Potential over-issuance risk from Safe Water Supply projects

As per internal Standard Operating Procedures, the Gold Standard Secretariat regularly conducts quality assurance and control (QA/QC). In the spring of 2020, Gold Standard conducted QA/QC for Safe Water Supply (SWS) projects. The Secretariat identified a risk of potential over-estimation of emission reductions and therefore risk of over-issuance of credits and raised this to a working group of our independent Technical Advisory Committee (TAC) as the risk was material.

Because the risk of over-issuing credits was high due to the recent growth of registered projects in the SWS portfolio, the Chair of the Gold Standard TAC raised a grievance to prompt immediate action that enabled Gold Standard to ensure its principle of conservativeness could be applied across the entire portfolio, including for already registered projects.

An investigation was initiated, led by Berkeley Air Monitoring Group (BAMG) and overseen by an independent working group comprised of Gold Standard TAC members with no conflict of interest.  

The investigation found that values reported are higher than what is expected based on current academic literature and historic field research, particularly among borehole projects, though it found no evidence the project developers did not follow the methodologies. It is also important to note that due to Covid travel restrictions as well as the need to move quickly to allow projects to continue delivering clean water to communities, the scope of this investigation did not include analysis of each of the 200+ projects in the SWS portfolio; rather the investigators evaluated case studies compared to literature and default technology specifications.

Gold Standard has taken careful note of the representations to the draft investigation report submitted by SWS project developers, most which maintain that project realities do not always map to academic literature and field research, particularly for borehole projects. These representations were considered and reflected as investigators deemed appropriate in the final report.

To deliver against Gold Standard’s principle of conservativeness the Gold Standard Board of Directors, with a recommendation from the TAC, made a decision that the comparison estimates from the BAMG investigation report should be considered as reference values in certification decisions for all SWS projects until formal updates go into effect for Annex 3 of the Technologies and Practices to Displace Decentralized Thermal Energy Consumption (TPDDTEC) methodology, which provides requirements for SWS projects.

To ensure environmental integrity, any carbon credits issued from registered projects with previously approved baselines higher than the reference values from the BMAG investigation report must be compensated by retiring an equivalent number of Gold Standard carbon credits to account for the difference prior to issuance. Buyers of these SWS credits can therefore be assured that their purchases represent real carbon reductions and that they have supported sustainable development outcomes through the SWS project as well as the project used as additional compensation.

A working group of the Gold Standard TAC has reviewed the SWS Annex based on the findings of this investigation, the latest academic research, project developer representations and expertise, and further project reviews. Proposed updates to the SWS Annex aim to enable carbon finance to continue to support the delivery of safe water to vulnerable communities with the highest levels of integrity. Updates also aim to provide further clarity and simplifications for developers where needed, while maintaining the highest level of rigour associated with Gold Standard.

Gold Standard has shared these proposed updates to the SWS methodology for public consultation and with stakeholder input, has published an updated SWS methodology that will be applicable for new projects.

As part of its regular standard update process, Gold Standard is also undertaking a full review of the microscale programme. This review aims to ensure that it is properly structured to deliver on its purpose to enable access for small scale but high impact climate action in vulnerable communities while ensuring sufficient assurance, taking into account the investigation report findings.

Finally, while the investigation did not analyse historic issuances, nor did it reach conclusions on potential past over-issuance, to be conservative and to safeguard environmental integrity, Gold Standard will retire Gold Standard-certified carbon credits in line with the potential historic over-issuance mentioned in the report.

As water crises intensify due to a changing climate, Gold Standard invites the climate and development community to contribute to a longer-term, comprehensive review of how to leverage climate action deliver finance to this urgent humanitarian need, which could prompt further methodology development or the generation of new climate finance mechanisms.

For more information or to provide feedback, please contact [email protected]