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Expanding Carbon Markets

The Gold Standard Programme for Underrepresented Regions

Farmer on rice field
(Photo: The Gold Standard)

Background

Up to now, LDCs in general and African LDCs in particular have hardly been involved in the CDM. This is largely due to a lack of capital and also to the high transaction costs that have resulted in the low number projects. On what are known as the voluntary carbon offset markets, the situation is different. Voluntary offset markets offer businesses and private individuals the opportunity to voluntarily offset their carbon emissions, including in sectors not regulated by means of climate change policy. In contrast to the CDM Compliance Market, projects on the voluntary offset market are not subject to registration through the CDM Executive Board and no host country approval is needed. The projects must, of course, be certified, but the voluntary nature of the market allows for a more flexible, but nonetheless reliable approach – one that can result in lower transaction costs when compared to the CDM.  

Against this backdrop, the Gold Standard Foundation has as part of a three-year working programme commissioned by the German Federal Environment Ministry (BMU) developed a range of new micro-methodologies for the voluntary offset market. These are designed to lower the barriers to market entry and enable activities in the clean energy/energy efficiency sectors to be expanded to take in currently under-represented regions. The aim is for these instruments to serve as a catalyser for innovation and institutional capacity-building in the target region in the hope that the solutions will be transferred to other countries. It was also hoped that the new concepts would be transferred to the compliance systems in order to promote participation among under-represented regions.  

Approach and Results

To break down the barriers that prevent entry to carbon markets in the target region, the Gold Standard developed an integrated approach comprising several different activities and measures.

The existing rules and processes for micro-projects and Programmes of Activities were revised. A new Micro-PoA Programme formed a corner stone of that approach, enabling activities to be expanded to under-represented regions while keeping transaction costs low. As part of this separate micro programme, project developers were able to lower their transaction costs, cut both the time involved in project registration and their expenditure, and also benefit from the simplified procedure. Projects were eligible for the programme if their activities achieved maximal reductions of 10,000 tonnes of carbon dioxide equivalents per annum and if they implemented measures in the renewable energy, energy efficiency and waste management sectors in LDCs, land-locked developing countries and Small Island Developing States, or targeted poor communities elsewhere. The Gold Standard Micro-Programme enables these micro-activities to be expanded to allow a programmatic approach in which the benefits of both concepts are combined.  

A further component of the Gold Standard Programme took the form of a special procedure for projects in crisis regions and refugee camps, where project developers face huge challenges when it comes to contracting the services of an accredited Designated Operation Entity (DOE) to perform the validation and verification process. Under these conditions, the new rules allow deviation from the usual procedure and combine a review of existing documentation by the DOEs with an on-site inspection by objective observers, thus providing support for local project activities conducted in crisis regions and refugee camps.

The Gold Standard DNA Programme was another key part of this project. Given their experience in ensuring that the social, environmental and economic benefits of their activities actually reach the local and global communities, the Gold Standard supported DNAs which had introduced strict procedures for the evaluation of contributions towards sustainable development. Respective agreements were signed with the DNAs in the Philippines, Egypt and Ruanda. The Programme provided the DNAs, who by that time had introduced evaluation procedures and criteria for sustainable development, the opportunity to expand their institutional capacities. The Gold Standard also developed innovative tools for use in a wide range of activities. The new rules for micro-projects and PoAs were enhanced with the addition of four new methodologies and web-based tools which were introduced in 2013. The new methodologies focused on electrification and energy supply in rural areas, processing agricultural products and preserving food. In addition, the methodology for efficient cookstoves was simplified. A training workshop on using the new methodologies was held in 2013.

To improve assessment of the impacts of sustainable development, an online training tool and a separate accreditation system were launched in 2013. Using case studies, they were designed to help project developers and auditors in their work.

Implementation

The Gold Standard Foundation

Other project participants

Perspectives Climate Change GmbH, NIRAS, South South North

Project lifecycle

2011 – 2014

Contact

Lloyd Fleming
Email: lloyd.fleming@goldstandard.org

Further information

Gold Standard Website