Blu Diamond Water Standard

Version Number: 1.0

Effective Date: September 5, 2025

1.0 Introduction

The Blu Diamond Water Standard provides a framework for project owners and developers to ensure that their projects meet the minimum requirements for generating Blu Diamond Water Certificates. Following a thorough review of the relevant details of the proposed project to confirm compliance with this Standard, water certificates will be issued by Blu Clarity (or its authorized representative) to the relevant owner or developer that applied to Blu Diamond for such issuance (the “Applicant”). Each water certificate represents a measurable and independently verified volume of freshwater use avoided, reduced, or made available through reuse, repurposing, or other efficiency measures.

This Standard is designed to be transparent, verifiable, and broadly applicable to a range of water conservation and reuse projects, each of which may be subject to their own regulatory requirements and industry standards, which apply in addition to this Standard. This Standard is also designed to be compatible with generally accepted methods for quantifying water benefits, such as the Volumetric Water Benefit Accounting (VWBA) methodology, so long as they are consistent with the Standard’s core principle of quantifying the volume of usable water produced or freshwater use avoided in a deterministic manner that is measurable, verifiable, and reliable.

The following sections outline the requirements for project eligibility, measurement, monitoring, and the processes for certification and revocation.

2.0 General Project Requirements

To qualify for Blu Diamond Water Certificates, all projects must meet the following requirements:

Additionality: The project must result in water savings that are additional to what would have occurred in a business-as-usual scenario. Water savings must not be mandated by existing regulations, laws, or permits. An operating facility may qualify if it came into operation or had a material improvement to its water-related performance within 18 months prior to the Blu Diamond Water Certificates issuance.
Permanence: Water benefits must be sustained for a minimum of 5 years.
Leakage: The project must not cause a shift in water consumption to another location or system that would negate the water savings represented by the Blu Diamond Water Certificate.
No Double Counting: The Blu Diamond Water Certificates generated by the Applicant cannot be claimed, registered, or sold by multiple parties, and they must not be used to fulfill another regulatory or voluntary obligation.
Measurement: All measurements used to quantify avoided water volume must be deterministic and not modelled or probability-based, based on direct metering and/or independently verifiable data. Probabilistic models or estimations are not permitted as the primary basis for determining the volume of Blu Diamond Water Certificates to be issued.
Baseline Establishment: A clear and defensible baseline must be established to quantify the volume of freshwater use avoided, reduced, or made available through reuse, repurposing, desalinization or other efficiency measures.
Environmental Safeguards: Projects must include an environmental impact assessment (EIA) confirming no net-negative effects on local water quality, biodiversity, or communities. For desalination, brine disposal must meet sustainability standards (e.g., no ocean discharge without dilution).
Right to Claim Environmental Attributes: The Applicant must have the clear and undisputed right to claim the environmental attributes underlying the Blu Diamond Water Certificates generated by the project under applicable law and without conflicting with any third party contractual obligations.
Third-Party Auditable: All project data, including baseline and operational data, must be transparent, well-documented, and subject to third-party audits to ensure compliance and accuracy, as facilitated by an approved MRV platform.
Water Quality: The repurposed or treated water must be of a quality suitable for its intended use, as verified in accordance with the MRV plan.
Insurance-Backed: The project must be underwritten with insurance provided through a Blu Diamond-authorized, investment-grade partner to compensate the insurance policy holder for the failure of the project to generate the anticipated volume of Blu Diamond Water Certificates.

3.0 Project-Specific Requirements

3.1 Water Desalination

Desalination projects involve removing salts and other minerals from saline water to produce water of a suitable quality for its intended use.

Baseline: The baseline is the volume of freshwater that would have been drawn from an alternative source (e.g., municipal supply, freshwater aquifer) to meet the demand that the desalinated water from the project will fulfil.
Measurement: The volume of water produced by the desalination plant must be continuously metered and be adjusted for any operational water use by the facility.
Verification: The project must provide documented evidence of the metered freshwater output and the end-user’s consumption of this water. The project must also provide documentation that the water is of suitable quality for its intended use.

3.2 Wastewater Treatment for Reuse

These projects involve treating wastewater for that it becomes of a quality suitable for reuse.

Baseline: The baseline is the volume of freshwater that would have been used for the application if the treated wastewater from the project were not available.
Measurement: The volume of treated wastewater that is reused in a commercial, industrial, or municipal facility must be continuously metered.
Verification: The project must provide documented evidence of the metered volume of treated wastewater. The end-user’s continued use of this water confirms its suitability for the application. The project must provide documentation that the water is of suitable quality for its intended use.

3.3 Water Reduction Technologies

This category includes technologies that reduce freshwater consumption in a process, such as drip irrigation, low-flow fixtures, or closed-loop cooling systems.

Baseline: A historical water use baseline must be established for the specific process or site where the technology is implemented. This baseline should be based on a minimum of one year of continuous, metered water use data prior to the project’s implementation.
Measurement: Water use after the implementation of the technology must be continuously metered and compared against the established baseline. A clear, deterministic (not model or probability-based) methodology for calculating water savings must be defined, accounting for variables like production changes or environmental conditions that could influence water use.
Verification: The project must provide continuous metered data for both the baseline period and the operational period. The calculation of the avoided freshwater volume must be transparent and auditable.

3.4 Repurposing of Wastewater

This involves redirecting wastewater to a different application that would have otherwise used freshwater.

Baseline: The baseline is the volume of freshwater that would have been used for the new application if the repurposed wastewater were not available, as determined by reference to recognized and established industry engineering standards.
Measurement: The volume of repurposed wastewater delivered to the new application must be continuously metered.
Verification: The project must provide documented evidence of the metered volume of repurposed wastewater.

4.0 Monitoring, Reporting, and Verification (MRV)

All projects must have a robust MRV plan, managed by a provider accredited by Blu Diamond and facilitated by an approved MRV platform, to ensure the integrity of the Blu Diamond Water Certificates.

Monitoring: Projects must have an approved system for continuously measuring and recording water flow data, with a frequency appropriate to the project type (e.g., daily, hourly).
Reporting: Each project must submit an Annual Monitoring Report including:
- Total volume of water avoided, reduced, or made available through reuse, repurposing, desalinization, or other efficiency measures.
- Detailed operational data and meter readings.
- Water quality testing results (if applicable).
- Maintenance and calibration logs for metering equipment.
Verification: The data provided in the reports will be subject to a third-party verification process to verify the accuracy of the water volumes. This ensures the integrity of the Blu Diamond Water Certificates issued in relation to the project.

5.0 Certification Process

To be certified for Blu Diamond Water Certificates, a project must undergo the following process:

Application Submission: The project owner or developer must submit a formal application to Blu Diamond, including the project’s full design specifications, the established baseline, the MRV plan, and documentation of clear ownership and financial backing.
Initial Third-Party Audit: An independent third-party validator approved by Blu Clarity must review all submitted documentation and conduct a site visit to validate the project’s compliance with this Standard.
Insurance Underwriting: Based on the audit findings, Blu Clarity will insure the generation of Blu Diamond Water Certificates and underwrite the same through one or more qualified insurance carriers rated A or higher, compensating the insurance policy holder for the failure of the project to generate the anticipated volume of Blu Diamond Water Certificates.
Final Approval: Upon successful completion of the audit and insurance underwriting, Blu Clarity will issue a formal certification, confirming the Applicant as eligible to generate Blu Diamond Water Certificates.

6.0 Issuance, Registration, Transfer, and Use/Retirement of Blu Diamond Water Certificates

6.1 Issuance

Upon successful certification of a project under Section 5.0, Blu Clarity (or its authorized representative) shall issue Blu Diamond Water Certificates (“Certificates”) corresponding to the verified volume of freshwater use avoided or reduced, or usable water made available.
Upon issuance, the Certificates will be considered Ex-Ante Certificates and will convert to Ex-Post Certificates once the MRV confirms the water production or water savings, as applicable, represented by the Certificate.
Each Certificate shall represent a stated quantity of verified water benefit quantified in kilogallons (kgal), unless otherwise specified by Blu Clarity.
Certificates shall be issued by Blu Clarity to the Applicant in digital form only and immediately recorded on the secure register administered by Blu Clarity (or its authorized representative) (referred to as the “Registry”).

6.2 Registration

All issued Certificates must be recorded in the Blu Diamond Registry, which shall serve as the official record of ownership and transaction history.
Each Certificate shall carry a unique alphanumeric identifier, and the Registry will contain metadata identifying the originating project, issuance date, project location, project type, and verification details.
Registration shall ensure traceability, prevent double counting, and provide transparency to all market participants.

6.3 Transfer

Certificates may be transferred between parties through the Registry in accordance with Registry procedures.
Transfers must be documented and recorded in real time, such that chain of custody is continuously maintained.
Certificates may only be transferred if they are active and not previously retired or cancelled.
Blu Clarity reserves the right to suspend or restrict transfers in the event of suspected fraud, double counting, or regulatory non-compliance.

6.4 Use and Retirement

Ex-Post Certificates may be retired voluntarily by the holder for the purpose of making claims regarding water stewardship, sustainability goals, or other permitted uses, as determined by Blu Clarity.
Certificates retired for the purpose of offsetting the holder’s water use must have been generated from projects in the same geography as the water use being offset. Recognizing that the geographic impact of water use on a watershed is highly variable and context-driven, this requirement will be interpreted in the context of the holder’s publicly stated water stewardship policies and the general intent of this Standard.
Retirement shall be effected through the Blu Diamond Registry, at which time the Certificate shall be permanently removed from circulation.
Once retired, a Certificate cannot be reissued, transferred, or reused.
Retired Certificates shall remain visible in the registry with their full historical data for transparency and audit purposes.

6.5 Claims and Representations

A Certificate may only support claims relating to the verified volume of freshwater use avoided or reduced, or usable water made available, as documented at the time of issuance.
Holders must not make claims beyond the verified scope of the Certificate. Any misrepresentation may result in revocation or other remedies under Section 7.0.
Claims may not imply regulatory compliance unless expressly permitted by applicable law or regulation.

6.6 Registry Governance

Blu Clarity shall oversee the governance, operation, and security of the Blu Diamond Registry.
Registry data shall be auditable, transparent, and accessible to stakeholders subject to confidentiality and data protection requirements.
Blu Clarity may partner with recognized third-party registry providers or blockchain-based systems to enhance integrity and interoperability.

7.0 Revocation for Non-Compliance

Revocation of certification is a serious measure taken to uphold the integrity of Blu Diamond Water Certificates. Revocation determinations will be made by Blu Clarity or its authorized representative .

Non-Compliance Events: Non-compliance includes, but is not limited to, failure to submit required monitoring reports, falsification of data, material deviation from the approved project plan, or breach of the insurance agreement.
Notification and Remediation: In the event of a non-compliance finding during an audit or review, the project owner will be formally notified and given a specified period to correct the issue.
Revocation: If the non-compliance is not rectified within the specified period, Blu Clarity reserves the right to revoke the project’s certification.
Consequences: Revocation will result in the immediate cessation of Blu Diamond Water Certificate issuance for the project and any Blu Diamond Water Certificates already issued for the project shall be cancelled.

8.0. Governance

The Blu Diamond Water Certificates are governed by Blu Clarity and its authorized representatives as the fiduciary for the Blu Diamond ecosystem. This Standard, and any Certificates issued pursuant hereto, shall be governed by, and construed in accordance with, the laws of the State of Texas, without regard to its conflict of law principles.
Any dispute, controversy, or claim arising out of or relating to this Standard, the issuance or use of Blu Diamond Water Certificates, or the rights and obligations of the parties hereunder shall be finally resolved by binding arbitration administered by the American Arbitration Association (“AAA”) in accordance with its Commercial Arbitration Rules then in effect. The seat of arbitration shall be Houston, Texas, and the proceedings shall be conducted in the English language. The arbitral award shall be final and binding on the parties, and judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. Nothing in this Section shall preclude either party from seeking interim or conservatory measures, including injunctive relief, from a court of competent jurisdiction in Houston, Texas.
Blu Clarity and its partners will periodically review and update this Standard to reflect advancements in technology, measurement methods, and market practices.
The current version of this Standard can always be found at www.bludiamondwater.com.