Gold Standard

Currently active program focusing on co-benefits in renewable and energy-efficiency projects (as of 1/2011).

www.cdmgoldstandard.org


Overview
Market Size and Scope
Offset Project Eligibility
Additionality Requirements and Project Methodologies
Project Approval Process


Overview

Type of Standard and Context

The Gold Standard (GS) is a voluntary carbon offset standard for renewable energy and energy efficiency projects. The GS can be applied to voluntary offset projects and to Clean Development Mechanism (CDM) projects. It was developed under the leadership of the World Wildlife Fund (WWF), HELIO International and SouthSouthNorth, with a focus on offset projects that provide lasting social, economic and environmental benefits.

The GS CDM was launched in 2003 after a two-year period of consultation with stakeholders, governments, non-governmental organizations and private sector specialists from over 40 countries. The GS for voluntary offset projects (GS VER) was launched in 2006. The GS is presently endorsed by over 60 environmental and development NGOs.

Standard Authority and Administrative Bodies

  • The Gold Standard Foundation is a non-profit organization. The operational activities of the GS are managed by the Gold Standard secretariat, and include capacity building, marketing, communications, certification, registration and issuance, as well as maintenance of the GS rules and procedures.
  • The Foundation Board oversees the strategic and organizational development of the GS. The Board currently has seven members. At least 50% of its members must be recruited from the Gold Standard NGO supporter community, and one member is at the same time the Chair of the Gold Standard Technical Advisory Committee (GS-TAC, see below). In case of significant changes to the GS rules and procedures, the Board decides whether a Gold Standard NGO supporter majority is necessary to implement the change.
  • The Technical Advisory Committee (GS-TAC) evaluates and approves projects and new methodologies for VER projects, and is in charge of updating the GS rules and procedures. It is the equivalent of the CDM Executive Board (EB)/Methodology Panel for VER projects. The GS-TAC currently has ten members, all acting in their personal capacities. GS-TAC members are from the NGO community, multilateral organizations, aid agencies and the private sector and all work for the GS on a pro-bono basis.
  • The Gold Standard NGO Supporters officially endorse the practices of the GS method and approve major rule changes (e.g. eligibility of project types). Gold Standard NGO Supporters are consulted as part of the GS stakeholder consultations and are invited to take part in the project review process. They may also request an in-depth audit of GS projects at both the registration and the issuance stage.
  • The Gold Standard Auditors are UNFCCC accredited Designated Operational Entities (DOEs) who carry out validation and verification of GS projects. DOEs are not allowed to carry out the validation and the verification of the same project, except for micro- and small-scale projects.

Regional Scope

The GS is an international voluntary carbon offset standard. The large majority of projects are in non-annex 1 countries.

Recognition of Other Standards/ Linkage with Other Trading Systems

The GS does not recognize any other voluntary standards, but the GS is recognized by Green-e Climate.

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Market Size and Scope

Tradable Unit and Pricing Information

Becuase GS credtis are viewed as premium offsets, GS CERs and VERs often fetch a premium price compared to similar offsets from other offset programs.

Participants/Buyers

GS Credits are purchased by buyers who place a high value on environmental integrity and strong co-benefits. These are buyers from the compliance market and voluntary buyers, such as NGOs, large corporate entities with strong Corporate Social responsibility (CSR) profiles, businesses and offset retailers.

Current Project Portfolio

As of January 2011, the Gold Standard listed the following projects:
247 Gold Standard VERs: 151 listed, 28 registered, 31 validated, 35 issuing projects
Retired VER credits: 2.1 MMTCO2e

183 Gold Standard CERs: 140 listed, 27 registered, 7 validated, 6 issuing projects

Current project portfolio information changes rapidly. For the latest information, see the Gold Standard Registry

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Offset Project Eligibility

The latest version, GSv2.1 was released on June 1, 2009. The GS Requirements outline the rules of the GS certification in a concise way. The Gold Standard Toolkit describes the project cycle and provides examples and detailed instructions on the use of the GS. Based on experiences and recurring queries, the Toolkit will be updated to include the most relevant examples and guidance. The Toolkit comes with templates (annexes) that are easily used to report information being passed between project proponents, validators, verifiers and the GS. All GS-related documents can be downloaded GS website.

Project Types

The GS accepts renewable energy (including methane-to-energy projects) and end-use energy efficiency projects.

The eligibility of hydropower plants with capacity over 20MWe is evaluated on a case-by-case basis. All such projects must undertake a pre-feasibility assessment, which must include

1. the provision of a Compliance Report proving the project's compliance with WCD guidelines,  to be validated by a DOE/AIE. 
2. a specific stakeholder consultation, including a site visit by local stakeholders.

Project Locations

GS VER projects cannot be implemented in countries with an emission cap, except if GS VERs are backed by Assigned Amount Units (AAUs) being permanently retired.

Project Size

The GS does not set a minimum project size. For GS CERs, CDM project size limits apply. Project size requirements for GS VERs are:

• micro-scale (<5,000 tons CO2 per year),
• small-scale (5,000–60,000 tons CO2 per year) or
• large-scale (>60,000 tons CO2 per year).

Start Date 

The earliest start date for retroactive crediting of GS VERs was January 1, 2006, and retroactive crediting is only permitted for a maximum of 2 years prior to the registration date.

The GS does certify CDM pre-registration credits for a maximum of one year prior to the project’s CDM registration date under certain conditions:

• The project developer can provide proof that the final version of the PDD was submitted for validation to the DOE prior to January 31, 2008.
• The DOE must provide a verification report covering the GS VER period either with the first verification of GS CERs or separately.
• The reasons for the delay between the start of project operation and the CDM registration have to be explained by the DOE as part of the verification report covering the GS VER period.

GS CERs will only be issued after the project has been successfully registered as a GS CDM project. Once the project has been registered as a GS CDM project, the normal GS rules apply.

Crediting Period

Crediting periods are either one 10-year period or three renewable seven-year periods, except for validated pre-CDM GS VERs (see above).

Projects can opt-in to GS crediting during the overall crediting period by submitting a GS-compliance verification report to the GS. Projects can opt-out of GS crediting during the overall crediting period, but opt-out is final and the project can no longer be communicated as a GS project.

Prior to opt-in and after opt-out, projects are permitted to seek issuance of credits from other standards. However, projects are not permitted to apply for the issuance of credits under different standards if this results in extending the overall crediting period of the project beyond the GS VER rules.

Co-benefit Objectives and Requirements

Both GS CER and GS VER projects must show clear sustainable development co-benefits, including environmental, social and economic benefits, as well as technological sustainability. The GS provides a sustainability matrix to help project developers develop their sustainability criteria. The GS requires that critical and sensitive sustainable development indicators as well as mitigation or compensation measures are monitored over the entire crediting period, and that information on the status of the indicators is included in the verification reports.

Both the project developer and the stakeholders consulted assign scores of - (a major negative impact) 0 (neutral impact) or + (a major positive impact) to a broad set of predefined indicators covering all aspects of sustainable development. Scoring depends on the specific circumstances. The framework chosen for the scoring process is tailored to each project and must be clearly explained and justified.

Environmental Impact Assessment (EIA) requirements are the same for VER and CER for both small- and large-scale projects. For micro-scale voluntary offset projects, an EIA is required if the relevant local or national law prescribes an EIA or if stakeholders have concerns about environmental impacts for which no mitigation measures can be identified – in such a case, the project must be treated as a small- or large-scale project. If no EIA is required by the legislation, the project developer still has to provide a statement confirming that the project complies with local environmental regulation.

The GS requires two public consultation rounds for all projects. VER projects require a letter to the Designated National Authority (DNA) or, if no DNA exists, another relevant authority to communicate the development of the project as a GS voluntary offset project.

During the 60-day period prior to finalizing the validation process, stakeholders must have the opportunity to make comments on the GS Project Design Documents (PDDs). In contrast to GS CDM projects, no international stakeholder consultation is required for GS VER projects. However, all Gold Standard projects undergo two rounds of local stakeholder consultations, national GS NGO supporters and international GS NGO supporters with offices in the host country must be involved in stakeholder consultations in all cases.

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Additionality Requirements and Project Methodologies

Additionality Requirements

The additionality requirements for both GS CERs and GS VERs are project-based and bottom-up. The GS requires the application of the latest UNFCCC additionality tool. In addition, previous announcement checks are required for both CER and VER projects.

Project Methodologies

GS CDM projects can only use CDM EB-approved methodologies, which are bottom-up and project-based. GS VER projects can choose to use the baseline methodologies approved by the Methodology Panel of the CDM EB, the CDM Small Scale Working Group, or the United Nations Development Program Millennium Development Goals’ Carbon Facility. If no suitable methodology exists, GS VER projects can propose a new protocol to be approved by the GS-TAC at a fixed cost paid by the project developer. The fees are USD 2,500 for small- and large-scale projects and USD 1,000 for micro-scale projects.

Approved VER methodologies include:

  • use of plant oil for cooking stoves,
  • domestic coal fire efficiency improvement,
  • small scale biodigesters,
  • improved cook-stoves,
  • ecologically sound fuel switch to biomass,
  • supply and distribution of energy efficient light bulbs and water saving products in households,
  • biodiesel from waste oil/fat from biogenic origin.

For an up-to-date list of approved VER methodologies go here.

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Project Approval Process

Validation and Registration

Projects are approved by the GS-TAC after it has reviewed and agreed all the required documentation. CER projects must additionally go through the CDM approval process. In general, the validation requirements for GS VER and GS CER projects are identical, but for VERs some requirements of the CDM have been simplified or removed. These include:

• Simplified guidelines for micro-scale projects
• Broader eligibility of host countries
• Less stringent rules on the use of official development assistance (ODA)
• Broader scope of eligible baseline methodologies
• No need for formal host country approval.

All GS projects must be validated by a DOE. The GS provides support to DOEs in the form of a validation manual for each VER and CDM stream. The key validation requirements for GS projects are:

• A stakeholder consultation report
• A completed PDD with the baseline and monitoring methodology and the sustainable development matrix
• A Validation Report
• Acceptance of the GS Terms and Conditions.

GS CDM projects use CDM PDD and validation forms, with the additional GS-specific information on project type, stakeholder consultation and contribution to sustainable development provided as an annex. The GS provides templates and instructions for GS VER project verification documents.

Validation and verification procedures are often unreasonably costly for micro-scale projects. Hence, micro-scale projects pay a standard one-time fee to a validation fund (USD 5,000) and an annual fee to a verification fund (USD 2,500). The GS TAC uses a “targeted random” selection method to select projects for validation and verification. Actual validations and verifications performed by DOEs will be paid for via the GS validation and verification funds. Projects not selected for DOE validation and verification in this approach are validated and verified by the GS in-house, but may be required to undergo DOE verification in later years.

Monitoring, Verification and Certification

GS-specific verification is conducted by DOEs. It includes emission reduction data and the monitoring of sustainable development indicators. Monitoring reports have to be submitted yearly. Project developers monitor projects according to the monitoring plans provided in the PDD. Monitoring reports are submitted to a third-party auditor (a DOE). Except for micro-scale and small-scale projects, a DOE cannot validate and verify the same project..

The GS TAC, the GS secretariat, and GS NGO supporters can request clarifications or corrective actions within a two-week period after submission of the verification report to the GS, before credit issuance of GS VERs or certification of GS CERs is initiated.

The verification report must demonstrate compliance with GS reporting criteria (especially Sustainable Development Indicators (SDIs). The SDIs must be monitored if they are:

• crucial for the overall positive impact on sustainable development
• particularly sensitive to changes
• generating stakeholder concerns.

Registries and Fees

The GS Foundation launched an independent Gold Standard Registry operated by APX Inc. in mid-March 2008. The registry tracks ownership transfers of GS VERs in the voluntary carbon market. It is a proprietary registry and the GS Foundation is the only entity to issue credits. CERs are registered in the CDM registry and will be tracked in the GS registry as well. The GS registry includes the GS Project Database and manages the transfer of documents during the certification process. The public has access to a number of reports and to project information.

The GS does not engage in project or credit transactions. The GS registry makes it possible to track the number of retired GS VERs and to review the number of GS VERs issued. However, buyers and intermediaries between the point of issuance and the point of retirement remain unknown to the GS. The ownership of retired credits can be made public if desired.

The Gold Standard Foundation has to date been funded through sponsorships, grants and fees. From August 1, 2009, new projects applying for the Gold Standard will no longer be charged a fee per credit certified, but instead will deliver a percentage of actual credits to the Gold Standard Foundation -- 1.5% of CERs and 2% of VERs. This fee structure mimics the financing mechanism used by the UNFCCC for the adaptation fund. The offsets are purchased by Sindicatum Carbon Capital, an offset project developer and the proceeds are delivered to the Gold Standard Foundation. The Gold Standard Foundation retains its independence and status as a non-profit NGO.

Projects that are already operational may apply for retroactive registration to the GS. For this, they need to go through a “(retroactive registration) pre-feasibility assessment” for which the GS charges a fee of USD 0.1 per VER for an amount of VERs equivalent to the expected annual volume of reductions (with a minimum fee of USD 250).

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