IIn 2003, representatives of environmental and human rights organisations convened in Brussels to discuss their concerns that carbon markets could become a ‘race to the bottom’ in relation to environmental integrity and sustainable development. 

The group highlighted the need for a system that could identify and encourage well-designed activities as the sources for credible greenhouse gas reductions that maximise wider sustainable development outcomes. At this meeting the concept of the Gold Standard was born.

The Gold Standard certification process was developed through close collaboration between technical and policy experts from civil society, governments, multilateral organisations and the private sector. A non-profit Swiss Foundation was established to house a full-time secretariat for the standard and to further develop tools to achieve its mission. 

Now endorsed by 80+ international NGOs and with more than 1,400 projects in 80 countries undergoing certification. The Gold Standard has become the global benchmark for the highest integrity and greatest impact in climate and development initiatives.

COMMUNITY SERVICES PROJECTS 

These types of projects provide or improve access to services/resources at household, community or institutional level, these include:

• Renewable energy connected to mini-grid or off grid solutions: Including solar, tidal/wave, wind, hydropower, geothermal, waste to energy and renewable biomass.
• End-use energy efficiency:Project activities that reduce energy requirements as compared to baseline scenario without affecting the level and quality of services or products e.g. efficient cooking, heating, lighting, etc.
• Waste management + handling:  All waste management activities that deliver energy or a usable product with sustainable development benefits such as composting, biogas etc.
• Water, sanitation and hygiene (WASH): WASH activities contributing to climate change mitigation and/or adaptation benefits.

For more details on: 

• General project eligibility: Gold Standard for the Global Goals Principles & Requirements>>
• Specific requirements: Gold Standard Community Services Requirements>> 

RENEWABLE ENERGY PROJECTS 

Gold Standard Renewable Energy Projects must supply energy to a national or a regional gridfrom non-fossil and renewable energy sources such as photovoltaic, tidal/wave, wind, hydro, geothermal, waste to energy and renewable biomass. 

Additional eligibility criteria are prescribed for specific project types including hydropower and projects using biomass resources. 

For more details on: 

• General project eligibility Gold Standard for the Global Goals Principles & Requirements>>
• Specific requirements: Gold Standard Renewable Energy Activity Requirements>>

AFFORESTATION/REFORESTATION (A/R) PROJECTS 

No Deforestation: The planting area or the project area cannot meet the definition of a forest (as defined by the Designated National Authority) at project start date and shall not have been forest for at least 10 years prior to the project start.

Projects can include/apply:  

• Planting trees (also shrubs, palms, and bamboo)
• Single-species plantations
• All silvicultural systems for example: Conservation forests (no use of timber), forests with selective harvesting and rotation forestry
• Agriculture (agroforestry) or pasture (silvopasture) activities.

A project area cannot be on wetlands (but projects in mangroves are eligible). They cannot result in drainage or irrigation of areas with organic soils. And soil disturbance on organic soils shall be less than 10% of the area that is submitted for certification (not 10% of the entire project area).

For more details on: 

• General project eligibility Gold Standard for the Global Goals Principles & Requirements>>
• Specific requirements: Gold Standard Land Use & Forests Activity Requirements>> 

Roughly two thirds of our funding comes from the income generated by our certification activities, this pays for our core team. The remaining third comes from grant funding that supports our on-going research and development projects. Funders include the Governments of Luxembourg and Germany, Climate-KIC, and more. For more information, please see our latest Annual Report>>

Certification of Gold Standard projects for carbon sequestration ensures climate integrity through five backstops designed to ensure that activities do not underperform and, should they do so, to address and resolve issues transparently. These are:

1. Robust requirements on values and process that thoroughly assesses the design of the activity;

2. Frequent Monitoring, Reporting and Verification (MRV) of the activity (carbon and non-carbon);

3. A compliance pathway that clearly lays out how activities that under-perform get back on track.

4. The liability of underperformance remains with the project owner under The Gold Standard Terms & Conditions; and

5. The Gold Standard Compliance Buffer, which requires that projects reserve 20% of its Emission Reduction issuance in the event that carbon is no longer sequestered due to an event like forest burning or unplanned clearing.

The vital role of sustainable land use and as part of the balance of the Earth’s ecosystem has been part of the international political agenda for many years. Since the Rio Earth Summit in 1992, land use has been framed within the climate debate. Most recently the political process has been driven under the UNFCCC umbrella of REDD (Reduced Emissions from Deforestation and Degradation) and REDD+ (denoting wider outcomes) within the forestry sector.

Gold Standard and its partners believe in a strong international focus on conserving forests for climate, biodiversity and livelihood reasons. Moreover, forest ecosystems require the strongest possible safeguards.

However, by just crediting stored carbon – that is, simply paying people to stop cutting forests - many current approaches to REDD and REDD+ face technical and political challenges that may undermine their long-term sustainability. Therefore, the Gold Standard approach to achieving REDD+ is built around addressing the drivers of deforestation and unsustainable practices by using carbon finance to enable new land management techniques, restore forests and transform livelihoods through energy access and other clean technologies.

This genuine landscape approach, in which multiple and different sustainable activities can be included for certification, recognises that for genuine and long-lasting success, a holistic approach which considers all interactions within a landscape must be used allowing local communities a stake in a forest’s future and in turn driving long-term conservation of natural resources and the sustainable livelihoods they support.

The quantity of carbon stored in a forest depends on factors like geographical location, species, soil type, and climate. To ensure that no overestimation is made on the carbon stored by the forest, Gold Standard has set different safeguards:

Conservative approach: All parameters used for the determination of the net CO2-fixation must be derived from the best available scientific sources. In their synergy, they must lead to a conservative calculation approach. This means that in case of uncertainties:

• The CO2-fixation should be underestimated, and

• The baseline and leakage should be overestimated

Carbon pool “harvested wood”: Some Gold Standard projects produce timber. This timber generally has additional climate effects, which are NOT accounted for by the standard's methodology.

What are typical positive effects from harvested wood?

• Wood is used for furniture and as building material. Such use stores carbon for much longer than the time of the climate project.

• Wood can be used to replace energy intensive materials, for example, by using wooden window frames instead of aluminum frames.

• Wood is a direct substitute for fossil fuels, for example, using pellets to heat a home rather than oil.

Monitoring over 50 years: To ensure that the carbon stays in the trees, Gold Standard certified projects are monitored by third-party auditors up to 50 years after planting.

Improvements to the way we grow food is essential to be able to feed a growing population while also reducing emissions. With agriculture being one of the main drivers of deforestation, the sector of agriculture, forestry and other land use is the largest contributor of global direct GHGs emissions (24% or 11.76 Gt CO2e/yr). (Source: IPCC Assessment Report 5).

While absolute emissions are expected rise in emerging economies and developing countries, through efficiency gains, resources can be used more effectively to reduce emission per-unit of production. The following interventions can help:
• Cropland management (improved varieties, crop rotation, efficient use of fertilizer, reduced tillage, water harvesting, timing & precision)
• Grazing land management (deep rooting grasses, appropriate stocking densities, animal waste management)
• Livestock (improved feed and dietary additives to reduce emissions form enteric fermentation, improved breeds).

Demand side measures are also critical to reduce global agricultural emissions, including dramatic food waste reduction as well policy interventions to address consumption of high impact food like meat and soy.

Beyond climate mitigation, improvements to agricultural practices around the world are even more critical in climate adaptation – that is, empowering food producers to become resilient to the increasing challenges posed by an already changing climate.

Why carbon markets?

When companies or individuals go about their daily lives and conduct business they use energy. When this energy is derived from fossil fuels such as oil, coal and gas, it releases carbon and other greenhouse gases (GHGs) into the atmosphere. This is one of the key contributors to climate change.

Carbon markets provide the infrastructure for carbon trading or ‘offsetting’ -- the process by which businesses and individuals can be accountable for their unavoidable emissions by funding certified GHG emission reduction projects elsewhere in the world. The World Bank State and Trends of Carbon Pricing 2016 report estimates that carbon markets have the potential to reduce global mitigation costs by more than 50 percent by mid-century.

Compliance carbon markets under the Kyoto Protocol

In 1992 the United Nations Framework Convention on Climate Change (UNFCCC) was created to raise awareness and build knowledge to help mitigate climate change. In 1997, more than 170 countries adopted the Kyoto Protocol to the Convention. This set legally binding targets for 37 industrialised countries to limit or reduce overall GHG emissions by at least 5% below 1990 levels during the period 2008-2012.

To achieve the targets set within this protocol, three flexible financial mechanisms were created:

1. Emissions Trading – the international transfer of emission allocations between industrialised (Annex 1) countries. E.g. a country that stays within its target can sell the surplus allowances to another country that has exceeded its limit.
2. The Clean Development Mechanism (CDM) – creates carbon credits called Certified Emission Reductions (CERs) through emission reduction projects in developing countries, regulated by the United Nations. Emitters who have exceeded their emission allocations can purchase these CERs to make up the difference.
3. Joint Implementation – any Annex I country can invest in emission reduction projects in any other Annex I country as an alternative to reducing emissions domestically.

The rationale behind such schemes is that climate change is a global problem and that the location of GHG emission reductions is irrelevant in scientific terms. This means that a tonne of carbon dioxide reduced in a cook stove project in Kenya has the same environmental value as a tonne of carbon dioxide reduced through a wind project in China or a clean energy project in the United States. The difference in these projects is the cost of implementation.

The emission reductions generated by these flexible mechanisms are collectively referred to as ‘carbon credits’. A carbon credit is a financial instrument that represents a reduction or the avoidance of one tonne of carbon dioxide equivalent (tCO2e) from the atmosphere.

These three mechanisms, along with the European Union Emissions Trading Scheme (EU ETS) put in place by the EU in order to meet its Kyoto target, make up the largest environmental market in the world for the trading of carbon credits.

The voluntary carbon markets

In a voluntary carbon market, an entity (company, individual, or other “emitter”) chooses to take accountability for its carbon footprint by purchasing carbon credits that reduce the amount of carbon in the atmosphere. It is driven by a company’s desire to demonstrate climate leadership and/or ‘do the right thing’ and has been around in different forms for many years.

The Paris Agreement

The Paris Agreement is an agreement within the UNFCCC aimed at achieving greenhouse gas emissions mitigations, adapting to the effects of climate change, and driving climate finance beginning in the year 2020. The agreement entered into force in November 2016 after 114 countries ratified it.

Article 2 of the Paris Agreement outlines the aims of the convention as:

1. Holding the increase in the global average temperature to well below 2 °C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 °C above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change;
2. Increasing the ability to adapt to the adverse impacts of climate change and foster climate resilience and low greenhouse gas emissions development, in a manner that does not threaten food production;
3. Making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.

In addition to these goals, the agreement outlines the National Determined Contributions (NDCs), which are the contributions each member country should make in order to stay ‘well below’ the 2°C degree target.

Article 6 of the agreement provides the framework for international cooperation to drive down emissions through market and non-market mechanisms. It is expected to feature a Sustainable Development Mechanism – the successor to the Clean Development Mechanism established by Kyoto Protocol. This and other mechanisms position countries to achieve the mitigation and sustainable development goals, and therefore meet their NDCs.

Our standard, Gold Standard for the Global Goals, is designed so that each project takes climate action in tandem with sustainable development. As a part of our certification process, our project developers are required to adhere to our ‘do no harm’ principle, consult with local stakeholders, and ensure that their projects not only help protect the climate by contributing to Sustainable Development Goal (SDG) 13, Climate Action, but also benefit local communities by contributing to two additional SDGs. These safeguards and requirements ensure that the project impacts are real, measurable, and verified by an independent third party. Find out more about Gold Standard for the Global Goals>>

Carbon markets can be either voluntary or mandatory. The main difference between the two is that the voluntary market is unregulated.  Recognised international standards, such as Gold Standard exist to monitor and verify the quality and validity of the carbon credits that are traded in the voluntary market.

Compliance schemes are currently aimed at the most “energy intensive” emitters (at a company level). These include power generators, oil refineries, iron and steel production and processing companies, those who produce commodities such as cement, glass and ceramics and the paper and pulp industry.

The voluntary market serves the purpose of businesses (typically blue-chip corporations), government departments, NGOs and single individuals wanting to be accountable for their carbon footprint and help drive the transition to a low-carbon future.

Additionality is a defining concept of carbon-offset projects. To qualify as a genuine carbon offset, the reductions achieved by a project need to be ‘additional’ to what would have happened if the project had not been carried out (e.g. continued as business-as-usual). For instance, if a project is viable in its own right, say through the sale of electricity, or because of government funding, regulation or other policies, then it cannot be used as an offset project as it would have been undertaken regardless of investment secured through carbon markets. The concept of additionality is important as only carbon credits from projects that are “additional to” the business-as-usual scenario represent a net environmental benefit. Without the “additionality” requirement, there is no guarantee that the emissions reduction activities will lead to a reduction of greenhouse gases into the atmosphere. Therefore, in simple terms, if carbon credits are awarded to activities that would have happened anyway, emissions are allowed to rise without a corresponding cut elsewhere, therefore making the process meaningless. Any business or individual considering purchasing carbon credits to ask questions to ensure that the standard or system backing the credits require proof of additionality. 

No. Carbon credits are an investment in emission reductions to drive the transition to a low-carbon economy. Even with clean energy gaining momentum, there is a tremendous gap to fill to meet the ‘well below 2oC’ target the Paris Agreement sets for limiting global temperature rise. Companies that set ‘Science Based Targets,’ that is, internal emission reduction targets in line with what science tells us to limit warming to 2C’ and then go beyond by supporting projects that reduce global emissions are demonstrating best practice corporate climate action. By choosing Gold Standard projects for their carbon credit purchases, they are also helping to bring sustainable development benefits – like access to energy and water, new jobs, and better health – to communities around the world.

Pricing varies based on the project type and can even vary within the same type of projects. This article highlights some of the reasons for this difference, outlining the key factors that should be considered when purchasing carbon credits. Read more about why prices vary between project types>>

While this remains an ongoing topic of discussion in civil society, Gold Standard will likely propose (for stakeholder input) a transition period toward a requirement for either Corresponding Adjustments or another form of formal recognition of the voluntary action within host country domestic policy. A key principle is to ensure that vulnerable projects or stakeholders are not excluded or left behind, underscoring the likely need for capacity building throughout a sufficient transition period. These details will be shared in a public consultation in the summer of 2020.

Gold Standard will create a ‘vulnerability’ principle to activate the Ongoing Financial Need rule in Gold Standard for the Global Goals to ensure that projects receiving carbon finance still require it in order to renew their crediting period. These details will be shared in a public consultation in the summer of 2020.

Gold Standard will explore scope expansion and growth in the following areas, subject to consultation and business case:

• Soil Organic Carbon
• Blue Carbon
• Improved Forest Management (IFM)

The Fairtrade Minimum Price ensures producers receive prices that cover the average cost of setting up a sustainable carbon project. It is calculated according to the project type and related costs and is the starting point for price negotiations between the producer and/or the Facilitator with the Fairtrade buyer. The selling price may differ from the minimum price, depending on how much a buyer is willing to pay at the end of the value chain.

The Minimum Pricing model is still in development but the most recent data is as follows:

• €8.20 for energy efficiency projects;
• €8.10 for renewable energy projects;
• €13. for forestry management projects.

The Fairtrade Premium values which must be paid for each Fairtrade Carbon Credit (on top of the Minimum price) are:

• €1.00 / tCO2e for energy efficiency and renewable energy projects;
• €1.50 / tCO2e for forestry management projects.

Companies who pay the Minimum Price and Premium levels will also need to pay a ‘Fairtrade Carbon Credit fee’ for market development activities Fairtrade will conduct. This fee level is recommended by Fairtrade International to be 3.5% of the Minimum Price.