Frequently asked questions
Find answers to some of our most frequently asked questions below. For any other enquiries, please do not hesitate to contact us>>
If you are a project developer, please visit our project developer hub>> for a comprehensive list of FAQs relevant to Gold Standard for the Global Goals.
Voluntary Carbon Markets Post-2020
Consistent with our current position, Gold Standard will not issue carbon credits from REDD+ projects but may explore labelling of 3rd party REDD+ credits from national schemes, based on a high integrity approach that features rigourous safeguards and sustainable development provisions. Note that A/R and agriculture projects are considered separately.
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Gold Standard is exploring when it is credible to issue credits in countries that have withdrawn from the Paris Agreement, for example for vulnerable or very high ambition projects and those that have commenced certification when this rule comes into force. 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.
In the future, Gold Standard will only allow projects that are vulnerable, in a development context, to transition to Gold Standard for the Global Goals from CDM. 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)
Gold Standard advocates for a ‘reduce within/finance beyond’ model, where companies should reduce in line with science and finance beyond their own boundaries as additional to this. Carbon Neutrality requires further definitional work to be brought into line with this philosophy and hence Gold Standard does not actively advocate for it as a claim in the absence of this clarity. However, given the lack of overall civil society backing for an alternative, Gold Standard does not and will not critique the use of Carbon Neutrality as a term until further work is done to offer viable replacements and/or improvements.
Offsetting and the low-carbon transition
A carbon credit is a financial unit of measurement that allows organisations and individuals to support the transition to a low carbon future. Each carbon credit represents the removal of one tonne of carbon dioxide equivalent (tCO2e) from the atmosphere - roughly the monthly energy consumption of an average American household. After having reduced your emissions as much as you can, purchasing carbon credits is another way to take climate action beyond your own area of influence. You can purchase carbon credits from Gold Standard-certified projects here>>
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:
- 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.
- 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.
- 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:
- 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;
- 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;
- 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.
The Sustainable Development Goals (SDGs) are a set of seventeen Global Goals and 169 targets agreed on by the UN General Assembly that cover a broad range of sustainable development issues. These included ending poverty and hunger, improving health and education, making cities more sustainable, combating climate change, and protecting oceans and forests. Our standard, Gold Standard for the Global Goals, certifies the SDG outcomes of projects in order to ensure that climate action is pursued in tandem with sustainable development.
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>>
Emissions trading, also known as ‘cap and trade’, is a market-based approach to address climate change.
The basic principle involves setting a limit on the total quantity of GHG emissions allowed to be released over a given period of time (the “cap”). Each participant in the scheme receives an individual cap or allowance. Emission permits or allowances are issued to help cover these caps.
And the ‘Trade’
The trading part establishes a market for these permits by allowing organisations to buy and sell depending on whether they have a shortfall or surplus in allowances. (E.g. a participant who emits less than their allowance can sell the unused balance to another participant who has exceeded their allowance). Emissions trading encourages companies to continually reduce emissions – the more permits they don’t use, the more money they can make from selling that excess.
Most emissions trading schemes also allow participants to purchase carbon credits from GHG emission reduction projects in developing countries. One credit equals one tonne of emissions saved. As long as these credits are certified to the correct level then they can count towards the emitter’s target back home. However, to ensure that emitters are making a significant contribution to controlling their own emissions, and are not just buying their way out of their obligations, offset usage in trading schemes is usually limited to a proportion of the overall emissions target.
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.
Standards have been set up to provide assurances to buyers that the emissions reductions generated by a particular project are indeed real, quantifiable and additional.
Credible standards provide high quality, independently verified assessments of the emission reductions produced by a project. The Gold Standard goes one step further and ensures that all its projects meet robust and stringent methodology requirements for sustainable development in the local area.
To ensure the purchase of high quality carbon offsets, it is imperative that companies pursue offsets that have been subjected to rigorous third party monitoring, reporting and verification procedures. It is also useful to source carbon credits from a reputable offset supplier who can offer transparency in terms of the projects, pricing and retirement of the carbon credits.
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.
Carbon offsetting allows an organisation to be accountable for its unavoidable emissions, reducing its impact on the environment and helping to drive the low-carbon transition in a cost-effective way. The benefits to an organisation include:
• Being recognised for climate leadership as part of a broader Corporate Social Responsibility (CSR) or sustainability strategy
• Responding to demand from stakeholders, from consumers to investors, to disclose and manage climate risk to the business
• Earning the credibility that comes from being responsible for full environmental impact or costs to natural capital
• Pre-compliance measures where companies may be exposed to carbon pricing measures like a carbon tax
• Reducing commercial risk from supply chain threats as a result of climate change
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.
The price of a carbon credit depends on many factors, including market dynamics and the quality, type, size, and geographical location of the project – but most importantly, the value that credit creates. Read more about the dynamics that drive pricing for carbon credits>>
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>>
You can calculate your carbon footprint by using an online carbon calculator. There are a number of calculators that can help you to measure and understand the impact of your activities. Our founding partner, WWF UK has a great tool to help individuals calculate their environmental footprint>>
Also, many governments have environmental departments that provide tools and calculators to help you calculate your emissions or you can use a carbon consultant or retailer. You can find a list of reputable carbon retailers on the International Carbon Reduction and Offset Alliance website, in this link: https://www.icroa.org/page-18187
About Gold Standard
We believe in a climate secure world where sustainable development brings life-changing benefits to communities everywhere. As a standards body, we work to ensure every dollar of climate and development funding goes as far as it can. We design processes that amplify the impact of projects and verify their outcomes - inspiring greater confidence that drives investment to accomplish even more. With a broad NGO Supporter Network and over 1,400 projects in more than 80 countries, our projects have delivered billions of dollars in climate and development outcomes in local communities around the world.
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.
To keep global warming well below 2oC and meet the Sustainable Development Goals, climate action cannot be one-dimensional. Efforts to reduce greenhouse gases must also help the world develop on a sustainable pathway—providing access to clean energy and water, good health and nutrition, secure livelihoods, and thriving ecosystems. This means that climate and development interventions must be holistic and high-impact, allowing every dollar invested to deliver as much as possible.
Gold Standard for the Global Goals is designed to accelerate progress toward climate security and sustainable development. This next-generation standard enables initiatives to quantify, certify and maximise their impacts, while enhanced safeguards, holistic project design, management of trade-offs and local stakeholder engagement ensure the highest levels of environmental and social integrity. Certification against the standard provides the confidence that these results are measured and verified, allowing us to track progress toward the Paris Climate Agreement and the Sustainable Development Goals.
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>>
Investing in Gold Standard projects demonstrated your commitment to protecting the climate and sustainable development. If you know which project(s) you’d like to support, you can invest by contacting the project developers directly. Our project profile page>> contains contact information for each project. If you require any assistance, please contact us at firstname.lastname@example.org.
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>>
Gold Standard's day-to-day activities are run by the Secretariat and overseen by the Governance Board who provide financial oversight and strategic governance. Our Technical Advisory Committee is responsible for ensuring the rigor and integrity in all our work, proven existing programs and innovative new initiatives. To view our governing structure, visit our Who We Are page>>
Land Use and Forests
Land use plays an enormous role in the carbon balance of the planet; yearly an amount corresponding to 50 times the net emissions caused by humans cumulates through terrestrial ecosystems. Of the emissions generated by humans, around 30% are caused by the unsustainable use of land. The amount of carbon still stored in land-based ecosystems means that the potential contribution of this area to mitigating or increasing the rate of climate change can be significant. Indeed, the Paris Agreement underscores the urgent need for carbon sinks like forests to meet the ambition to limit global temperature rise to ‘well below 2°C.’
Beyond what’s relevant for climate mitigation, forests contain more than half of the world’s biodiversity and the livelihoods of billions of people depend on the sustainable use of land. With a growing world population, the demand for productive land continues to increase, causing rapid deforestation and degradation, a decrease in biodiversity and a negative impact on the livelihoods of many of the poorest people on the planet.
When land-use activities were incorporated into compliance schemes around the world, Gold Standard’s Land Use and Forestry programme was introduced to respond to the urgent need for a best practice benchmark in this sector, based upon ten years of ensuring environmental integrity and sustainable development in energy projects.
Gold Standard is now working towards a genuine landscape approach to climate mitigation and adaptation. The aim is to maintain and enhance the carbon stock stored at the landscape level, while improving the sustainable use of resources, people’s livelihoods and the conservation of biodiversity.
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.
Many climate protection projects require upfront finance and often use forward sales of Emission Reductions, that is, securing sales before the actual issuance of the unit. This is particularly relevant in the land use context because project cycles are longer, reflecting the time it takes to sequester CO2 in forests and other carbon sinks. However, untracked forward sales do not provide buyers with sufficient protection, increasing the risk of over-selling the anticipated outcomes, and thus threaten environmental integrity.
Gold Standard enables the registration of number of expected emission reductions following project performance certification to a limit of five years forward using scientific calculations to ensure that the quantity is not overestimated. These are registered as ‘Planned Emission Reductions’. and can be traded but not retired. Once the emission reductions have been verified, these units are Verified Emission Reductions and may be retired and used for carbon or climate neutrality claims.
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.
It is correct that investments in climate forests do not contribute to reducing society's dependence on fossil fuels. But as long as fossil fuels are burned, forests are currently the only viable and scalable answer to re-capture carbon or CO2 from our atmosphere. In fact, the Paris Agreement underscores the urgent need for carbon sinks like forests to meet the ambition to limit global temperature rise to ‘well below 2°C.’
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.
There are concerns that the Gold Standard Requirements on forests (A/R and IFM) could lead to a significant increase in plantations.
Gold Standard does not regard plantations as inherently negative. Rather, we believe that plantations can, when sustainably designed and managed, lead to an increase of ecosystem services and employment in rural areas. Our rules only allow plantations if they:
• Are designed and managed in cooperation with stakeholders
• Bring income and jobs to local people
• Maintain and manage water resources and soil nutrients
• Absorb and store carbon
• Include corridors for wild animals
• Protect critical areas for plants and animals
• Enhance degraded areas
We are supported by the WWF programme on New Generation Plantations.
Note that all Gold Standard projects must prove how they go “beyond business as usual”. This means that a normal forest plantation, which could be financed also without the benefits from carbon credits, cannot be certified under Gold Standard.
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.
Fairtrade Climate Standard
Fairtrade Carbon Credits are the result of a strategic partnership between Gold Standard and Fairtrade International to support smallholder farmers in their fight against climate change. By using minimum pricing principles to ensure a fair return for producers as are used in Fairtrade commodities, Gold Standard and Fairtrade are working to ensure climate finance benefits those who need it most.
Fairtrade Carbon Credits are, at their essence, Gold Standard verified emissions reductions (VERs) that have been generated by producer organisations that meet Fairtrade eligibility criteria and achieve a Fairtrade minimum price and premium in the market. Additional details include:
- Project ownership limited to Fairtrade eligibility criteria. Projects eligible for the Fairtrade add-on standard can only be initiated by producer organisations, who are by default considered the project developer and have rights to the carbon credits. Many times, producer organizations will enlist the support of a Gold Standard project developer, who in these cases is called the Project Facilitator, as they provide technical expertise and support with project design documentation.
- Minimum pricing. The Fairtrade Minimum Price ensures that project costs are covered and that income is returned to the producer organization. The Minimum Price 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 buyer. A Fairtrade Premium is charged on top of the Minimum Price. It is important to note that if the Fairtrade minimum price plus premium is not secured, these are still considered Gold Standard certified credits and can be sold as such.
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 Fairtrade Premium is charged on top of the Minimum Price. Producer groups will use Premium generated by Fairtrade Carbon Credit projects to finance climate resilience and adaptation projects. If a producer group has come to Fairtrade solely through the Fairtrade Climate Standard, they will also be expected to invest the Premium in climate adaptation projects unless they can demonstrate that another type of local development project needs their investment more urgently.
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.
Fairtrade Carbon Credit projects will increase the resilience of producer groups to the negative impacts of climate change, helping to provide a more sustainable future for their communities, through diversifying income streams, offering a chance to learn new skills and techniques and create local employment. The Fairtrade Climate Standard also encourages producers to participate in developing the carbon projects, creating real ownership for the producers and communities involved.
Beyond the benefits of carbon mitigation and adaptation projects, the main benefit for producers is new sales opportunities, and the benefits of the Fairtrade price and Premium. The Fairtrade Premium from carbon credits will offer producers the chance to invest in becoming more resilient to the effects of climate change through adaptation projects, such as tree planting or learning new techniques. This is vital to ensure they and their communities can carry on farming.
Water Benefit Certificates
A Water Benefit Certificate represents a volume of water sustainably supplied, purified, or conserved. Once issued, Water Benefit Certificates can be sold to earn income that supports further water project activity.
Corporates are encouraged to responsibly manage and reduce their own water footprint wherever possible. But recognizing that most organizations cannot reduce to zero, Water Benefit Certificates are a way to invest in water security. It is important to consider that water is inherently a local resource, such that a cubic metre of water from a project in Canada is qualitatively vastly different from a cubic metre of water from a project in the Sahel. Further, water has value on multiple levels, ranging from economic to social and cultural. Therefore, in order to make purchases of WBCs credible, it is important that they be used as one component of a larger, comprehensive water stewardship strategy, and that the desired outcomes from purchasing WBCs are communicated appropriately and effectively.