glossary.md

Ecological Glossary

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

A

• Abatement: Reduction in greenhouse gas emissions.
• Accredited Independent Entity (AIE): An entity accredited by the Joint Implementation Supervisory Committee, responsible for the determination of whether a project meets the relevant requirements of Article 6 of the Kyoto Protocol and JI guidelines. Corresponds to DOE in the CDM context.
• Adaptation Fund: A fund established in 2002 to help developing countries meet the cost of adaptation to climate change. The Fund was financed mainly with a share of proceeds from clean development mechanism (CDM) project activities, but a slowdown in CDM project activity due to a crash in prices has meant in the years since 2013 donations from mainly European countries have been the main contributor.
• Adaptation Levy: A levy of 2% of the Certified Emission Reductions from all CDM projects except those implemented in Least Developed Countries (LDCs) to raise funds for the Adaptation Fund.
• Additionality: The principle that a project activity is additional if the resulting emission reductions are lower than what would have happened in the absence of the activity.
• Ad-Hoc Working Group on Further Commitments for Annex I Parties under the Kyoto Protocol (AWG-KP): Subsidiary body to the Kyoto Protocol, established in 2005 to determine further commitments for Annex I countries for the period after the first round of Kyoto emission targets expired in 2012. The work is required under Article 3.9 of the Kyoto Protocol. The group includes countries that have ratified the Kyoto Protocol (notably not the United States).
• Ad-Hoc Working Group on Long-term cooperative action under the Convention (AWG-LCA): Subsidiary body to the UNFCCC, established by the COP-13/CMP-3 in 2007 to produce a successor to the Kyoto Protocol after 2012. The group includes all the countries that are members of the UNFCCC.
• Afforestation and Reforestation (A/R) Projects: Afforestation and reforestation (A/R) projects involve the growing of forest on land that has not been forested for a period of at least 50 years (afforestation) or on non-forested land (reforestation) through planting and/or the promotion of natural seeding.
• Alliance of Small Islands States (AOSIS): Coalition of 44 low-lying and small island countries particularly vulnerable to sea-level rise that tend to push for the most ambitious emission reduction goals at the UNFCCC. -Allocation: The distribution of allowances to participants in an emissions trading scheme or other entities. Allocation can be done by selling the allowances (usually in auctions) or for free via principles including grandfathering and benchmarking.
• Allowance: Legally defined unit that entitles the holder to emit a quantity of greenhouse gases (usually one tonne of CO2 equivalent).
• Annex B Countries: Annex B countries are the 39 emissions-capped countries listed in Annex B of the Kyoto Protocol.
• Annex I Countries: Consisting of the industrialized OECD countries and countries with economies in transition listed in Annex I of the UNFCCC (such as former Soviet nations). Belarus and Turkey are listed in Annex I but not in - Annex B; and Croatia, Liechtenstein, Monaco and Slovenia are listed in Annex B but not in Annex I.
• Annex II Countries: Annex II of the UNFCCC includes all original OECD member countries, but not countries with economies in transition and are required to provide financial resources to enable developing countries to curb emissions.
• Annual Emissions Allocations (AEAs): Tradeable emission units handed out to EU member states under the 2009 Effort Sharing Directive governing emissions in sectors not regulated under the EU ETS, including agriculture, buildings, land transport and waste. National allocations were determined based on GDP per capita of each member state to meet 2020 targets.
• Assembly Bill 32 (AB32): Also known as the Global Warming Solutions Act of 2006. The US state of California law that sets up the country’s first enforceable state-wide program to cap all greenhouse gas emissions from major industries. Its law requires the state’s greenhouse gas emissions be reduced to 1990 levels by 2020.
• Assigned Amount Units (AAUs): The assigned amount is the total volume of greenhouse gases that each Annex B country can emit during under commitment periods of the Kyoto Protocol (2008-2012 and 2013-2020) An AAU is a tradable unit of 1 tonne CO2e.
• Australian Carbon Credit Unit (ACCU): An emission reduction unit equal to 1 tonne of CO2e, issued under the Carbon Farming Initiative.

B

• Backloading: In the EU ETS this refers to the postponement of the sales of 900 million emission allowances (EUAs) scheduled to be sold over 2014-2016 until 2019-2020 as a temporary reform measure aiming to stimulate demand for allowances amid a massive surplus.
• Banking: The transfer of allowances or credits from one compliance period to the next. Such banking may encourage early abatement action depending on their current situation and their expectations of the future price of allowances. It also brings market continuity. Some restrictions on the number of units that can be carried over may apply.
• Baseline: The ‘baseline’ emissions that would occur without the policy intervention or project activity being considered.
• Benchmarking: One type of free allocation method where allowances are distributed based on output or an industry’s intensity standards, based on best-performing companies.
• Business as Usual Scenario (BAU): A reference case of future emissions, i.e. projections of future emission levels with no changes to current economics, policies and technology.
• Borrowing: A mechanism under an emissions trading system that allows entities to use allowances designated for a future compliance period to meet current compliance period obligations.

C

• California Air Resources Board (CARB): Government agency to attain and maintain healthy air quality, research air pollution, and tackle the pollution in the US state of California. CARB is the chief implementing agency for Assembly Bill 32 (AB32).
• California Carbon Allowance (CCA): A tradable allowance to emit one tonne carbon dioxide equivalent of greenhouse gases approved and issued by the California Air Resource Board for compliance under the state’s cap-and-trade system.
• Cap-and-Trade: A design for emissions trading systems where total emissions are limited or “capped”. Tradable emission allowances corresponding to the total cap are allocated to participants. This is distinct from a baseline-and-credit approaches where only deviations from a baseline are tradable. The rationale is to let the market determine the price for keeping emissions within the cap. To comply at least cost, regulated entities can opt to deploy internal abatement measures or obtain allowances in the market.
• Carbon Capture and Storage (CCS): The separation of CO2 from industrial and energy-related sources, transport to a long-term storage location. CO2 may be stored underground in old oil and gas fields, coal fields and saline aquifers.
• Carbon Dioxide Equivalent (CO2e): A widely used measurement unit used to indicate the global warming potential (GWP) of greenhouse gases. Carbon dioxide (CO2) is the reference gas against which other greenhouse gases are measured.
• Carbon Emission Factor (CEF): Amount of CO2 emitted per unit of energy produced.
• Carbon Farming Initiative (CFI): Carbon Farming Initiative is the Australian domestic carbon offset scheme that allows emission reduction project developers in Australia to earn carbon credits.
• Carbon finance: Resources deployed towards emissions reduction activities through the transaction of such emission reductions.
• Carbon leakage: Carbon leakage occurs when production of goods is moved to countries with laxer constraints on greenhouse gas emissions than the original country. This could lead to an increase in their total emissions.
• Carbon Negative: An organization is removing more carbon than it emits each year.
• Carbon Neutrality: Purchasing and retiring emission credits or allowances corresponding to the amount of emissions from an activity, company or country. Companies that have typically said they’re “carbon neutral” if they offset their emissions with payments either to avoid a reduction in emissions or remove carbon from the atmosphere. But these are two very different things. For example, one way to avoid a reduction in emissions is to pay someone not to cut down the trees on the land they own. This is a good thing, but in effect it pays someone not to do something that would have a negative impact. It doesn’t lead to planting more trees that would have a positive impact by removing carbon.
• Carbon Removal Unit or CRU: means a unit representing one metric ton of CO2 removed from the atmosphere, net of any life-cycle process emissions, and intended to be permanently stored or otherwise sequestered.
• Carbon Sink: Natural or human-made systems that absorb carbon dioxide from the atmosphere and store them. Forests are the most common form of sink, in addition to soils, peat, permafrost, ocean water and carbonate deposits in the deep ocean.
• Certification: Where an emission reduction project is audited by a government agency or independent authority to determine that it meets established criteria.
• CDA: A type of carbon offset credit for Carbon Dioxide Avoidance.
• CDM Registry: Portal of accounts into which the CDM EB issues CERs from registered CDM project activities.
• CDR: A type of carbon offset credit for Carbon Dioxide Removal.
• Certified Emission Reductions (CERs): Carbon credits generated through the CDM which can be used to meet an Annex B Party’s emission commitment under the Kyoto Protocol, as a unit of trade in GHG emissions trading systems or- if credits are subsequently cancelled – as a method of auditing to deliver foreign aid/investment
• Clean Air Act (CAA): A piece of United States federal legislation relating to the reduction of smog and air pollution in general. 1990 Amendments proposed emissions trading, added provisions for addressing acid rain, ozone depletion and toxic air pollution, established a national permits program. The CAA provides grounds for the EPA to regulate greenhouse gas emissions.
• Clean Development Mechanism (CDM): The CDM is a mechanism under Article 12 of the Kyoto Protocol designed to help developing countries (non-Annex B) achieve sustainable development by allowing entities from Annex I parties to participate in project or program-based emission reduction activities hosted in developing countries to obtain CERs to use for compliance with Kyoto emission targets. CERs are generated from projects that lead to certifiable emissions reductions that would otherwise not occur.
• Clean Development Mechanism Executive Board (CDM-EB): Body that registers validated project activities as CDM projects, issues CERs. The CDM EB is accountable to the Conference of the Parties to the Kyoto Protocol and meets around six/seven times a year.
• Chinese Certified Emission Reduction (CCER): One CCER is equal to one-tonne carbon dioxide equivalent reduced from the atmosphere. Used in the Chinese domestic offset trading scheme.
• Climate Action Reserve (CAR): A non-profit voluntary and compliance registry for offsets focused on developing standardized greenhouse gas reduction protocols, tracking offsets through a public database, and serving as a project registry for voluntary as well as offsets eligible for compliance under AB32.
• Co-decision: The main method of enacting primary EU legislation (directives, regulations, decisions) which grants the bloc’s 2 main lawmaking bodies – the Parliament and Council – equal powers to amend and block new legislation proposed by the European Commission. The process can take 1.5-2 years for a law to pass.
• Comitology: The procedure by which the EU enacts delegated EU legislation, which complements primary legislation often with more technical detail. EU lawmakers delegate this to the European Commission under some supervision and normally takes around six months.
• Common but differentiated responsibilities (CBDR): A core principle under the UNFCCC that puts the onus on developed countries to take action to tackle climate change, fully written in the 1992 text as “common but differentiated responsibilities and respective capabilities”.
• Compliance: Surrendering the required amount of allowances, or allowances and offsets, to cover an entity’s emissions in a cap-and-trade system.
• Compliance Market: Established by government regulation. In carbon markets, regulated entities surrender credits or allowances corresponding to its emissions at the end of each compliance period.
• Conference of the Parties (COP): The COP is the supreme body of the UNFCCC. It meets once a year to review progress.
• Conference of the Parties serving as the Meeting of the Parties (CMP): The COP also serves as the meeting of the Parties to the Kyoto Protocol and are held simultaneously.
• Core Carbon Attributes (CCA): a set of attributes for carbon credits recommended by the TSVCM, to differentiate carbon credits from each other based on type, method, storage, etc..
• Core Carbon Principles (CCP): a set of recommendations and characteristics for carbon credits recommended by the TSVCM, which is also used to define the common properties that carbon credits should have to reflect the adherence to the principles.
• Credit Limit: Limit on the use of offsets for compliance by the companies under a cap-and-trade system.
• Crediting Period: The crediting period is the duration for which a project generates carbon credits. The crediting period shall not extend beyond the operational lifetime of the project. For CDM projects crediting period continues either a 7-year period, which can be renewed twice to make a total of 21 years, or a one-off 10-year period.
• Cross-sectoral correction factor (CSCF): Provided for in Art. 10a.5 of the revised EU ETS Directive, the CSCF was applied to cut the free allocations on EU allowances from 2013-2020 because the preliminary allocation through national implementation measures (NIMs) exceeded the maximum amount of allowances available.

D

• Derogation allowances: Shorthand term commonly used to describe a decreasing number of EU allowances allowed to be given for free to power plants for a transitional period over 2013-2019. From 2013, other EU ETS-regulated power plants must pay for all their allowances, but eight of 10 eligible member states chose to make use of this derogation under Article 10C of the EU ETS Directive. In return, the states have put up national plans setting out investments to be financed through the free allocation with a view to modernizing their electricity sectors and diversifying their energy mix.
• Designated National Authority (DNA): The official body representing the government of the host country for CDM or JI projects. For CDM host countries, the DNA must issue a non-objection letter for a project to be approved, if it agrees that a project is in line with its sustainable development objectives. The DNA also issues the Letter of Approval (LoA) required for the registration of a CDM project. A project will need both a host country approval as well as investor country approval.
• Designated Operational Entity (DOE): A domestic legal entity or an international body accredited and designated by the CDM EB. The DOE validates and requests registration of a proposed CDM project activity and verifies emission reductions of a registered CDM project activity.
• Determination: JI’s equivalent of validation and verification under the CDM. The process of independent evaluation of a JI project by an Accredited Independent Entity on whether the Project Design Document (PDD) fulfill all requirements to JI projects under the Kyoto Protocol.
• DG Climate Action: One of the Directorate Generals, or departments, of the European Commission and the most relevant to the EU ETS. It acts as regulator for the emission trading system and is responsible for most of the related legislation.
• Double Counting: Where emissions reductions are accounted for in more than one place.
• Durability: The term in years of how long the CO2 will be removed from the atmosphere, compared with the risk of CO2 reversion to the atmosphere before that term elapses.
• Durability Period: The Durability Period will be XX years from the date of creation of the delivered credit.

E

• Emissions Reduction Fund (ERF): The A$2.55 billion fund is the key pillar in Australia’s Direct-Action Plan on climate and is central to the country reaching its goal to cut emissions by 5% below 2000 levels by 2020. Through the fund, the government buys emission reductions at regularly held auctions from companies that offer them at the lowest cost.
• Emission Reduction Unit (ERU): Units achieved through emission reduction activities of a Joint Implementation project.
• Effort Sharing Decision: Established binding annual emission targets for EU member states over 2013-2020 for emissions in most sectors not regulated under the EU ETS such as agriculture, buildings, land transport and waste.E
• Emission Reduction Purchase Agreement (ERPA): Binding purchase agreement governing the transaction of emission reductions.
• Emissions Trading Scheme (ETS): The European Union Emissions Trading System (EU ETS), was the first large greenhouse gas emissions trading scheme in the world, and remains the biggest.
• European Union Allowances (EUA): A tradable and bankable units under the EU ETS. Each allowance equals 1 tonne of CO2.
• European Union Aviation Allowances (EUAA): From 2012 aviation has been included in the EU ETS and can only be used exclusively by the aviation sector for compliance. This exclusivity creates lower liquidity than EUAs (which can also be used by the aviation sector) and has resulted in EUAAs trading at a discount to EUAs.
• European Union Emissions Trading Scheme (EU ETS): Trading Scheme within the European Union, launched on January 1, 2005. The Phase I (2005 – 2007) received much criticism due to oversupply of allowances, free allocation via grandfathering and the lack of banking into future phases. Phase II (2008-2012) linked the ETS to other countries participating in the Kyoto trading system via the use of Kyoto credits (CDM/JI). In Phase III (2013-2020), the share of auctioning increased so that in 2013 at least 50 percent of the total amount of allowances were auctioned and is set to increase further as free allocation is phased down towards 2020.
• European Union Transaction Log (EUTL) – see Union Registry

F

• Flexible mechanisms: Under the Kyoto Protocol, a collective term for International Emissions Trading, the Clean Development Mechanism and Joint Implementation.
• Framework for Various Approaches (FVA): Defined at U.N. climate talks in Durban in 2011, a general framework at UNFCCC level that allows various approaches, including the use of markets, to enhance the cost-effectiveness of, and to promote, mitigation actions, bearing in mind different circumstances of developed and developing countries, that must meet standards that deliver real, permanent, additional and verified mitigation outcomes, avoid double counting of effort, and achieve a net decrease and/or avoidance of greenhouse gas emissions.
• Frontloading: Also known as ‘early auctions’, refers to the sale in late 2012 of EUAs from the 2013 and 2014 vintages. The EU decided in 2011 to increase the volumes brought to market in 2012, to allow compliant companies to hedge their future needs for allowances. 120 million allowances were “taken out” of the volumes planned to be sold in 2013 and 2014.
• Fuel Switching: The process of power generators and industries moving between the use of higher carbon content fuels such as coal and lower carbon content fuel, such as natural gas.

G

• Global Environment Facility (GEF): A global partnership among 183 countries, international institutions, non-governmental organizations (NGOs), and the private sector to address global environmental issues while financing national sustainable development initiatives.
• Global Warming Potential (GWP): Global warming potential is the impact greenhouse gases have on global warming. CO2 is used as a reference case with a GWP of 1. GWP changes with time and the IPCC has used 100-year reference periods. Below is a list of 100-year GWPs used in the Kyoto Protocol for the six greenhouse gases regulated under Kyoto:
  • Carbon dioxide (CO2) GWP: 1
  • Methane (CH4) GWP: 21
  • Nitrous oxide (N2O) GWP: 310
  • Hydrofluorocarbons (HFCs) GWP: 150 – 11 700
  • Perfluorocarbons (PFCs) GWP: 6500 – 9 200
  • Sulphur hexafluoride (SF6) GWP: 23 900
• Gold Standard: A Swiss-based non-governmental organization, the Gold Standard offers a tool aiming to ensure that CDM, JI and VER projects have real environmental benefits and provide additional confidence to host countries and the public that projects represent new and additional investments in sustainability.
• Green Premium: The costs added to the use of early adopter products like green cement or steel. Coined by Bill Gates.
• Grandfathering: A usually free method for allocation of emissions credits/allowances to companies or other legal entities based on their historic emissions.
• Greenhouse gases (GHGs): Greenhouse gases (GHGs) are both natural and man-made and trap heat in the Earth’s atmosphere by absorbing infra-red radiation, causing the greenhouse effect. There are six GHGs covered under the Kyoto Protocol – carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulfur hexafluoride (SF6). CO2 is the most important GHG released by human activities.
• Green Investment Scheme (GIS): By implementing Green Investment Schemes (GIS), the seller governments of Assigned Amount Units (AAUs) demonstrate that the proceeds from the sales are invested in environmentally beneficial activities, a process also called the “greening” of AAUs. This has been “hard” greening, usually referring to directly investing in emission reduction activities, and “soft” greening activities that lead to environmental benefits not directly connected to emission reductions measures.
• Group of 77 and China (G77/China): G77/China is the main developing country-group in UN climate negotiations, consisting of more than 130 developing countries.

H

• Hot air: Excess permits (AAUs) that have occurred due to economic collapse or declined production for reasons not directly related to intentional efforts to curb emissions. Russia and Ukraine have significant hot air volumes.
• HFC-23: About 98% of HFC-23 emissions are created as a byproduct in the production of refrigerant gas HCFC-22 and generally are vented to the atmosphere.
• Hydrofluorocarbons, or HFCs: One of the six greenhouse gases, controlled in the Kyoto Protocol. Largely used for making insulating foam and in refrigeration.

I

• ICROA: International Carbon Reduction and Offset Alliance.
• Intended nationally determined contributions (INDCs): The actions that countries intend to take under a global climate agreement to be agreed in Paris in December 2015. The nature of these INDCs will largely determine whether the world achieves an ambitious 2015 agreement.
• International Emissions Trading (IET): International emissions trading, one of the three flexible mechanisms under the Kyoto Protocol, allows for transfer of AAUs across international borders or emission allowances between companies covered by a cap-and-trade scheme.
• International Transaction Log (ITL): UN-operated database of all tradable credits under the Kyoto Protocol and the application that verifies all international transactions and their compliance with Kyoto rules.
• Intergovernmental Panel on Climate Change (IPCC): Established by the World Meteorological Organization (WMO) and the United Nations Environmental Program (UNEP) in 1988 to assess scientific, technical and socio-economic information relevant for the understanding of climate change, its potential impacts and options for adaptation and mitigation.
• Interwork Alliance: - an open standards non-profit organization that focuses on development of multiparty specifications to represent shared value using tokenization and workflows via SmartContracts.
• Inventory:Country report, under the Kyoto Protocol, on manmade greenhouse gas emissions and removals delivered on a regular basis according to the IPCC guidelines.

J

• Joint Implementation (JI): One of the three flexible mechanisms under the Kyoto Protocol, for transfer of emissions permits from one Annex B country to another. JI generates ERUs from emission reduction projects leading to quantifiable emissions reductions.
• Joint Implementation Supervisory Committee (JISC): Joint Implementation Supervisory Committee (JISC) supervises the verification of ERUs generated by JI projects.

K

• Korea Emissions Trading Scheme (SK ETS): Established by the Korea Framework Act on Low Carbon and Green Growth which started in January 2015.
• Kyoto Protocol: The Kyoto Protocol originated at COP-3 to the UNFCCC in Kyoto, Japan, 1997. It specifies emission obligations for the Annex B countries and defines the three so-called Kyoto flexible mechanisms: JI, CDM and International Emissions Trading (IET). It entered into force in 2005.

L

• Leakage: A decrease in sequestration or an increase in emissions outside the boundaries of project, program activities resulting from project, and/or program implementation. Leakage may be caused by shifting of the activities of people present in the project area or by market effects whereby emission reductions are countered by emissions created by shifts in supply of and demand for the products and services affected by the project.
• Land Use, Land Use Change and Forestry (LULUCF): The (LULUCF) sector was included under the Kyoto Protocol to take into consideration certain human-induced activities that remove greenhouse gases from the atmosphere known as carbon “sinks”. They activities were later defined under the UNFCCC as: afforestation, reforestation, deforestation (the direct human-induced conversion of forested land to non-forested land), revegetation, forest management, cropland management, grazing land management.
• Least Developed Countries (LDCs): The world’s poorest countries. The criteria currently used by the Economic and Social Council (ECOSOC) for designation as an LDC include low income, human resource weakness and economic vulnerability. Currently 48 countries have been designated by the UN General Assembly as LDCs – click here to see a list of them.
• Letter of Approval (LoA): Gives formal approval of the project as a JI or CDM project by the Parties involved.
• Linking Directive: Not a formal directive on its own but an amendment to the EU Emissions Trading Directive 2003/87/EC that permits companies to use carbon credits from CDM/JI projects for compliance with their targets under the EU ETS. It provides provisions relating to project approval processes and authorization to participate in the flexible mechanisms, and features additional provisions relating to the establishment of national emissions inventories.
• Low Carbon Fuel Standards (LCFS): The LCFS requires fuel providers to ensure what they sell meets, on average, a target for greenhouse gas emissions measured in carbon dioxide equivalent per unit of fuel energy sold.

M

• Marginal Abatement Cost (MAC): The cost of reducing emissions by one additional unit.
• Market Stability Reserve (MSR): Proposal to reform the EU ETS to address the massive surplus of allowances and improve the market’s resilience to economic shock. Measure to regulate the supply of allowances to be auctioned according to pre-determined rules governing when the reserve should be filled or emptied based upon how many allowances are in circulation.
• MiFID: The Markets in Financial Instruments Directive (Directive 2004/39/EC). An EU law providing harmonized regulation for investment services to increase competition and consumer protection. The second revision, MiFID II, is due in force from 2017 and would cover all spot and derivatives contracts for commodities, including carbon.
• Marrakesh Accords: Agreement reached under the UNFCCC on finer details of the international climate change policy regime developed at the seventh Conference of the Parties in 2001. The Accords cover significant principles for emissions accounting, the implementation of flexible mechanisms and technology transfer.
• Memorandum of Understanding (MoU): An agreement between two parties to formally recognize a joint desire to conclude an agreement or to achieve goals jointly. It may have legal backing of sanction and are often used as a basis for CDM/JI projects between a host and investor country.
• Metric Ton of CO2 Equivalent (mtCO2e): Metric tons of carbon dioxide equivalent or MTCO2e is a unit of measurement. The unit "CO2e" represents an amount of a GHG whose atmospheric impact has been standardized to that of one unit mass of carbon dioxide (CO2), based on the global warming potential (GWP) of the gas.
• Mitigation: An intervention to reduce greenhouse gas emissions, either by reducing the sources of the emissions or enhancing sinks soaking them up.

N

• National Allocation Plan (NAP): A plan which sets out the quantity of allowances and how they will be allocated.
• National Communication: A report submitted by Parties in accordance with the UNFCCC and the Kyoto Protocol to inform other Parties of activities implemented to address climate change.
• National Development and Reform Commission (NDRC): China’s economic planning agency, which has responsibility for overseeing the country’s climate policy and developing a national emissions trading system. -Nationally Appropriate Mitigation Action (NAMAs): A set of mitigation policies and/or actions reported to the UNFCCC on a voluntary basis that are undertaken by a developing country to curb its greenhouse gas emissions. Can be supported by developed countries.
• Net Zero: An organization removes as much carbon as it emits. The reason the phrase is “net zero” and not just “zero” is because there are still carbon emissions, but these are equal to carbon removal.
• New Entrant Reserve: In the EU ETS, an amount of allowances set aside by member states for new or expanded installations.
• New Zealand Emissions Trading Scheme (NZ ETS): The NZ ETS has no absolute cap, as the scheme is intensity-based. Emitters receive and surrender permits, called New Zealand Units (NZUs), based on individual benchmarks for each industry. Foresters receive free permits based on emissions they save but must hand permits back to the government when the forests are harvested. The ETS is intended to be the government’s main policy instrument to meet its emission targets.
• New Market Mechanism (NMM): Defined at the 2011 COP in Durban as operating under the guidance of the COP to enhance the cost-effectiveness of, and to promote, mitigation actions, bearing in mind different circumstances of developed and developing countries.
• Non-Annex I countries: Countries that have ratified or acceded to the UNFCCC, but not included in Annex I and have no emission reduction targets.

O

• Official Development Assistance (ODA): A category of development aid which flows from members of the OECD’s Development Assistance Committee (developed countries) to developing countries. The Conference of the Parties decided projects funded by ODA are not eligible under the CDM so developers must disclose information on any public funding for their CDM project activity.
• Offset credits or offsets: Emission reduction credits from project-based activities that can be used to meet compliance or corporate objectives as a supplement or alternative to reducing an entity’s own emissions.
• Over the Counter (OTC) market: Trades arranged by brokers, as opposed to trades on exchanges or bilateral trades made directly between two parties.
• Operational Entity: An independent entity, accredited by the CDM Executive Board, that validates CDM project activities, verifies and certified emission reductions generated by projects.

P

• Partnership for Market Readiness (PMR): A World Bank-led program supporting the development of carbon pricing initiatives in developing countries through grant programs and technical expertise. Funded by donor countries in developed nations.
• Party: A state (or regional economic integration organization such as the European Union) that agrees to be bound by a treaty and for which the treaty has entered into force.
• Permit - see Allowance.
• Phase 1 of the EU ETS: The first EU ETS trading period covering 2005-2007 was considered a test period. In late 2007 the market was flooded with emission allowances, and prices fell to zero as the market operators realized that they were not allowed to ’bank’ these into the subsequent trading period.
• Phase 2 of the EU ETS: Covering 2008-2012. The cap was tightened from phase 1. Free allocation (also known as grand fathering) continued to be the dominant way of transferring EUAs to the regulated companies, although some member states opted to auction up to 10 percent of their allowances. The detailed distribution to each installation was decided through National Allocation Plans (NAPs), set up by each member state and approved by the European Commission. Unused phase 2 allowances could be banked into Phase 3. Approximately 2 billion allowances were issued a year in what had been expected to be close to the required demand but following the economic crisis both industry and power companies sharply cut production, thereby lowering their emissions down toward a level closer to 1.9 billion. By the end of 2012 the market had an accumulated oversupply of around a year’s worth of issuance.
• Phase 3 of the EU ETS: Covering 2013-2020, with several major changes including an increased use of auctions. Most power companies are required to buy all their EUA requirement, except for some eastern states allowed to continue some free allocations in return for making investments in infrastructure. Almost all industrial companies continue to get free allocations because most met conditions for assessing whether they were vulnerable to competition from other countries with looser environmental regulations. In a more centralized approach, the exact distribution of allowances is decided down to installation level by the European Commission, based on the plans received from the member states. The cap reduces annually by a factor of 1.74 percent.
• Plenary: A formal meeting of the entire body of an institution such as the EU Parliament or the UN COP, CMP or one of the subsidiary bodies.
• Program of Activities (PoA): A voluntary action of a policy, measure or goal which results in emission reductions or removals that are additional. Can consist of many sub-activities batched together– or CDM program activities (CPAs). Often referred to as programmatic CDM.
• Project Design Document (PDD): Document describing a CDM or JI project, completed by project developers to register their project.
• Perfluorocarbons or PFCs: A Kyoto gas: a by-product of aluminum smelting and replacement for CFCs in making semiconductors.
• Primary transaction: A transaction between the original owner of the carbon asset and a buyer (also known as a trade in the primary market).

R

• Recourse Pool: means a pool of replacement credits, in a quantity equal to a percentage determined based on reversal risks associated with a source project for carbon removals.
• Reduced Emissions from Deforestation and Degradation (REDD+): Activities that seeks to reduce greenhouse gas emissions by preserving existing carbon stocks in forests (typically tropical rainforests), peat lands etc. The approach would be additional to project-based efforts such as the CDM.
• Regional Greenhouse Gas Initiative (RGGI): A regional cap and trade system covering northeastern US states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont. The scheme has regulated CO2 emissions from power plants since 2009.
• Registration: Registration is the formal acceptance by the CDM Executive Board of a validated project activity and is required for the verification, certification and issuance of carbon credits for that project activity.
• Regional Greenhouse Allowance (RGA): Tradable unit under the Regional Greenhouse Gas Initiative, corresponds to 1 short tonne (0.907 metric tons) of CO2.
• Removal Unit (RMU): RMUs are tradable carbon units issued by Parties to the Kyoto Protocol representing an allowance to emit one tone of GHGs absorbed by a removal or carbon sink activity such as reforestation in an Annex I country.
• Retirement: The permanent removal of an offset credit from circulation as a transactable unit so that it represents a permanent reduction or removal of CO2e from the atmosphere as applied toward an emissions reduction target.
• Reversal: means an escape or release into the atmosphere during the Durability Period of a carbon removal credit.
• Reversal Event: means any event or circumstance occurring after delivery of any removal credits during the Durability Period, whether intentional or unintentional, that results, or that is reasonably likely to result, in a Reversal.

S

• Secondary Transaction: A transaction where the seller is not the original owner of the carbon asset (also known as a trade in the secondary market).
• Secondary Market: The secondary market is the subsequent transaction or trading of Certified Emissions Reductions (CERs) related to CDM projects or Emission Reduction Units (ERUs) from JI projects beyond the primary transaction.
• Set-aside: In the EU ETS this refers to the withdrawal of a certain volume of emission allowances (EUAs), otherwise meant to come to the market in the coming years. The term originated from autumn 2011, to address the huge over-supply of allowances in the EU ETS. Before a substantial discussion could be started on the precise nature of a set-aside, the European Commission instead presented proposals for the ‘backloading’ of allowances.
• Shadow price of carbon: The social cost of carbon given a stabilization goal for the atmospheric concentration of GHG emissions.
• Sinks: The removal of greenhouse gases (GHGs) from the atmosphere through land management and forestry activities that may be subtracted from a country’s allowable level of emissions.
• Solidarity fund: Provisions under the EU ETS to award a higher proportion of auction-able allowances to poorer member states for the purposes of “solidarity, growth and interconnections”. Under the 2030 package, it equates to 10% of all EUAs to be sold by governments between 2021 and 2030.
• Subsidiary Body for Implementation (SBI): Body advising and assisting the COP in implementation of the UNFCCC and in preparing its decisions.
• Subsidiary Body for Scientific and Technological Advice (SBSTA): Body advising the COP on scientific and technical matters. It provides a link between the scientific information from experts and the policy-oriented requirements of the COP.
• Sulfur Hexafluoride or SF6: One of six Kyoto Protocol-regulated GHGs. It is mostly used in heavy industry to insulate high-voltage equipment and assist in the manufacturing of cable-cooling systems.
• Supplementarily: Supplementarily is a provision in the Kyoto Protocol stating that emissions trading should be a supplement to domestic action to curb emissions. There was no quantitative limit set, however.
• Sustainable Development Goals (SDG): Are a set of goals and targets that UN member countries will use to influence their policies over the next 15 years. The goals include zero hunger, health and water, and aim for responsible consumption with people having the relevant information and awareness that foster lifestyles in harmony with nature.

T

• TSVCM - Taskforce for Scaling Voluntary Carbon Markets: launched by Mark Carney, UN Special Envoy for Climate Action and Finance Advisor to UK Prime Minister Boris Johnson for COP26, formed to identify key challenges and impediments, build consensus on how best to scale up voluntary carbon markets and finally, present a blueprint of actionable solutions. -Tokyo Emissions Trading System (TETS): Initiated by the Tokyo Metropolitan Government and started in 2010, regulating about 1400 buildings and industrial facilities in the Tokyo Metropolitan area with aims to cover about 40% of region’s emissions.

U

• Umbrella group: An informal group of industrialized countries outside the EU but occasionally acts as a negotiating bloc on specific issues at international talks. The group was formed after the adoption of the Kyoto Protocol, and consists of Australia, Canada, Iceland, Japan, Russia, New Zealand, Norway, Ukraine, USA.
• Union Registry: The EU’s registry for accounts holding emission allowances. In June 2012, the registries of the 30 countries that take part in the EU ETS (27 member states plus Norway, Iceland and Liechtenstein and now new EU member Croatia) were transferred to a new common system under the European Commission. The centralization of the accounts was an effort to put an end to thefts and frauds in some of the national registries. It operates with stricter security, such as double authentication of trades and a 26-hour transaction delay.
• United Nations Framework Convention on Climate Change (UNFCCC): Established in 1992 at the Rio Earth Summit. It is the overall framework guiding the international climate negotiations. Its main objective is “stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic (man-made) interference with the climate system”.

V

• Validation: The process of independent evaluation of an emission reduction project activity by a third party.
• Verification - see also Determination: The process of formal confirmation by a recognized independent third party that inventories and emission reduction claimed by participants in carbon trading schemes conform with established rules. The systematic, independent, and documented assessment by a qualified and impartial third party of the GHG assertion for a specific reporting period. The verification process is intended to assess the degree to which a project complies with certification standards and associated approved methodologies, tools, eligibility criteria, requirements, and specifications, and has correctly quantified net GHG reductions or removals. Verification must be conducted by an independent, accredited third-party verification body that is free of conflict of interest.
• Validation and Verification body (VVB): Auditors tasked with assessing project and claims against a standard's rules and the requirements of the applied methodology. VVBs are qualified, independent third parties which are approved by the supporting standard to perform validation and verification.
• Verified Carbon Standard (VCS): VCS is a certification standard for offset credits in the voluntary market. The VCS is an initiative of the World Business Council for Sustainable Development, International Emissions Trading Association, The Climate Group, and the World Economic Forum.
• Verified Emission Reductions (VERs): VERs are generated by emission reduction projects that are assessed and verified by third party organizations, not through the UNFCCC.
• Voluntary carbon market: The sum of all transaction of carbon credits in non-compliance markets. The generation of non-compliance credits is made up of emission reductions generated to sell to voluntary end users and not to compliance buyers.
• Voluntary standard: Any standard, e.g. The Gold Standard, Verified Carbon Standard, the Climate Action Reserve, that aims to ensure the quality of carbon credits in the voluntary carbon market.

W

• Western Climate Initiative (WCI): Launched in 2007 by states and provinces in western United States, Canada, and Mexico. WCI is a collaboration of jurisdictions working together to identify, evaluate, and implement emissions trading policies to tackle climate change at a regional level. WCI partners are California, Quebec, Manitoba, British Columbia and Ontario. California and Quebec have linked their emissions trading systems under the WCI.

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