We talk to Margaret Kim, CEO of Gold Standard, a non-profit certification organisation based in Geneva.
Gold Standard was established in 2003 by WWF and other international NGOs to ensure projects that reduce carbon emissions featured the highest levels of environmental integrity and also contributed to sustainable development. It has supported over 1700 projects in 80 countries and states to have reduced 134 tonnes of CO2 equivalent emissions. But how far does carbon compensation really deliver its promise? Gold Standard recently launched “Carbon Offsetting 2.0”, putting an extra emphasis on the integrity of carbon assets, nature-based solutions and ensuring the right instruments are used in the right way.
Geneva Solutions: What issue are you trying to address with this reset of carbon offsetting?
Margaret Kim: In brief, we’re aiming to bring the voluntary carbon market in line with the emerging rules of the Paris Agreement and to ensure that carbon finance is channeled where it has the greatest impact. Without these changes, we risk carbon credit revenue going to projects that may not deliver the climate impact that they intend to. On the other hand, a growing voluntary market may inadvertently de-incentivize countries to raise their own national commitments over time, as the Paris Agreement expects them to. In the transition to this new paradigm, carbon offsetting can have a major impact on accelerating progress toward global decarbonization.
GS: Several companies - notably airlines - claim to reach carbon neutrality by purchasing carbon credits while not necessarily reducing their emissions. Does it represent a breach of integrity? And how far does it leave these companies off the hook from genuine science-based targets?
Carbon offsetting without internal reductions in line with science-based targets will not get us to the global goal of balancing carbon emissions with carbon sinks by midcentury - the ambition of the Paris Agreement. Some sectors will take longer to decarbonize, including the aviation sector or companies that have a majority of emissions in their value chains. In these harder-to-abate sectors, carbon offsetting will play an important role that allows these companies to take responsibility for their carbon emissions now, in parallel to initiating their decarbonization strategies.
If you have time, read our analysis here: Is carbon compensation a real climate solution?
GS: How can Gold Standard guarantee that carbon credits from nature-based solutions or clean energy projects are actually additional on a global level and lead to permanent effects? Given that a tree, for example, must be protected over 50 to 100 years to deliver its promise of carbon sequestration.
Additionality is required for every project prior to project certification and is demonstrated through several possible methods, notably barrier tests, eligibility and performance tests.
To ensure permanence in land-use activities, projects must put 20 per cent of their credits from each issuance into a “compliance buffer” account that acts as an insurance policy in case a forest burns or trees die, for example. Project certification periods for Gold Standard land-use projects are long-term, 30 or 50 years, and require ongoing monitoring, independent third party site visits and local stakeholder engagement to report any loss of carbon stocks.
Beyond the long timeframe, Gold Standard projects aim at generating additional positive impacts for project participants, therefore increasing the likelihood of sustainable practices even beyond the lifetime of a project. By doing so, permanence is not simply a matter of how many years carbon can be retained via a legal document or buffer account, but by means of making participants realize it benefits them to keep carbon stored.
GS: Gold Standard certifies there is no double accountancy: when the ownership of a carbon credit is transferred through purchase to a company, the carbon reduction will not be counted twice by the organization or country making the effort. How does this work and what are the challenges?
What you are asking about pertains to double claiming – that the country where the project happened counts the reduction in their own national inventory and a company purchasing carbon credits claims to have offset their carbon emissions. The solution will include some optionality: either the host government cancels those credits in their own national inventory (makes a “corresponding adjustment”), or the company purchasing the credits uses an alternative claim to offsetting, for example, to have financed an emission reduction.
GS: What is the potential of carbon offsetting to play a much bigger role in bridging the emissions gap with the level required to stabilize the climate at 2°C warming?
The voluntary carbon market needs to scale up dramatically to deploy the needed amount of private sector finance to help close that gap. At Gold Standard, we believe this can be enabled in several ways: 1) Reducing barriers to project certification by deploying technology to capture monitoring data and facilitate the verification process. 2) Innovating in ways to help pre-finance project activities, as carbon markets work on a “payment for performance” basis, requiring project developers to take all the up-front risk to invest in their climate protection projects. 3) Providing better access to connect buyers of carbon credits with the project developers selling their credits.
Gold Standard’s online platform is our effort to help facilitate this direct support.