Additionality: Principle that a project should only be able to earn credits if the greenhouse emission reductions would not have occurred without the expectation of revenue carbon credit sales. The principle of Additionality is critical to the development of carbon credits and the Additionality proof should be requested whenever carbon credits are purchased.
Additionality Tool: Guidelines developed by the CDM Executive Board to assess additionality based on financial, technological and other barriers. Additionality established using the CDM Additionality Tool is very robust and offers the highest level of assurance.
Afforestation and Reforestation (A/R): Carbon sequestration method that involves growing forests on land that was not forested for at least 50 years.
Annex B countries: The 39 industrialised countries listed in Annex B of the Kyoto Protocol. Annex B countries agreed to binding emissions reductions during the Kyoto Protocol negotiations, and include the main EU member states, Australia, Japan, Russia and the United States. Annex I and Annex B are often used interchangeably. A list of Annex B countries can be found here.
Annex I countries: The industrialized countries and “economies in transition” listed in Annex I of the UN Framework Convention on Climate Change (UNFCCC). Annex I and Annex B are often used interchangeably. However, Belarus and Turkey are listed in Annex I but not Annex B, while Croatia, Liechtenstein, Monaco and Slovenia are listed in Annex B but not Annex I. A full list of Annex I countries can be found here.
Annex II countries: The subset of Annex I/B countries that have an obligation to provide technology and financial assistance to help developing countries reduce emissions. The Annex II countries are Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Japan, Luxembourg, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, the United Kingdom, and the United States of America.
Assigned Amount Units (AAUs): The total volume of GHGs- in units of one ton CO2e - that each Annex B country is allowed to emit during the first phase of the Kyoto Protocol. Unless the country government agrees otherwise, any emissions reductions that occur in that country can be counted towards its AAU reduction target. Organizations that buy and sell carbon offsets from Annex B countries may thus run the risk of double-counting their emission reductions.
Baseline: The volume of greenhouse gas emissions in the absence of the project activity or emissions reduction initiative. The baseline is compared against the emissions following project implementation. The difference between baseline emissions and with- project emissions is the emission reduction that can be used as a carbon offset.
Business-as-usual: The scenario in which policies to reduce emissions are not enacted. The business-as-usual scenario is often used to determine the greenhouse gas emissions baseline.
Cap and trade: A system pioneered in the United States in the 1980s under which an overall limit or "cap" for emissions is set and tradable allowances are auctioned, sold or granted to participating organisations. The total amount of allowable emissions is gradually reduced causing participants to trade their permits to achieve the desired reduction at the lowest overall cost.
Carbon dioxide equivalent (CO2e): A metric used to compare the relative global warming potential of different greenhouse gases. For example, methane is 21 times more potent than CO2 - making 1 ton of methane equal to 21 tCO2e.
Carbon credit: An instrument created to represent one metric ton of CO2e avoided or removed by a carbon reducing project.
Carbon footprint: The total greenhouse gas emissions from an organization or activity, expressed in tons of CO2 equivalent.
Carbon neutrality: The state in which the emissions from one activity are balanced by emission reductions achieved elsewhere. For example, a company that emits 100 tCO2e can be carbon neutral if they purchase and retire 100 tCO2e of carbon credits from outside their company.
Carbon offsetting: The process by which emissions from one source are matched against carbon credits derived elsewhere.
Carbon sink: Process or structure that removes a greenhouse gas from the atmosphere. Forests, water, peat deposits, and carbonate deposits (shells and limestone) and mechanical carbon capture and storage systems are carbon sinks.
Certified Emission Reductions (CERs): Permits granted by the Clean Development Mechanism Executive Board. Each CER represents one metric ton of CO2e. CERs were designed for use to meet all or part of an Annex B emission reduction commitment, but can also be used to meet voluntary emission reduction goals.
Clean Development Mechanism (CDM): The system of rules governing project-based emission reduction activities in developing countries. CDM-certified projects generate CERs that can be used to meet emission reduction commitments in Annex B countries.
Clean Development Mechanism Executive Board (CDM EB): The body that oversees operation of the CDM. The CDM EB registers CDM projects, issues CERs, and manages the various working groups that rule on project methodologies and other issues.
Crediting period: The period of time during which the emissions reduction project generates valid carbon credits. The crediting period cannot exceed the operational lifetime of the project, but may be considerably shorter, depending on the rules of the project standard and the decisions of the project proponent.
Designated Operational Entity (DOE): An organization accredited by the carbon credit standards body to validate projects, request registration, and verify emission reductions from the project activity. A list of accredited DOEs for CDM projects can be found here.
Emission coefficient: A number used to convert units of an activity or product into units of CO2e that result from the activity or from the manufacture and/or use of the product. Emission coefficients are usually expressed as tons CO2e/[unit of activity].
Emission factor: see "Emission coefficient".
Emission reduction: The removal, limitation, reduction, avoidance, sequestration or mitigation of greenhouse gas emissions.
EU ETS: The European Union Emissions Trading Scheme – a regional cap and trade system intended to help the European Union meet its 2012 goal of reducing greenhouse gas emissions by 8% below 1990 levels.
Global Warming Potential (GWP): The intensity with which a ton of greenhouse gas affects global warming relative to a ton of carbon dioxide. Some GHGs stay in the atmosphere longer than others, so relative GWP changes with time. The GWP for the six GHGs covered under the Kyoto Protocol are as follows:
Gold Standard: Certification standard for carbon credits. When launched in 2003 Gold Standard was intended to ensure that CDM and JI projects result in net environmental improvements beyond greenhouse gas emission reductions. In 2006 the Gold Standard included VERs from projects in developing countries within its certification system. The Gold Standard was initiated by WWF, SSN and Helio International, and is now supported by nearly 50 non-profit organizations.
ISO 14064-1: Standard issued in 2006 by the International Organization for Standards (ISO). Provides guidance for quantifying and reporting greenhouse gas emissions at the organizational level. Based on the WRI/GHG Protocol for measuring organizational carbon footprints.
ISO 14064-2: Standard issued in 2006 by the International Organization for Standards (ISO). Provides guidance for quantifying and reporting greenhouse gas emissions reductions from project activities. Forms the basis for the 2007 version of the Voluntary Carbon Standard.
Joint Implementation: Mechanism established under the Kyoto Protocol that allows for emission permits to be transferred between Annex B countries. Whereas CDM projects generate CERs, JI projects generate ERUs (Emission Reduction Units).
Kyoto Protocol: The agreement negotiated at the Third Conference of Parties to the UN Framework Convention on Climate Change in Kyoto, Japan in December 1997. The Kyoto Protocol defined the emission reduction obligations of Annex B countries and defined CDM, JI and emission trading as mechanisms for achieving emission reductions.
Non-Annex I Countries: Those developing countries without a binding GHG emissions reduction commitment under the Kyoto Protocol. Non-Annex I countries are expected to receive technology transfer and financial assistance from Annex II countries to help them achieve emissions reductions in the absence of a binding commitment. A full list of non-Annex I countries can be found here.
Permanence: A measure of whether the emission reduction achieved by a project or activity can be reversed.
Project Design Document (PDD): A document that describes an emission reduction project’s relevant characteristics, including name, location, project technology, baseline scenario, use of the additionality tool, estimated greenhouse gas reductions, etc.
Registry: An inventory system that tracks the accumulation and removal or retirement of emission reduction credits by an organization. Registries may be specific to a particular credit type, as is the case for the Gold Standard, CDM and Voluntary Carbon Standard registries, or may hold multiple credit types, as is the case for generic third party registries and proprietary registries maintained by individual companies.
Validation: The systematic, independent and documented process for evaluating the proposed project activity and project documentation against the requirements of a project standard.
Verification: The systematic, independent and documented process for evaluating the emissions reduction claims of a project proponent against agreed verification criteria.
Verified Emission Reduction (VER): Emission reductions generated by projects that are assessed and verified by objective third party mechanisms other than the UN Framework Convention on Climate Change.
Voluntary Carbon Standard (VCS): Certification standard for offset credits in the voluntary market. The VCS was initiated by The Climate Group, the International Emissions Trading Association, the World Economic Forum and the World Business Council for Sustainable Development. VCS is based upon the requirements of the Clean Development Mechanism and the ISO 14064-2 standard for project-level greenhouse gas emission activities.
