achieve their NDCs, and must regularly track progress towards them.
By claiming to have offset emissions, an organisation is effectively stating that the act of purchasing carbon credits has counteracted their unabated emissions, leaving the atmosphere no worse of.
However, in a scenario where a government hosting a project generating carbon credits is able to count the underlying emission impact towards their NDC, it is possible that this emission impact will displace or defer other action that the government may have taken to achieve their NDC, if this is no longer required. Where this displacement or deferral occurs, the premise of the offset claim – that the atmosphere is no worse off – is no longer assured, as the underlying emission impact has replaced rather than added to abatement that would otherwise have happened.
- Claims for credits without corresponding adjustments – a new model for supporting high integrity climate action
New context, new claims
The voluntary use of carbon credits has until this point been synonymous with ‘carbon offsetting’. Through our proposals, Gold Standard is seeking to safeguard the integrity of claims to have offset emissions within a new policy context. At the same time, Gold Standard, like others in civil society, sees an opportunity to define a new type of corporate claim in this new context. Rather than ‘offsetting’ or ‘carbon neutrality’ claims, companies could purchase quality carbon credits with the same rigorous requirements - real, additional, unique, and independently verified – and claim to have ‘financed’ or 'contributed' to emission reductions or removals.
In this way, a company can use existing voluntary carbon market infrastructure to purchase and retire an amount of carbon credits equal to its unabated emissions, and claim to have ‘financed’ or 'contributed' tangibly towards the goals of the Paris Agreement.
This is different from an offsetting claim insofar as the company claims to finance the reduction or removal of an equivalent amount to its unabated emissions, but it does not claim their emissions have been ‘offset’. It enables voluntary buyers to invest in projects that do not have corresponding adjustments, but still contribute to quantified and verified impacts towards the host country’s NDC and therefore the Paris Agreement, as well as the Sustainable Development Goals.
The financing model has the potential to avoid complexity, ensure clarity and credibility of claims. When coupled with the implementation of Science-Based Targets, this marks a step-change in voluntary action and finance from the private sector.
Gold Standard has advocated for this approach in the past, including in a 2018 publication with CDP and WWF, and held extensive engagement with partners. This approach is also well-aligned with wider developments to define best practice for companies looking to take full responsibility for their emissions, such as the Science-Based Targets Initiative’s consultation on a new Net Zero Standard, and WWF's Blueprint for Corporate Action on Climate and Nature.
Gold Standard will continue to engage with stakeholders, including civil society, project developers and users of Gold Standard credits, to build the credibility and understanding of, as well as mechanisms for, ‘financing’ claims.
3. Aligning with the Paris Agreement
Gold Standard wants to ensure that projects continue to represent best practice internationally and are eligible across different markets and use cases, which we expect will increasingly align their requirements with those adopted under Article 6. We anticipate needing to update several other aspects of our existing rules to align with Article 6, once its guidance is adopted. Any rule changes will need to be consulted on in the future, but we are proactively seeking comments + feedback on three areas we have identified.
- Ensuring reductions/removals are real
- Supporting sustainable development
- Contributing to the overall mitigation of global emissions
Contributing to overall mitigation efforts
Any comments or feedback can be addressed to email@example.com
- HOW COULD THE CONCEPT OF AN "OVERALL MITIGATION IN GLOBAL EMISSIONS" (OMGE) BE OPERATIONALISED UNDER THE PARIS AGREEMENT?
Oeko Institute, June 2019
- HOW COULD THE CONCEPT OF AN "OVERALL MITIGATION IN GLOBAL EMISSIONS" (OMGE) BE OPERATIONALISED UNDER THE PARIS AGREEMENT?