- Michael Schlup, Gold Standard, +41 (0)61 283-0916
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Setting the benchmark for sustainable energy projects: Gold Standard.
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Why is the Gold Standard necessary?
How does the Gold Standard work?
What criteria underpin the Gold Standard?
What is the problem with additionality?
Why is the Gold Standard necessary?
The rules for the CDM - which allows carbon credits - were finalised in the 2001 Marrakech Accords.
A number of these projects have major shortcomings, especially when they fail to demonstrate that the CDM was crucial for their development: a key component of the Kyoto Protocol is 'additionality', the delivery of added environmental and social benefits. At present WWF and other environmental groups do not see that the rules and guidelines being developed by the CDM Executive Board will adequately deal with these issues.
To set a marker for truly additional projects that also benefit sustainable development, WWF and others developed the Gold Standard.
What criteria underpin the Gold Standard?
What is the problem with additionality?
The guidance on the requirement that projects demonstrate additionality is ambiguous. Two interpretations are possible: a) that emissions be lower than in the no-project scenario, and b) that the project would not have occurred without the CDM. The first is a baseline issue whereas the second screens out business-as-usual projects: both are necessary to ensure climate effectiveness.
Unfortunately, the second is not explicitly dealt with in the rules and there is currently no indication from the CDM Executive Board that project developers will be obliged to show that their projects would not have happened without the CDM.
There is also a lack of reference to the requirement that baselines be developed in a "conservative manner" in the project design document. This is a key provision in the Marrakech Accords and one of the few guarantees against baseline inflation, yet the Executive Board has so far offered no guidance how this should be applied.
There is similarly no reference to long-term benefits for climate change mitigation, despite this being a core part of the CDM text in the Kyoto Protocol.
The provisions for stakeholder consultation and public participation are inadequate. Project Design Documents must be posted on the Internet and it is by no means certain that stakeholders will have access to them, especially in the case of rural projects. Likewise there is no requirement that documents be made available in a language familiar to stakeholders.
How does the Gold Standard work?
What criteria underpin the Gold Standard?
What is the problem with additionality?
Why is the Gold Standard necessary?
The rules for the CDM - which allows carbon credits - were finalised in the 2001 Marrakech Accords.
A number of these projects have major shortcomings, especially when they fail to demonstrate that the CDM was crucial for their development: a key component of the Kyoto Protocol is 'additionality', the delivery of added environmental and social benefits. At present WWF and other environmental groups do not see that the rules and guidelines being developed by the CDM Executive Board will adequately deal with these issues.
To set a marker for truly additional projects that also benefit sustainable development, WWF and others developed the Gold Standard.
How does the Gold Standard work?
The Gold Standard is composed of a package of quality control criteria, specifically:
- Project eligibility is restricted to renewable energy and demand side energy efficiency projects because these technologies carry inherently low environmental risks.
- An explicit 'additionality' test is used to screen out projects that would have happened without the CDM.
- A methodology deploying environmental and social indicators is used to check the contribution of a project to sustainable development.
- Adoption of the Gold Standard will lead to projects that provide credibility for developers and investors in CDM/JI projects, coupled with certainty for host country governments that real benefits are being delivered.
What criteria underpin the Gold Standard?
This development has been governed by a set of basic principles:
- Standards that can be supported by a wide range of stakeholders, in particular environmental groups and others who believe in the overriding importance of maintaining environmental integrity.
- A balance between environmental rigour with practicality in terms of application by project developers and operational entities.
- Avoidance of elevated transaction costs or bureaucratic procedure.
- Direct compatibility with the CDM and JI project planning and monitoring.
- Simple procedures, easily handled by standard CDM project.
- A Global Standard, readily applicable in a variety of local and national contexts and across different sectors.
What is the problem with additionality?
The guidance on the requirement that projects demonstrate additionality is ambiguous. Two interpretations are possible: a) that emissions be lower than in the no-project scenario, and b) that the project would not have occurred without the CDM. The first is a baseline issue whereas the second screens out business-as-usual projects: both are necessary to ensure climate effectiveness.
Unfortunately, the second is not explicitly dealt with in the rules and there is currently no indication from the CDM Executive Board that project developers will be obliged to show that their projects would not have happened without the CDM.
There is also a lack of reference to the requirement that baselines be developed in a "conservative manner" in the project design document. This is a key provision in the Marrakech Accords and one of the few guarantees against baseline inflation, yet the Executive Board has so far offered no guidance how this should be applied.
There is similarly no reference to long-term benefits for climate change mitigation, despite this being a core part of the CDM text in the Kyoto Protocol.
The provisions for stakeholder consultation and public participation are inadequate. Project Design Documents must be posted on the Internet and it is by no means certain that stakeholders will have access to them, especially in the case of rural projects. Likewise there is no requirement that documents be made available in a language familiar to stakeholders.