Gold Standard FAQs
- What is the Gold Standard?
- Why was the Gold Standard created and what are its main objectives?
- What types of projects are eligible to register with the Gold Standard?
- Why is The Gold Standard different from other standards in the market?
- How do Gold Standard procedures differ from the Clean Development Mechanism (CDM)?
- What tests does the Gold Standard require to demonstrate additionality?
- Are there higher transaction costs associated with GS registration and certification?
- Why does The Gold Standard obtain a price premium?
- How is The Gold Standard Foundation funded?
What is the Gold Standard?
The Gold Standard is an award winning certification standard for carbon mitigation projects, recognised internationally as the benchmark for quality in both the compliance and voluntary carbon markets. The Gold Standard is the standard of choice for multiple governments, multinationals and the United Nations and the only certification standard trusted and endorsed by more than 80 NGOs worldwide.back to top
Why was the Gold Standard created and what are its main objectives?
Established in 2003 by WWF to demonstrate that carbon markets could deliver capital efficiently to greenhouse gas mitigation projects, with substantial co-benefits, all Gold Standard projects demonstrate real and permanent GHG reductions and sustainable development benefits in local communities that are measured, reported and verified.
In the past decade more than 800 Gold Standard low carbon projects have been listed, predominantly in China, India, Turkey and Africa. In 2010 alone, 175 projects were added to the Gold Standard pipeline, a 40% increase from 2009. Each project represents a community that has benefited from The Gold Standard’s rigorous requirements. In total, over 6-million Gold Standard credits have been issued in the voluntary market (VERs) and almost 1-million have been labelled by The Gold Standard in the compliance market (CERs). This approach ensures Clean and Sustainable Development is genuinely achieved.back to top
What types of projects are eligible to register with the Gold Standard?
- Renewable Energy – such as solar, bomass, biogas and liquid biofuels (if they produce electricity), wind, geothermal, hydro.
- Energy Efficiency – industrial, domestic, transportation, public sector, agricultural sector and commercial sector.
- Waste Handling and Disposal – all waste handling activities that deliver an energy service or a usable product with sustainable development benefits (e.g. composting).
- Land Use and Forests – including New Forests & Agroforestry, Forest Management and Smart Agriculture.
Why is The Gold Standard different from other standards in the market?
Although operating in a competitive market alongside many other carbon standards, The Gold Standard’s culture and approach to carbon credit certification is unique. Its founding NGOs – WWF, SouthSouthNorth and Helio International – felt a rigorous approach was essential, to ensure that emission reductions are real and verifiable and that the activities make a measureable positive impact on sustainable development in local communities.
The Gold Standard is also unique for its insistence that developers take a holistic approach to project design and implementation. In this context, The Gold Standard remains the ONLY certification standard that requires ALL projects adhere to the strictest standards on additionality and positively impact the economy, health, welfare and environment of the local community hosting the project.
The Gold Standard approach means lower project risk through inclusive and thorough design, higher investor confidence, greater access to carbon finance, more impactful, often transformational projects for communities and a superior price due to higher demand for a premium product. All of these aspects are unique and, have helped to bring greater credibility to the carbon markets.back to top
How do Gold Standard procedures differ from the Clean Development Mechanism (CDM)?
All project developers wishing to register with the Gold Standard prepare a Project Design Document (PDD) as for CDM projects. To satisfy CDM criteria for carbon offset projects, evidence must be provided demonstrating that the project will:
- Deliver reductions in emissions that are additional to any that would occur in the absence of the project activity
- Undertake pubic consultation and provide assurances that there will be no significant adverse environmental impacts
- Comply with sustainable development criteria of the host country and receive host country approval
- Provide real, measurable and long-term mitigation benefits, using an approved baseline and monitoring methodology
- Avoid diversion of Official Development Assistance
In addition a Gold Standard Passport that contains supplementary information relating to the CDM criteria must be prepared. It must be demonstrated that the project will implement one or more renewable energy or energy efficiency activities and will contribute to sustainable development by making a net-positive contribution to the economic, environmental and social welfare of the local population that hosts it.back to top
What tests does the Gold Standard require to demonstrate additionality?
The Gold Standard method requires all project developers to use the UNFCCC Additionality Tool to demonstrate that emissions reductions will be additional to ‘business-as-usual’. Using the same tool for both voluntary and compliance projects provides clarity and transparency and sets a minimum standard that allows comparison between credits. This is especially important in the voluntary market, where the GS label provides a guarantee of value for potential buyers.back to top
Are there higher transaction costs associated with GS registration and certification?
The transaction costs for Gold Standard registration are somewhat higher than for normal CDM registration. The higher costs are attributable mainly to the additional time and effort needed to conduct the local stakeholder consultation and supply the additional information required by the Gold Standard method.back to top
Why does The Gold Standard obtain a price premium?
For the past decade, The Gold Standard has continually innovated, influenced and inspired those involved with the carbon markets, demonstrating that a market mechanism for carbon finance, when managed correctly, can deliver multiple positive outcomes at no net additional cost. The Gold Standard approach means lower project risk through more inclusive and thorough design, higher investor confidence, greater access to carbon finance, better projects for communities and a superior price due to higher demand for a premium product. All of which has for ten years helped to bring greater credibility to the carbon markets.
This rigorous certification process ensures genuine quality and like all high end products, Gold Standard carbon offsets carry a price premium. We are proud that our credits command this premium over other standards since it reflects the credibility, honesty, integrity and robustness of the standard and our brand. Moreover, it clearly demonstrates that The Gold Standard approach delivers not only better quality projects but also more commercially viable investments. Only by meeting these two criteria can carbon markets be financially sustainable in the long term.
For the end buyer, reduced risk brings peace of mind – an offset programme is only as strong as its weakest tonne. With sustainable development and environmental co-benefits being maximised and ensured via The Gold Standard’s MRV, investing in quality Gold Standard carbon credits is an investment in your own brand, demonstrating to clients, staff and suppliers sincerity towards environmental and corporate social responsibility.back to top
How is The Gold Standard Foundation funded?
Launched in 2003 with funding and in-kind support from the conservation organisation WWF and the Basel Agency for Sustainable Energy, The Gold Standard was established as a Swiss, non-profit foundation in September 2006 with three employees. By the end of 2011 it will have 30 employees in 10 countries. Headquartered in Geneva, Switzerland, the organisation now has registered offices in the US, India and Singapore.
Government and private grants represented 95% of revenue in 2007 and 89% in 2008. During this time the Foundation developed financial momentum through the exponential growth of a revenue stream from credit issuance (11% of revenue in 2008 to 73% in 2010). The Foundation aims to fund operating costs from this commercial income. New innovations are funded through grants with the goal of becoming financially sustainable when implemented. Donors appreciate this leverage effect in addition to the policy influence that results from the demonstration of new, commercial viable market-based tools. Major donors include the German Federal Ministry of Environment and WWF.
The organisation’s 2011 operating budget of USD 3m comprises a well-balanced mix of revenue from certification fees (57%) and funded development programmes (43%) The table below shows the Gold Standard’s financial evolution.back to top