Gold Standard

The Gold Standard is an independently audited, globally applicable best practice methodology for project development that delivers high quality carbon credits of premium value along with sustainable development co-benefits associated with the projects.

Created in 2003 by a small group of non-governmental organisations, including WWF,  today the label receives worldwide recognition and is officially supported by 51 charities, NGOs and environmental and development organisations.

It was created to ensure top quality projects under a Kyoto instrument, the Clean Development Mechanism (CDM). It is the most widely endorsed quality standard for designing and implementing carbon offset projects.

The Gold Standard’s main purpose is to ensure that CDM projects are both reducing carbon dioxide (CO₂) emissions and fostering sustainable development. In WWF’s view, the Gold Standard reflects best the objectives of the CDM as defined in the Kyoto Protocol.

An independent best practice benchmark

If designed correctly, CDM and Joint Implementation (JI) projects can play a valuable role in promoting the spread of sustainable energy technologies both within and outside the industrialized world.

The key phrase is if designed correctly.

The Gold Standard: Quality Standards for the CDM and JI, is designed to be an independent best practice benchmark for CDM and JI greenhouse gas offset projects.

The CDM Gold Standard is a new innovative NGO product which has been designed to promote a sizeable market in 'quality' certified emissions reductions and emissions reductions units from CDM projects. The Standard itself is a project methodology, fully consistent with the CDM Executive Board's Project Design Document, which provides assurance that CDM projects will deliver what they are supposed to deliver - real emissions reductions and a clear contribution towards sustainable development.

It offers project developers a tool with which they can ensure that the CDM and JI deliver credible projects with real environmental benefits and, in so doing, give confidence to host countries and the public that projects represent new and additional investments in sustainable energy services.

Gold Standard Architecture

The Gold Standard is built on the basic architecture of CDM projects and is in line with the rules of the CDM Executive Board, the official body within the UN approving CDM projects. This allows project developers to use the same tool (the CDM approval form) but in its expanded form for CDM Gold Standard projects.

Using the Gold Standard methodology marginally increases development costs compared to a standard CDM project.  But there are advantages: better project preparation means that proper stakeholder consultation has been conducted, the local population and environment of the project have been taken into account, and possible stumbling blocks with local initiatives have been tackled and addressed. Overall the Gold Standard methodology will lead to a better project preparation and lower project risk, which in practice also leads to financial benefits for the developer.

Voluntary Gold Standard projects

At Carbon Expo 2006, the Gold Standard launched its methodology for voluntary offset projects, a simplified version of the CDM Gold Standard. This methodology keeps intact the basic rules of the Gold Standard but makes them more easily applicable. This methodology is, however, only available for Voluntary Emission Reductions – and it creates so-called VERs – Voluntary Emission Reduction units. To avoid problems with double accounting, this methodology, similar to the CDM, is only available for developing countries.

What is the difference between CDM and voluntary projects?

CDM projects are part of the Kyoto Protocol flexible mechanisms. As such they can generate credits for emission reductions that can be included in a country’s official emissions accounts.

If an industrialised country has to reduce its emissions by a certain amount by a certain time (e.g. Germany X%, the Netherlands Y% by 2012) then it can at least partly cover this reduction by buying credits from CDM projects (or investing in CDM projects). CDM projects have to be in developing countries. A second system, called Joint Implementation (JI), will tackle investment in industrialised countries and come into force from 2008.

CDM projects are now gaining momentum: in December 2005, there were 40 CDM-registered projects, with 500 in the pipeline.  By May 2006, there were more than 176 registered projects and approximately 600 in the CDM evaluation process leading to registration.

Voluntary projects are outside the Kyoto system. Their emission reductions cannot be traded in official emission trading systems. Most offset projects to date are developed in the voluntary market and have not followed a particular standard. Small projects will find the voluntary offset market increasingly attractive because projects are mostly cheaper than under the CDM. They are attractive to companies who use offset as part of their corporate social responsibility strategy but which up to now are not legally obliged to lower their emissions. Those buyers will, however, also look for quality assurance: the Gold Standard for voluntary offset projects tackles this need and is so far the only independent standard for quality in this market.