Resources
Bibliography of Reference Documents and Library of Carbon Credit Resources
Welcome to the Bibliography and Library of Carbon Credit Resources curated by OAD Carbon Trust. This section provides a comprehensive list of reference documents, guidelines, and resources essential for understanding and participating in carbon credit initiatives and emissions trading.
Reference Documents
EU Emissions Trading System (EU ETS)
European Commission, Directorate-General for Climate Action. "EU Emissions Trading System (EU ETS)."
Kyoto Protocol and Mechanisms
United Nations Framework Convention on Climate Change (UNFCCC). "Kyoto Protocol." Available at: UNFCCC Kyoto Protocol.
Verified Carbon Standard (VCS)
Verra. "Verified Carbon Standard (VCS) Program Documents." Available at: Verra VCS Program.
Gold Standard
Gold Standard. "Gold Standard for the Global Goals."
Clean Development Mechanism (CDM)
UNFCCC. "Clean Development Mechanism (CDM)." Available at: UNFCCC CDM.
Frequently Asked Questions (FAQs) on Carbon Credits
General Questions
- Carbon credits are certificates representing the right to emit one ton of carbon dioxide (CO2) or its equivalent in other greenhouse gases. They are used as a tool to mitigate climate change by incentivizing emission reductions.
- The main purpose of carbon credits is to encourage emission reductions and promote sustainable practices by creating a market for trading emissions allowances. They contribute to global efforts to combat climate change.
Kyoto Protocol Mechanisms
- The CDM is a mechanism under the Kyoto Protocol that allows developed countries to invest in emission reduction projects in developing countries. Projects earn Certified Emission Reductions (CERs) for each ton of CO2 equivalent reduced.
EU Emissions Trading System (EU ETS)
- The EU ETS is a cap-and-trade system implemented by the European Union to limit greenhouse gas emissions from installations in sectors such as energy, industry, and aviation. It is the largest carbon market in the world.
- Participants in the EU ETS include energy-intensive industries, power generators, and airlines operating within the European Economic Area (EEA) that are required to hold allowances equivalent to their emissions.
- Allowances are allocated to installations based on National Allocation Plans (NAPs) prepared by EU member states. They determine the total quantity of allowances available and how they are distributed to covered entities.
Verification and Compliance
- Carbon credits are verified through rigorous processes conducted by accredited third-party auditors. Verification ensures that emission reductions are Real, Measurable, Additional, and Verified (RMAV).
- Additionality refers to the requirement that a carbon offset project must result in emission reductions that are additional to what would have occurred in the absence of the project. It ensures the environmental integrity of carbon credits.
- Compliance obligations vary depending on the regulatory framework (e.g., EU ETS, voluntary standards). Participants typically need to measure, report, and verify their emissions, acquire sufficient allowances or credits to cover emissions, and comply with reporting deadlines.
Market Mechanisms and Standards
- Voluntary carbon markets enable organizations and individuals to voluntarily purchase carbon credits to offset their emissions beyond regulatory requirements. They often adhere to standards such as the Verified Carbon Standard (VCS) or Gold Standard (GS).
Compliance and Reporting
- Reporting requirements vary by regulatory framework and standard. Generally, they include annual emission inventories, verification reports, and documentation demonstrating project additionality and environmental integrity.
- Carbon credits are retired when they are permanently removed from circulation after being used for compliance or voluntarily to offset emissions. Retirement ensures that credits cannot be traded or used again.
International Agreements
- The Paris Agreement is an international treaty adopted in 2015 under the United Nations Framework Convention on Climate Change (UNFCCC). It aims to limit global warming to well below 2 degrees Celsius compared to pre-industrial levels, with efforts to limit it to 1.5 degrees Celsius.
Carbon Credit Terms and Abbreviations
- Registries are electronic databases that track the issuance, transfer, and retirement of carbon credits or allowances. They ensure transparency, traceability, and integrity of transactions within carbon markets.
Conclusion
Glossary of Carbon Credit Terms and Abbreviations
General Terms
Carbon Credit:-
A certificate or permit representing the right to emit one ton of carbon dioxide (CO2) or the equivalent amount of another greenhouse gas (GHG).
Carbon Offset:-
A reduction in emissions of CO2 or other GHGs made to compensate for emissions produced elsewhere.
Greenhouse Gas (GHG):-
Gases that trap heat in the atmosphere, including carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), and fluorinated gases.
Emissions Trading System (ETS):-
A market-based approach to controlling pollution by providing economic incentives for achieving reductions in the emissions of pollutants.
Cap-and-Trade:-
An ETS approach where a cap is set on the total amount of certain GHGs that can be emitted by covered entities, and allowances can be traded among entities.
Kyoto Protocol Mechanisms
Clean Development Mechanism (CDM):-
A mechanism under the Kyoto Protocol allowing developed countries to invest in emission reduction projects in developing countries to earn Certified Emission Reductions (CERs).
Joint Implementation (JI):-
A mechanism under the Kyoto Protocol allowing developed countries to carry out emission reduction projects in other developed countries, generating Emission Reduction Units. (ERUs).
Certified Emission Reduction (CER):-
A carbon credit issued for emission reductions achieved by CDM projects.
Emission Reduction Unit (ERU):-
A carbon credit issued for emission reductions achieved by JI projects.
Assigned Amount Unit (AAU):-
A unit under the Kyoto Protocol representing an allowance to emit one ton of CO2 equivalent, assigned to countries with emission reduction targets.
International Emissions Trading (IET):-
A Kyoto Protocol mechanism allowing countries with excess AAUs to sell them to countries that are over their targets.
EU Emissions Trading System (EU ETS)
Allowance:-
A permit allowing the holder to emit one ton of CO2 or its equivalent under the EU ETS.
Verified Emission Reduction (VER):-
Emission reductions that have been verified by an independent third party, used in voluntary carbon markets.
Monitoring and Reporting Regulation (MRR):-
EU regulation specifying the rules for monitoring and reporting GHG emissions under the EU ETS.
Accredited Independent Entity (AIE):-
An independent third party that verifies emissions reductions under the Kyoto Protocol’s JI mechanism.
Designated Operational Entity (DOE):-
An independent auditor that validates and verifies CDM projects.
EU Allowance (EUA):-
The official unit of carbon credits under the EU ETS, representing one ton of CO2 equivalent emissions.
EU Aviation Allowance (EUAA):-
Allowances specifically for the aviation sector under the EU ETS.
Linear Reduction Factor (LRF):-
The rate at which the cap on emissions is reduced annually in the EU ETS.
National Allocation Plan (NAP):-
A plan submitted by EU member states detailing the allocation of allowances to covered entities under the EU ETS.
Registry:-
An electronic database that tracks the ownership of allowances and credits within the EU ETS and other carbon markets.
Other Relevant Terms
Carbon Tax:-
A tax levied on the carbon content of fuels, intended to reduce GHG emissions by increasing the cost of emitting carbon dioxide.
Climate Action Reserve (CAR):-
A U.S.-based offset registry and standard for voluntary carbon markets.
Gold Standard (GS):-
A standard for high-quality carbon offset projects ensuring real, measurable, and verifiable emission reductions.
Verified Carbon Standard (VCS):-
A standard for certifying voluntary carbon offset projects, administered by Verra.
CORSIA:-
Carbon Offsetting and Reduction Scheme for International Aviation, a global market-based measure to offset international aviation emissions above 2020 levels.
Nationally Determined Contribution (NDC):-
Climate action plans submitted by countries under the Paris Agreement, outlining their targets and actions for reducing GHG emissions.
Carbon Leakage:-
The situation where, due to stringent climate policies, businesses transfer production to countries with laxer emission constraints, potentially leading to an increase in total global emissions.
Sectoral Scope:-
Categories of activities covered by carbon credit standards, such as energy, waste management, or forestry.
Voluntary Carbon Market (VCM):-
A carbon market where companies and individuals voluntarily buy carbon offsets to compensate for their emissions.
Baseline:-
The scenario used as a reference point for calculating the additional emission reductions achieved by a carbon credit project.
Additionality:-
The principle that carbon offset projects must result in emission reductions that would not have occurred without the project.
Permanence:-
The assurance that emission reductions or removals from a carbon offset project will endure over time.
Leakage:-
The unintended increase in GHG emissions outside of the project area as a result of the project activities.
Guidelines and Regulatory Bodies
United Nations Framework Convention on Climate Change (UNFCCC):-
The international treaty under which the Kyoto Protocol and the Paris Agreement were adopted.
Paris Agreement:-
An international treaty adopted in 2015 aiming to limit global warming to well below 2 degrees Celsius, with efforts to limit it to 1.5 degrees Celsius.
National Authority:-
The body within each country responsible for overseeing the implementation of carbon market mechanisms, such as the CDM and EU ETS.
European Commission:-
The EU body responsible for proposing legislation, implementing decisions, and managing the day-to-day business of the EU, including the EU ETS.
By understanding these terms and guidelines, market participants can navigate the complexities of the carbon credit market, ensuring compliance and contributing to global efforts to mitigate climate change.