Gold Standard Carbon Offsets: 3 Scientists Review the Voluntary Carbon Marketplace

By Natalia Mello | Updated on October 14, 2021

As the average global temperature rises, more companies, such as Gold Standard Carbon Offsets, are committing to take action against climate change.

Following scientific recommendations on the urgent need to tackle global warming, these companies have been implementing and supporting projects through the voluntary carbon marketplace, that allow for the reduction or compensation of greenhouse gases (GHG) emissions, known as carbon offset projects. Knowing how this works is crucial for effecting change.

Three scientists have reviewed the voluntary carbon marketplace for you, outlining both the benefits, and the pitfalls that currently exist.

Gold Standard logo. While various technologies that facilitate emissions reductions are readily available, several organizations cannot fully stop their GHG production. That happens because many technological solutions are too expensive, or because certain emissions cannot be prevented.

 

For example, some chemical reactions inherent to industrial processes unavoidably emit GHGs. Also, many climate-friendly procedures – such as phasing out fossil fuel use – are extremely lengthy.

When companies cannot avoid GHG production, they can offset these emissions to remain carbon neutral… but how effective are these offsetting strategies, and is there a standard?

For the voluntary carbon marketplace… no, there is no one set of standards. However, there are a number of registries that have developed their own.

How to Compensate for GHG Emissions? Gold Standard Carbon Offsets

Companies that aim to compensate for their carbon footprint, and have a broader positive influence on the climate, can choose to purchase carbon offsets. A carbon offset represents one ton of carbon dioxide equivalent (CO2e) that is not released, or that is taken out of the atmosphere.1 For carbon offsets to have a positive impact, they must be real, measurable, additional, permanent, independently verified, and unique.2 But what does that mean?

  • Real carbon offsets are those that have genuinely, demonstrably occurred.
  • Measurability means that the reduction of GHG emissions or their removal needs to be quantified via established, standardized tools.
  • Carbon offsets are additional if these would not have happened in case a market for carbon credits did not exist.
  • Permanence means managing the offset project to ensure it will uphold GHG emissions reductions and removals across a period of, in most cases, at least 100 years.
  • When a qualified and unbiased external company validates carbon offsets, these are independently verified.
  • Uniqueness means that double counting does not happen: only one carbon offset can be linked to one ton of CO2e removed from or not released to the atmosphere.

In a broad sense, carbon offset programs can be classified as either non-voluntary or voluntary. Non-voluntary offset programs are backed by regulatory compliance in the form of a law or a protocol signed by the parties to the program.

An example of a nonvoluntary offset program is California’s Compliance Offset program that binds entities covered under California’s and Quebec’s Emission Trading Schemes.3 Voluntary offset programs, on the other hand, consist of carbon offset programs that are not mandatory. Regulations do not bind them, and parties adopting the programs do so out of their free will.4

Voluntary carbon offsets are traded in voluntary carbon markets (VCMs). VCMs are open not only for companies, but for governments and individuals as well.

Over time, VCMs have been facilitating the proliferation of various projects, including those focusing on forest conservation, reforestation and afforestation, renewable energy, and green construction. Besides their climate-friendly effects, these projects can improve human and non-human health, promote biodiversity conservation, and create more sustainable jobs.

Especially after the United Nations’ Paris Agreement, the world has been witnessing a boom in carbon offset projects. Particularly, programs aiming at reforesting, afforesting, and protecting tropical areas have been gaining momentum.

Are All Carbon Offset Programs Trustworthy?

While carbon offsets have the potential to generate many positive impacts, several institutes have been raising awareness that some offset programs are not measurable, additional, independently verified, unique, nor permanent. Such carbon offset schemes can be scams.

For instance, an independent investigation found that a program implemented in Brazil started to sell carbon offsets in 2013.5 The investigation uncovered that, in 2017, only half of the area the project encompassed had been reforested. That means half of the offsets traded were not real. Another case showed that individuals involved in a different program, aimed at preventing deforestation, received higher financial incentives to join loggers and sabotage the project.

Another issue is that some carbon offset programs may lead to GHG emissions in other places, a process known as leakage. One example of leakage is when tree planting in an area causes deforestation somewhere else. Some developers pay for ill-considered restoration programs, so that they have the approval to destroy pristine forests.

Additionally, many forest restoration efforts focus only on the quantity of trees planted, forgetting about the diversity necessary to ensure a healthy ecosystem. Sometimes, exotic species are planted in rows across large areas, which are quickly chopped down for commercial purposes. Some restoration projects also tend to neglect the process of growing and protecting trees – that is, following up all activities after the planting phase.

Luckily, this is not the case for all carbon offset programs, but these are definitely factors to consider when choosing a reputable one that will truly make a positive impact. Good projects will consider all of these factors, creating systems and making smart decisions to ensure that their efforts are real, have additionality, and will create a healthy ecosystem.

Is There Room for Optimism? Yes… Gold Standard Steps In

Overall, VCMs are considered complex and fragmented, opening up space for the problems listed above, but there is still room for them to make a big difference for the planet. There are many challenges in the marketplace itself, in terms of efficient trading, limited data, and the difficulties associated with ensuring robust carbon offset programs.

Nevertheless, strategies to break down these barriers exist, and are continually being improved.

Gold Standard Carbon Offsets are a good example. At its inception, the Gold Standard aimed to ensure that carbon offset projects benefit the host communities involved in the projects.6 It can be used as an additional certificate under the Clean Development Mechanism (CDM), or as a stand-alone program that targets voluntary projects.3

Unlike other carbon offset programs, those applying for Gold Standard Carbon Offsets must demonstrate the communal benefit of the project: to the locals implementing it, as well as neighboring communities.

This stipulation makes these offsets particularly adaptable to the construction and building industry. Because Gold Standard’s criteria ensures local community benefit and other solutions, one can find programs that rehabilitate wildlife, restore carbon sinks where they are desperately needed, and regenerate biodiverse ecosystems using their impact registry system. Construction offset programs that deliver these sorts of results ensure that the benefits to global climate patterns are established for decades to come.

An 8 Billion Trees bar graph depicting how carbon credits in the voluntary carbon marketplace can reduce greenhouse gas emissions.

Gold Standard Offsets work to demonstrate positive impacts by:

  • Setting criteria to determine the quality of offsets- with detailed developed project guides and processes to follow
  • Monitoring with third-party certified verifiers
  • Transparency through their registry (paid)
  • Higher co-benefits through adding Sustainable Development Goals (SDGs)
  • More thorough social impact assessment processes
  • GS projects are slightly better at delivering co-benefits to pro-poor compared to regular CDM
  • Those involved in developing Gold Standards claim that there are “marked differences in project design before and after standards have been applied” maybe because of –

Improved consultation processes
(a single consultation and two stakeholder interventions)

Improved stakeholder mapping
(For stakeholders affected by the project)

In addition to the Gold Standard Carbon Offsets, a Taskforce on Scaling Voluntary Carbon Markets was recently created to address the issues preventing VCMs from fulfilling their potential.

This initiative aims at giving rise to a centralized governance arrangement that supports high-quality carbon offsets. That is fundamental, especially considering that the Gold Standard has several limitations, including:

  • The Gold Standard avoids forestry-related projects
  • Less than 1 percent of land use and nature-based projects (includes afforestation and agroforestry) are part of their environmental market
  • It does not include any wildlife conservation or rehab activity in any of its projects which definitely must be a part of SDGs (local communities will benefit by avoiding human-animal conflict).

The basis for all livelihoods and progress is nature and wildlife, which is not an optional extra. By integrating nature and wildlife conservation with sustainable development, these projects will be able to protect the remaining species on Earth… species from which we benefit in so many different ways.

We depend on them for pest control, pollinators, food supplies, medicine, genetic resources, and centers of tourism. People cannot afford to forget that the human species needs trees and other wildlife to thrive, in order for us to thrive. Humanity is so entwined with nature, wildlife, and their habitats that the UN report estimates that the current negative trends will “undermine progress towards 80 percent.”7

Sustainable development must be based on an appreciation of the interdependency of people, forests and wildlife, to reimagine a future where the farmers and livelihoods are secured, while reducing the risks to wild animals that share the land.

 

Are There Any Drawbacks to the Gold Standard?

Making carbon offset trading just another business and ignoring parts of forests and wildlife with an excuse of “complexity” is not appealing. While implementing many great goals, the Gold Standard sidelines the existence of wildlife, and its crucial role in sustainable development.

There are no statistics on what percentage of projected emissions are realized in each project category. Additionally, many projects focus only on community-related sustainable development goals, rather than directly reducing CO2 emissions.

These projects are based on an unrealistic hypothesis with a sole intent to deliberately incorporate the emission reduction part (as it is mandatory criteria) into projects. If the emission part is excluded, these are purely community-based projects, and yet still viable.

In most clean water projects, the baseline data shows use, as well as burning of fossil fuels (or biomass) to boil water for “purification” (which will generate GHGs). This process simply does not happen in countries like Bangladesh or India as a common practice. Many of such GS-certified projects do not align with the central idea of reducing emissions. Rather, these are nothing more than the charity obtained from buyers, named as carbon credits.

To meet most of the community-based SDGs— especially sectors such as agriculture, water, and sanitation, — funds are provided by the respective nations through various departmental schemes; this again makes the project’s “additionality” questionable.

Projects meant for reduction of plastic use, plastic waste recycling, use of green technology, green buildings, eco-label, eco-product development and such other projects are not part of the Gold Standard program.

These projects can contribute real life solutions to GHGs emissions, not just greenwash with a powerful phrase like “carbon offset.” The project descriptions in many cases seem contradictory to what the Golden Standard claims.

For example, in the description it says, “Our rules for forestry projects explicitly ensure projects don’t cut down trees” but the project description for projects like “The Nicaforest High Impact Reforestation Program” mentions extraction activities and timber marketing in future years.6

The Gold Standard somewhat escapes the responsibility towards the future, by highlighting the short-term SDGs fulfilling activities. Removal of these trees after the said period of time might be fine in terms of carbon dioxide balances, but what about the imbalances in nature caused by loss of biodiversity associated with these forests?

The organization seems to promote monoculture through its certified labelled projects, which may pose threat to local biodiversity. The native ecosystem is important for the benefits of local communities, while monoculture is mainly only beneficial for commercial purposes that may not be useful for locals.

Although offset markets are relatively straightforward in principle, they have been anything but straightforward to implement in practice. However, the standards and labels like Gold Standard have the potential to make it more reliable by implementing its own stringent rules.

Exploring more project categories with “true solutions” for GHG emissions would be good to create quality standards, rather than just projecting carbon offsets as just another money-making business tool.

The Role of Companies in Providing High-Quality Carbon Offsets

Despite the issues associated with the current governance hampering the success of the VCM, various companies have been working to provide the best carbon offset programs.

These enterprises steer reforestation, afforestation, and forest conservation efforts across the world, warranting transparency in all operations and working with different planting partners.

While planting diverse and native tree species is the driving force of a successful forestry offset operation, some restoration activities encompass much more than that.

A permanent monitoring of all activities – that is, growing trees and not only planting them – and continuous engagement in local communities and individuals are at the core of an ethical and effective restoration approach to tree planting offset strategies.

Moreover, these offset projects can promote forest and wildlife conservation throughout the globe. Gold Standard Carbon Offsets are a great way to get started, but there are plenty of commendable options. Moreover, the beauty of the voluntary marketplace is that anyone can participate. Once emissions have been measured, using an ecological footprint calculator, users simply choose the offset program that they like.

Choose an offsetting company or verification standard that encompasses both the environmental and social dimensions of compensating for GHG emissions, with effective carbon offsets that are legitimate and contribute to a cooler world. Gold Standard, overall, meets that goal.


References

1What is a Carbon Offset? – Carbon Offset Guide. (n.d.). Retrieved April 8, 2021, from https://www.offsetguide.org/understanding-carbon-offsets/what-is-a-carbon-offset/

2Katz, J. (n.d.). How the voluntary carbon market can help address climate change. Retrieved August 4, 2021, from https://www.mckinsey.com/business-functions/sustainability/our-insights/how-the-voluntary-carbon-market-can-help-address-climate-change

3PMR. (2015). Overview of Carbon Offset Programs (6). PMR (Partnership for Market Readiness). https://openknowledge.worldbank.org/bitstream/handle/10986/21353/COP_eBook.pdf?sequence=1&isAllowed=y

4UNFCC Secretariat. (2013). Afforestation and Reforestation Projects under the Clean Development Mechanism. United Nations Framework Convention on Climate Change. Retrieved April 8, 2021.

5Song, L. (2019, May 22). An (Even More) Inconvenient Truth: Why Carbon Credits For Forest Preservation May Be Worse Than Nothing. Retrieved August 4, 2021, from https://features.propublica.org/brazil-carbon-offsets/inconvenient-truth-carbon-credits-dont-work-deforestation-redd-acre-cambodia/

6Greenhouse Gas Management Institute, & Stockholm Environment Institute. (2020, December 29). Gold standard. Carbon Offset Guide. Retrieved April 8, 2021, from: https://www.offsetguide.org/understanding-carbon-offsets/carbon-offset-programs/voluntary-offset-programs/gold-standard/

7(2018, June 28). Assessing knowledge | IPBES secretariat. Retrieved August 16, 2021, from http://ipbes.net/assessing-knowledge

8Image Source: The Gold Standard. https://www.goldstandard.org/