Gold Standard response to Yle series on carbon offsetting

Appropriateness of carbon offsetting as a climate solution

Gold Standard has long advocated for businesses to follow a mitigation hierarchy that prioritizes reducing a company's own emissions, in line with science, while taking full responsibility for those they cannot yet eliminate. Suggesting that companies should not do so, that is, not pay to compensate for their residual emissions, is akin to asserting that you should not recycle your rubbish because the only acceptable solution is zero waste. Read more about how we don't have time to dismiss carbon markets as a climate solution here.

In the absence of political will for economy-wide pricing on carbon pollution, the voluntary purchase of carbon credits is one tool among many to mitigate the climate emergency and transition to a low-carbon economy.

Appropriateness of carbon offsetting as a climate solution

Challenges that western businesses should not support carbon reduction projects in the developing world, often coming from activists that oppose market mechanisms writ large, miss two key points: 1) it is preferable to avoid locking in carbon intensive, polluting technologies as developing countries pursue their right to grow economically, and 2) climate projects can and should provide direct development benefits to communities where they take place.

Gold Standard safeguards and sustainable development provisions are designed to avoid negative impact and deliver measurable, verified positive benefits to project participants - and have been independently assessed to be the most rigorous among carbon standards.

Nearly 3 billion people globally are still forced to cook on dangerous open fires, a figure that has remained largely static for decades. Clean cooking falls largely outside the areas of the global economy targeted by companies; that is, it is not within the carbon footprint of major corporations and is thus overlooked by emerging voluntary private finance incentives. For this reason, carbon markets represent a vital line of finance to tackle an entrenched and difficult topic that is essential to mitigating the climate emergency and ensuring equitable access to energy services.

The clean cooking project by Impact Carbon featured in the Yle series is the first-ever Gold Standard certified cookstove project. It has been independently verified to have reduced as much as 50% less charcoal required for daily meal preparation, which can result in over USD$110 of savings per year for stove users. In addition, efficient cookstoves reduce toxic household air pollution which can have positive benefits on respiratory health, among other development benefits.

While sustainable development impacts for stove users are monitored, measured, and verified, the Yle series rightly highlights the opportunity for increased direct participation in project development and financial returns of credit sales by the communities where projects take place. Today, projects are initiated primarily by those in the global North, where capacity has already been built and connections with buyers of carbon credits are more established.

To help increase direct access to the market, particularly in the developing world, Gold Standard has launched a programme with support from Goolge.org Charitable Giving to help provide more automated and streamlined solutions that can also increase data quality and remove technical barriers for a broader community of market participants. We look forward to sharing progress on these efforts in the coming months.

Additionality

The Yle series implies that the Impact Carbon clean cooking solution project in Uganda does not deliver the impact it promises, which is based on a misunderstanding about 'additionality' -- a concept core to carbon offsetting. Additionality demonstrates that a project would be highly unlikely to move forward without carbon finance and therefore means a credit can be legitimately used to compensate for an emission elsewhere; it is assessed one time, at the project start. This is standard practice in carbon markets that gives project developers, who take all the up-front risk of investing in and developing climate protection projects, a predictable time horizon to implement their activity and repay their upfront investments. 

This clean cooking project by Impact Carbon was initiated more than 10 years ago in Uganda and continues to invest in supply chains to help produce efficient cookstoves, marketing that promotes the benefits of clean cooking as it continues to face barriers to adoption the world over, and warranty and maintenance programs that help ensure the benefits to communities and the climate continue over time, among other efforts. Beyond the direct, verified impact of the stoves Impact Carbon has made available to users, there is a high probability that these efforts have helped improve the market for cookstoves.

The Yle series implies that because today there are other cookstoves available in Kampala, some at similar prices, that this project is no longer 'additional.' This is illogical in the definition of additionality, which is demonstrated only at project start and has been clearly communicated to the producers of the series. Project design documents and independent third party verification of additionality as well as ongoing financial need at crediting cycle renewal can be found here. Finally, it is worth highlighting that according to the World Bank, still less than 2% of the population in Uganda has access to clean cooking technologies.

The assurance system + FPIC

Gold Standard is the only climate-centered standard that has achieved Code Compliant status from ISEAL, a globally-recognised framework for effective, credible sustainability systems. Our assurance system and certification process reflect ISEAL’s principles for best practice governance. It is comprised of Gold Standard as the standard setter, SustainCERT the certification provider, and assessment by an independent, UNFCCC-accredited validation and verification body VVB).

The assurance system includes requirements for corrective actions and, in extreme cases, a grievance mechanism to ensure that non-conformities are addressed.

This is relevant as the Yle series suggests that the Impact Carbon project may not be fully compliant with Gold Standard requirements for Free Prior and Informed Consent for cookstove users participating in the project. While these accusations have not been formally registered, Gold Standard takes non-conformity very seriously and is investigating this issue in context of its normal assurance processes.

The journalist reports that several project participants that Yle interviewed were unaware of their role in the project, suggesting that the project may not be fully compliant with one of Gold Standard's rules. Gold Standard eligibility criteria for community services projects like clean cooking solutions state: “full and uncontested legal ownership of any Products that are generated under Gold Standard Certification, (for example carbon credits) shall be demonstrated. Where such ownership is transferred from project beneficiaries, this must be demonstrated transparently and with full, prior and informed consent (FPIC).”

The Impact Carbon project in Uganda has demonstrated this according to Gold Standard’s certification process. Their Project Design Document (GS447 CP3 PDD v 2.0 03032021.pdf)) states on page 8:
“The users’ transfer the ownership of credits to PP at the time of sale / distribution by way of the end user agreement /sales receipt which clearly includes the following text:
“I hereby agree that all greenhouse gas emission reductions created through the use of this stove belong to Impact Carbon.........””

The project underwent validation for renewal of its crediting period in April 2021 by Carbon Check, an independent UNFCCC-accredited VVB. The validation report states on page 21 (Gold Standard Validation Report (CCIPL 896 FVR_GS 447.pdf)):
“Validation team reviewed the end user agreement and sales receipts /04/ which ensure the transfer of carbon credit ownership from end-users to the project owner.”

SustainCERT, the certification provider for Gold Standard for the Global Goals, confirmed on December 24, 2021 that the crediting renewal period audit has been conducted in accordance with Gold Standard requirements. The certification system is designed to balance rigor of assurance with practicality to avoid further resource requirements in a process that is already considered complex, as the Yle series otherwise highlights. The VVB is responsible for planning its assessment to check that user agreements are in place, typically via an assessment of process and sample check. Therefore, Gold Standard does not require a VVB to assure that each stove user has reviewed the end user agreement; rather that the system is in place and is seen to be working based on the VVBs assessment of risk.

These claims do not have a bearing on the validity of carbon reduction measurement and therefore do not compromise the environmental integrity of credits issued from the project. Further, insinuations that stove users alleged to be unaware of their participation in the project may also be selling carbon credits based on their stove usage are illogical prima facie.

While no formal complaint has been issued, based on the claims in this reporting, Gold Standard has asked that the VVB and SustainCERT review conformity with this eligibility criteria during the next performance certification.

A call for a nuanced debate on carbon offsetting

In the discussion around climate action, which is technical by necessity, Gold Standard remains humble and open about opportunities to improve. It’s core to our values and codified in our processes of technical development, consultation, and stakeholder inclusivity.

The Yle series laudably invested time and resources to produce an in-depth look at carbon offsetting, which was an opportunity to explore the nuances at hand. It was an ideal chance to have a good faith debate about the complex challenges that are the reality of incentivising, measuring and reporting on climate action: The trade-offs of precision and practicality in carbon accounting and implications for costs and complexity, effective catalysts for investment and meaningful and long-term impact, or the challenges in optimizing benefit sharing across the value chain. Unfortunately the series was edited to suit an activist agenda.

Gold Standard commits to continue to reckon with these challenges with honesty and integrity, with a goal to maximise the impact of every investment toward climate security and sustainable development for all.