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Carbon A-Z - glossary of keywords


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AA and AAU, see Assigned Amount and Assigned Amount Units.

Reduction in the quantity or intensity of greenhouse gas emissions.

AB 32 (Assembly Bill 32), see Global Warming Solutions Act.

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 the JI guidelines. Corresponds to DOE in the CDM context.

Accreditation Panel (CDM AP)
Entity that prepares the decision-making of the CDM Executive Board in accordance with the procedure for accrediting operational entities.

ACCU, see Australian Carbon Credit Unit.

Adaptation fund
Fund established in January 2002 (COP7, Marrakech) to help developing countries meet the cost of adaptation to climate change. The Fund is financed mainly with a share of proceeds (SOP) from clean development mechanism (CDM) project activities, see Adaptation Levy. At COP-14 in Poznan, the Parties agreed that the GEF (Global Environment Facility) acts as AF Secretariat and the World Bank as ”interim” trustee in charge of CER sales. The Poznan decision gives the Adaptation Fund Board permanent legal basis as an independent legal body, enabling it to enter into contracts and directly take project proposals, without having to go through implementing agencies, and to start disbursing the funds. The decision means that adaptation money can begin to flow at some point in 2009. The current amount of CERs in the AF’s coffers amounts to 4.5 million, i.e. a value of close to €60 million at current market prices.

Adaptation Levy
Levy to assist least developed countries (LDCs) through the Adaptation Fund to adapt to climate change. The levy, 2% of the certified emission reductions from the project, is imposed on all CDM projects except those implemented in LDCs.

Additionality principle
The principle that a project should only be able to earn credits if the GHG emission reductions produced by the project are additional to what would have happened in the absence of the carbon credit component.

Ad-Hoc Working Group on Further Commitments (AWG or AWG-KP)
Subsidiary body to the Kyoto Protocol, established by the COP-11/CMP-1 in 2005 to determine further commitments for Annex I countries for the period after the first round of Kyoto emission targets expire (2012). The work is required under Article 3.9 of the Kyoto Protocol. Full name is "Ad-Hoc Working Group on Further Commitments for Annex 1 parties under the Kyoto Protocol". The group includes the Annex I countries that have ratified the Kyoto Protocol.

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 Convention.

AEU, see Australian Emission Units.

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, seeding and/or the promotion of natural seed sources.

Agriculture, Forestry and Other Land Use (AFOLU), see Land Use, Land Use Change and Forestry

Alliance of Small Islands States (AOSIS)
Coalition of some 43 low-lying and small island countries that are particularly vulnerable to sea-level rise. AOSIS countries were the first to propose a draft text during the Kyoto Protocol negotiations calling for cuts in carbon dioxide emissions of 20% from 1990 levels by 2005.

The distribution of allowances to participants in an emissions trading scheme or other entities. Allocation can be done for free or by selling the allowances (see auctioning). Principles for free allocation include grandfathering, benchmarking and projections.

Legally defined unit (EUAs, AAUs, CCAs, NZUs, etc.) that entitles the holder to emit one tonne of CO2e or another quantity of greenhouses gases. Also known as emission allowance or emission permit. See also European Union Allowance (EUA).

American Carbon Registry
Founded in 1997 by Environmental Defense Fund and currently operated by Winrock International, the American Carbon Registry (formerly GHG registry) allows its members to buy, sell, hold, and retire project-based carbon offsets as well as report verified organizational GHG inventories. The Registry accepts projects from around the globe and recognizes standards that meet its published additionality and eligibility criteria.

Annex B Countries
Annex B countries are the 39 emissions-capped countries listed in Annex B of the Kyoto Protocol. In practice, Annex I of the UNFCCC (see below) and Annex B of the Kyoto Protocol are often used interchangeably.

Annex I Countries
Include the industrialised OECD countries and countries with economies in transition listed in Annex I of the UNFCCC. 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. In practice, however, Annex I of the UNFCCC and Annex B of the Kyoto Protocol are often used interchangeably.

Annex II Countries
Annex II of the UNFCCC includes all original OECD member countries, but not the countries with economies in transition. Annex II countries are required to provide financial resources enabling developing countries to undertake emissions reductions.

Approved Methodology (AM)
Methodology approved by the CDM Executive Board to calculate emission reductions for a CDM project that is not small-scale and not an A/R project (see below).

A/R Projects, see Afforestation and Reforestation Projects.

Assembly Bill 32 (AB 32), see Global Warming Solutions Act

Assigned Amount (AA) and Assigned Amount Units (AAUs)
The assigned amount is the total volume of greenhouse gases that each Annex B country is allowed to emit during the first commitment period (see explanation below) of the Kyoto Protocol. An Assigned Amount Unit (AAU) is a tradable unit of 1 tonne CO2e.

Auction Platform
In the EU ETS this refers to the new infrastructure that will be set up to handle auctions of EUAs. From 2013 onwards (start of phase 3) the member states are only allowed to sell their allowances on platforms that fulfil the criteria for ‘regulated markets’ with regards to security, anti-fraud and equal access for admitted buyers. Germany, the UK and Poland decided to opt out of the common solution and establish separate national platforms. Germany selected the EEX as its transitional platform; this is expected to be operational in October 2012. The UK chose ICE ECX in London as its permanent platform, and plans to host its first phase 3 auction in November. Poland will auction its EUAs on the common platform until it manages to set up its opt-out platform.

Common term used for the sale of allowances, as opposed to allocating them for free. See also Allocation. 

Australian Carbon Credit Unit (ACCU)
An emission reduction unit equal to one carbon dioxide equivalent tonne, issued under the Carbon Farming Initiative.

Australian Emission Unit
Emissions units are allowances traded on the Australian cap-and-trade. They will be available when the flexible charge period starts in July 2015 both trough auctioning and the secondary market.

Australian National Registry of Emission Units
Electronic system that tracks the location and ownership of emission units issued under the Kyoto protocol, the Australian Carbon Credit Units, and the carbon credits issued under the Australian Clean Energy Act 2011.


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In the EU ETS this refers to the postponement of the sales of a to-be-decided volume of emission allowances (EUAs). The term was coined the summer 2012 to describe the European Commission’s proposal to shift some of the planned auction volumes from the early to the late years of phase 3 (2013-2020). The idea behind the controversial plan was to temporarily address an over-supply of EUAs in the order of 1.8 billion tonnes.

Bali Action Plan
The document approved by consensus among the 187 countries at the UNFCCC COP in Bali on 15 December 2007. It sets an agenda for negotiators to find ways to reduce greenhouse gas emissions and help developing countries adapt to environmental changes by speeding up the transfer of technology and financial assistance. The negotiating process is to be concluded by 2009 and is expected to lead to a post-2012 international agreement on climate change. Also known as Bali road map.

The transfer of allowances or credits from one compliance period to the next. Parties to the Kyoto Protocol may bank as many AAUs they wish as long as they follow commitment period reserve rules, CERs corresponding to 2,5% of their targets, and ERUs corresponding to 2,5% of their targets,to use them in subsequent commitment periods. The EU ETS allows unlimited banking from the second compliance period (2008-12) onwards, but did not permit banking from the first to later periods. Also known as carry-over or hoarding.

Baseline and Baseline Scenario
The baseline represents forecasted emissions under a business-as-usual (BAU; see explanation below) scenario, often referred to as the 'baseline scenario', i.e. expected emissions if the emission reduction activities were not implemented.

An allocation method in which allowances are distributed based on output (e.g. one allowance per MWh generated) or on intensity standards in the industry, based on best-performing companies.

Entity where two or more emission sources (for example, countries) are treated as if they were a single emission source. The European Union constitutes a bubble under the Kyoto Protocol.

Bundling signifies the bringing together of several CDM project activities, to form a single project to reduce CDM-related transaction costs.

Business As Usual Scenario (BAU)
A business as usual scenario is a policy neutral reference case of future emissions, i.e. projections of future emission levels in the absence of changes in current policies, economics and technology.

A mechanism under a cap and trade system that allows entities to use allowances designated for a future compliance period to meet current compliance period requirements.

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CAR, see Corrective Action Request

California Air Resources Board (CARB)
Agency established by California's legislature in 1967 to attain and maintain healthy air quality, conduct research into the causes of and solutions to air pollution, and systematically attack the serious problem caused by motor vehicles. CARB is the chief implementing agency for Assembly Bill 32 (AB32).

California Carbon Allowance(CCA)
A tradable permit to emit one tonne carbon dioxide equivalent certain amount of greenhouse gases) that has been approved and issued by the California Air Resource Board for the purposes of compliance under the cap-and-trade system.

Cap and Trade
A design for emissions trading systems under which total emissions are limited or 'capped'. Tradable emission allowances corresponding to the total allowed emission volume are allocated to participants for free or through auctioning. Contrasts with baseline-and-credit approaches where only deviations from a baseline are tradable. Examples are the EU ETS, WCI, RGGI, international emissions trading under the Kyoto Protocol and the emissions trading scheme in Australia.

Carbon Capture and Storage (CCS)
Process consisting of the separation of CO2 from industrial and energy-related sources, transport to a storage location and long-term isolation from the atmosphere. CO2 may be stored under ground in old oil and gas fields, non commercial coal fields and saline aquifers. It may also be injected into the ocean. Also known as carbon capture and geological storage (CCGS).

Carbon Dioxide Equivalent (CO2e)
Measurement unit used to indicate the global warming potential (GWP) of greenhouse gases. Carbon dioxide is the reference gas against which other greenhouse gases are measured. See Global Warming Potential for conversion rates.

Carbon Emission Factor (CEF)
Amount of CO2 released per unit of energy produced.

Carbon Farming Initiative (CFI)
Carbon Farming Initiative is the Australian domestic carbon offset scheme that allows emission reduction projects developers in Australia to earn carbon credits eligible in the Carbon Pricing Mechanism.

Carbon leakage
Carbon leakage occurs when production of goods is moved to countries with less strict climate policy (e.g. India and China) than the original country (e.g. EU).

Carbon Neutrality
The practice of purchasing and retiring emission credits or allowances corresponding to the amount of GHG emissions from for instance an activity, company or country.

Carbon Offset, see Offsets.

Carbon Pollution Reduction Scheme (CPRS)
Australia’s proposed emission trading scheme that would reduce emissions through a carbon price across the entire economy. The Scheme was not passed by the Australian government.

Carbon Pricing Mechanism
The Australian emissions trading scheme that started the First of July 2012 with a fixed charge until July 2015 before transitioning to a fully flexible cap-and-trade scheme. The scheme covers about 60% of Australia total emissions and 315 liable entities.

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.

Carbon Trading, see Emission Trading.

CCS, see Carbon Capture and Storage.

A process by which a GHG reduction project is audited by a government agency or independent authority to determine that it meets established criteria. For instance, the act of approving emission reductions from a carbon project and issue emission reduction credits to the entity that owns the rights to the project credits.

CDM, see Clean Development Mechanism.

CDM EB, Clean Development Mechanism Executive Board.

CDM Registry
System of accounts into which the CDM EB issues CERs from registered CDM project activities (CDM Registry).

CERs, see Certified Emission Reductions.

CER, see Carbon Emission Factor.

Certified Emission Reductions (CERs)
CERs are carbon credits generated through the CDM. It can be used to meet an Annex B Party’s emission commitment or as a unit of trade in GHG emissions trading systems.

CFI, see Carbon Farming Initiative.

Clean Air Act (CAA)
A piece of United States federal legislation first passed in 1963 relating to the reduction of smog and air pollution in general. The Clean Air Act Amendments of 1990 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 GHG emissions.

Clean Development Mechanism (CDM)
The CDM is a mechanism for project-based emission reduction activities in developing countries (non-Annex B countries). Certified emission reductions (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 certified emission reductions (CERs) to relevant projects participants, and manages series of technical panels and working groups meetings (see Methodologies Panel). The CDM EB is accountable to the Conference of the Parties to the Kyoto Protocol. The CDM EB meets six to seven times a year.

China's Voluntary Emission Reduction Trading
This is a precursor to a domestic emission trading scheme in China. It currently accepts projects developed using CDM methodologies. The details of the trading scheme will be finalized in the near term. In 2011, the NDRC approved pilot ETS schemes in seven provinces/cities aimed to start in 2013. This includes city of Beijing, Tianjin, Shanghai, Chongqing and Shenzhen, provinces of Guangdong and Hubei. Shenzhen, in the Guangdong province, accounts for about a quarter of Guangdong’s energy consumption.

Chinese Certified Emission Reduction
One CCER is equal to one tonne carbon dioxide equivalent reduced from the atmosphere. Used in the Chinese domestic offset trading scheme.

Chinese price floor
The Chinese DNA approves only CDM projects that are contracted above a defined price level. The price level required depends on the project type.

CITL, see Community Independent Transaction Log.

Clean Energy Act
Passed in 2011, Australian legislative text of reference for the Australian Carbon Pricing Mechanism.

Clean Energy Regulator
In Australia, the Clean Energy Regulator is in charge of implementing the policies created in the Clean Energy Act. Is in charge of implementing the Carbon Pricing Mechanism and the Carbon Farming Initiative.

Clear Skies Act (Clear Skies Initiative)
Establishes in the United States federally enforceable emissions limits (or "caps") for three pollutants - SO2, NOx, and mercury for a period of 2008-2018. Clear Skies' NOx and SO2 requirements affect all fossil fuel-fired electric generators greater than 25 megawatts (MW) that sell electricity.

Climate Action Reserve(CAR)
Formerly the California Climate Action Registry, a non-profit voluntary and compliance registry for offsets. The Reserve is 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.

Climate Community and Biodiversity Standard (CCB Standard)
A certification standard for credits from land-use and forestry carbon mitigation projects. The standard rewards projects that simultaneously address climate change, support local communities and conserve biodiversity. The standard helps mitigating risk for investors and increases funding opportunities for project developers.

Co-decision and Comitology procedures
EU legislation consists of two groups of legal acts: primary and delegated. The first are the directives, regulations and decisions adopted by the European Parliament (EP) and the Council. Most of these acts come into existence using the co-decision procedure, which grants the two lawmakers equal powers to amend and eventually block new legislation proposed by the European Commission. If accepted in the EP (at least 377 of 754 members), and in the Council (at least 255 of 345 votes), the new legislation will be adopted. This process typically takes 18-24 months. Delegated acts complement the primary acts, normally by adding more (technical) details. Much the same way as a national parliament can delegate regulatory powers to a government and/or a relevant ministry, so the EU lawmakers can delegate legislative/regulatory authority to the Commission. The EU delegated acts come into existence using a set of procedures commonly known as Comitology, which basically is meant as a way to control that the Commission does not transgress its powers. This process takes approximately six months. Delegated acts normally take the form of Commission regulations (not to be confounded with Council and EP regulations). For secondary legislation regarding the EU ETS, the relevant decision making body is known as The Climate Change Committee. Here member states’ experts meet with Commission officials to discuss and decide on amendments.

Coal Mine Methane/Coalbed Methane
Coalbed methane is methane contained in coal seams, and is often referred to as virgin coalbed methane, or coal seam gas. Coal mine methane is the subset of coalbed methane that is released during the process of coal mining.

Commitment Period
The five-year Kyoto Protocol Commitment Period is scheduled to run from calendar year 2008 to calendar year-end 2012.

Commitment Period Reserve
To avoid "over-sell" and thus non-compliance with targets, Annex B Parties to the Kyoto Protocol must hold a minimum level, corresponding to 90% of assigned amount volume, of AAUs, CERs, ERUs and/or RMUs in a commitment period reserve that cannot be traded.

The act, specific to cap-and trade schemes, of surrendering the required amount of allowances, or some combination of allowances and offsets, to cover an entity’s emissions. Achievement by a Party in meeting its quantified emission limitation and reduction commitments under the Kyoto Protocol.

Compliance Instrument Tracking System Service
An account and transaction registry to track allowances and offsets for the California GHG emissions trading program, and additional jurisdictions such as the Canadian province of Quebec.

Compliance Market
A compliance market is a market established by government regulation. In renewable energy markets, utilities are mandated to generate a minimum percentage of their electricity from renewable sources. In carbon markets, regulated entities surrender credits or allowances corresponding to its (surplus) emissions at the end of each compliance period.

Community Independent Transaction Log (CITL)
Registry recording the issue, transfer and cancellation of allowances within the European Union emissions trading scheme.

Conference of the Parties (COP)
The COP is the supreme body of the UNFCCC. It meets once a year to review the progress. COP-11 took place in Montreal, Canada in November/December 2005 and was also the first Meeting of the Parties to the Kyoto Protocol (MOP-1).

Conference of the parties serving as the meeting of the parties to the Protocol (CMP)
The highest decision-making body of the Kyoto Protocol. Also known as COP/MOP.

COP, see Conference of the Parties.

Corrective Action Request (CAR)
A request raised by the Designated Operational Entity (DOE) during the validation process, in the case where a mistake has been made, the CDM requirements have not been met or there is a risk the emissions cannot be monitored or calculated. The DOE can also raise a Corrective Action Request during verification, if it finds non-conformities with monitoring requirements, mistakes in the emissions reductions calculations, or if Forward Action Requests raised during validation have not been resolved. All Corrective Action Requests have to be resolved before the DOE recommends the project activity for registration or issuance.

Countries with economies in transition (EIT)
Fourteen Annex I countries that include some Central and East European countries and former republics of the Soviet Union that are in transition from centrally-planned economies to market-based economies.

see Carbon Pollution Reduction Scheme.

Credit Limit
Limit on the use of CERs/ERUs for compliance by the companies under the EU ETS or other cap-and-trade systems. In the EU ETS, iIt is expressed as a maximum share of the total allocation.

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; for JI projects crediting period overlaps with the first commitment period under the Kyoto Protocol (2008-2012).

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DCCEE, see Department of Climate Change and Energy Efficiency.

Department of Climate Change and Energy Efficiency
The Australian ministry in charge of climate change regulations.

Designated National Authority (DNA)
The official body representing the government of the host country for CDM/JI projects. For JI host countries, the national authority approves the projects and issues the emission reduction units (ERUs). For CDM host countries, the designated national authority issues a non-objection letter necessary for the project approval, if it agrees that a project is in line with its sustainable development objectives. The DNA also issues the Letter of Approval (LoA) needed 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), see also Accredited Independent Entity (AIE).
A domestic legal entity or an international organization accredited and designated by the CDM EB. The DOE validates and requests registration of a proposed CDM projects activity as well as verifies emission reductions of a registered CDM project activity.

Determination, see also Validation and Verification.
The process of independent evaluation of a JI project by an Accredited Independent Entity whether the Project Design Document (PDD) fulfil all requirements to JI projects under Article 6 of the Kyoto Protocol and the JI guidelines. Determinations of reductions in anthropogenic emissions by sources or enhancements of anthropogenic removals by sinks pursuant to paragraph 37 of the JI guidelines are also referred to as verifications as for JI projects.

Determination and Verification Manual (DVM),
Document being considered by the JISC (Joint Implementation Supervisory Committee), which would serve as a practical reference for independent entities operating under the JI mechanism.

DG Climate
One of the Directorate Generals of the European Commission. DG Clima is the most relevant to the EU ETS. It acts as regulator for the emission trading system, and is responsible for most of the carbon-related legislation, such as the ETS Directive, the Auction Regulation, the Registry Regulation, etc. DG Clima is headed by Connie Hedegaard, a former Danish climate minister, who hosted the climate summit in Copenhagen in December 2009.

Domestic Project
In the JI context, project developed in the absence of another Annex 1 Party participant.

Double Counting
Potential problem with JI projects in sectors covered by the EU ETS. See also JI reserve.

Downstream Cap
A "downstream" cap and trade system is one in which where the entities emitting carbon dioxide are required to surrender allowances (also see: upstream cap).

see Determination and Verification Manual.

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Early auctions
See Front-loading.

see Environmental Impact Assessment.

Environmental Impact Assessment (EIA)
This is an assessment of the possible impact, both positive and negative, that a proposed project may have on the natural environment. This procedure ensures that environmental consequences of projects are identified before authorisation is given. The rules for an Environmental Impact Assessment vary from country to country. The EU has established a mix of mandatory and discretionary procedures to assess environmental impacts, which are set out in the EIA Directive.ree allocation (grandfathering) will be phased out towards 2020.

EIT, see Countries with Economies in Transition.

Eligibility Requirements
Conditions for being able to trade AAUs and ERUs under Article 17 of the Kyoto Protocol. There are six eligibility requirements for participating in emissions trading for Annex I Parties: (i) being a Party to the Kyoto Protocol, (ii) having calculated and recorded one’s Assigned Amount, (iii) having in place a national system for inventory, (iv) having in place a national registry, (v) having submitted an annual inventory and (vi) submit supplementary information on assigned amount. An Annex I party will automatically become eligible after 16 months of the submission of its report on calculation of its assigned amount.

Emission Reduction Unit (ERU)
Permits achieved through a Joint Implementation project.

Emissions to Cap (E-t-C)
Emissions-to-cap (E-t-C) , also called Gap-to-cap, is calculated by subtracting the seasonally adjusted cap from emissions (actual or forecasted). This metric gives an indication of whether the market (for a specific period) is producing more or less than the seasonally adjusted cap for that same period. More specifically, if not taking CERs into account, a positive (negative) E-t-C means that the market is fundamentally short (long), suggesting a buy (sell) signal.

Emission Reduction Purchase Agreement (ERPA)
Binding purchase agreement signed between buyer of CERs or ERUs - or other emission reduction credits - and seller. See primary market.

Emissions Reductions (ERs)
Emissions reductions generated by a project that have not undergone a validation/verification process, but are contracted for purchase.

ERU, see Emission Reduction Unit.

E-Tag, see NERC E-Tag

European Union Allowances (EUA)
A tradable unit under the EU ETS. Each allowance equals 1 tonne of CO2. EUAs are bankable from Phase 2 to Phase 3 of the EU ETS.

European Union Aviation Allowances(EUAA)
Starting in 2012 aviation will be included in the cap and trade system for CO2. A tradable unit under the EU ETS specific to airline emissions. Each allowance equals 1 tonne of CO2.

EU ETS, see European Union Emissions Trading Scheme.

European Union Emissions Trading Scheme (EU ETS)
Trading Scheme within the European Union, which was launched on January 1, 2005. The scheme is based on Directive 2003/87/EC, which entered into force on 25 October 2003. The Phase I (2005 - 2007) has received much criticism due to oversupply of allowances and the distribution method of allowances (via grandfathering rather than auctioning), Phase II (2008-2012) links the ETS to other countries participating in the Kyoto trading system. In Phase III, the share of auctioning will increase. In 2013 at least 50 percent of the total amount of allowances will be auctioned, and this share will increase, as free allocation (grandfathering) will be phased out towards 2020.

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see Forward Action Request.

Flexible mechanisms
Under the Kyoto Protocol, a collective term for International Emissions Trading, the Clean Development Mechanism and Joint Implementation.

Forward Action Request (FAR)
A request raised by the DOE during validation, which indentifies issues related to project implementation that require review during the first verification of the project activity. The DOE must report on the FARs in the validation report. If the issues raised in the FAR have not been resolved at the first verification, the DOE must make a Corrective Action Request.

Front Loading
Better known as ‘early auctions’, this refers to the sale in late 2012 of carbon allowances (EUAs) from the 2013 and 2014 vintages. The EU decided in 2011 to increase the volumes brought to market in 2012, in order 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. These allowances were meant to be sold evenly spread out throughout the year 2012, but due to delays the auctions did not start before October 2012.

Fuel Switching
The process of moving from a higher carbon content fuel, such as coal, to a lower carbon content fuel, such as natural gas, in power generation and industrial process for purposes of reducing carbon emissions.

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G77, see Group of 77.

GIS, see Green Investment Scheme.

Global Environment Facility (GEF)A global partnership among 178 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)
The global warming potential is the impact a greenhouse gas (GHG) has on global warming. By definition, CO2 is used as reference case, hence it always has the GWP of 1. GWP changes with time, and the IPCC has suggested using 100-year GWP for comparison purposes. Below is a list of 100-year GWPs used in the Kyoto Protocol for the six Kyoto gases:

Carbon dioxide (CO2) GWP: 1
Methane (CH4) GWP: 21
Nitrous oxide (N2O) GWP: 310
Hydrofluorcarbons (HFCs) GWP: GWP: 150 – 11 700
Perfluorcarbons (PFCs) GWP: 6500 – 9 200
Sulphur hexafluoride (SF6) GWP: 23 900

See also Carbon Dioxide Equivalent.

Global Warming Solutions Act of 2006
The California law that sets up the first enforceable state-wide program in the U.S. to cap all greenhouse gas emissions from major industries. The law requires that by 2020 the state's greenhouse gas emissions be reduced to 1990 levels. Also known as Assembly Bill 32 or AB32.

Gold Standard
Initiated by WWF, SSN and Helio International, the Gold Standard for CDM projects offers project developers a tool with which they can 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 sustainable energy services. Eligible project types are renewable energy and energy efficiency.

Grandfathering, see also Allocation.
Method for allocation of emissions credits/allowances to companies or other legal entities, usually free of charge, on the basis of their historic emissions. Grandfathering has been the main allocation method in Phase I1 and I2I of EU ETS.

Greenhouse gases (GHGs)
Greenhouse gases (GHGs) are trace gases that control energy flows in the Earth's atmosphere by absorbing infra-red radiation. Some GHGs occur naturally in the atmosphere, while others result from human activities. There are six GHGs covered under the Kyoto Protocol - carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulphur 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 these sales are invested in environmentally beneficial activities, a process also called the “greening” of AAUs.
There are two major concepts of greening – “hard” and “soft”, although both definitions are relative. Hard greening is usually defined as investing in projects aiming directly at GHG emission reductions. Soft greening stands for activities leading to environmental benefits not directly connected to GHG emission reductions measures
See also Hot Air.

Group of 77 and China (G77/China)
G77/China is the developing country-group in the climate negotiations, consisting of more than 130 developing countries.

GWP, see Global Warming Potential.

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Host Country
A host country is the country where a JI or CDM project is physically located. A project has to be approved by the host country to receive CERs or ERUs.

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 in particular have significant hot air volumes.

HFC-23 (Trifluoromethane)
About 98% of HFC-23 emissions are created as a byproduct in the production of HCFC-22 and generally are vented to the atmosphere. HCFC-22 is used mostly as the refrigerant for stationary refrigeration and air conditioning.

Hydrofluorocarbons, or HFCs
One of the six greenhouse gases, controlled in the Kyoto Protocol. Are produced commercially and are largely used in refrigeration and insulating foam.

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IET, see International Emissions Trading.

Integrated Gasification Combined Cycle (IGCC)
An IGCC is a power plant using synthetic gas. This gas is often used to power a gas turbine generator whose waste heat is passed to a steam turbine system (Combined cycle gas turbine). The gasification process can produce syngas from high-sulfur coal, heavy petroleum residues and biomass. IGCC could potentially capture and store carbon dioxide.

Integrated Pollution Prevention and Control (IPCC) Directive
IPCC Directive based on minimising pollution from various industrial sources throughout the European Union. Operators of industrial installations covered by Annex I of the IPPC Directive are required to obtain an authorisation (environmental permit) from the authorities in the EU countries. About 50.000 installations are covered by the IPPC Directive in the EU.

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. See emissions trading.

International Organization for Standardization (ISO)
The world's largest developer and publisher of International Standards. The ISO is composed of a network of the national standards institutes of 157 countries, with a Central Secretariat in Geneva, Switzerland. In March 2006, ISO launched the ISO 14064:2006 standards for GHG accounting and verification.

International Transaction Log (ITL)
Database of all tradable credits under the Kyoto Protocol and the application that verifies all international transactions and their compliance with Kyoto rules and policies.

Intergovernmental Panel on Climate Change (IPCC)
Thw IPCC was established by the World Meteorological Organisation (WMO) and the United Nations Environmental Programme (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. It is open to all Members of the UN and of WMO (www.ipcc.ch).

Issuance refers to the instruction by the CDM Executive Board to the CDM registry administrator to issue a specified quantity of CERs for a project activity into the pending account of the Executive Board in the CDM registry.

Internal Abatement
In emissions trading terminology, the act of reducing one’s own emissions for compliance purposes, e.g. through technology upgrades and fuel switching, as opposed to buying allowances/offsets or scaling down production.

Country report, under the Kyoto Protocol, on anthropogenic GHG emissions and removals delivered on a regular basis according to the IPCC guidelines.

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JI Reserve
A set-aside established in the National Allocation Plan for the period 2008 to 2012 of each Member State hosting or intending to host activities under the project based mechanisms of the Kyoto Protocol that could cause double-counting. The reserve refers to planned project activities and associated reductions or limitations of emissions that take place in installations under EU ETS and for which ERUs or CERs should be issued by the Member State. Also known as set-aside.

Joint Implementation (JI)
Joint Implementation is 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 on the basis of 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 following the verification procedure under the JISC.

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Korea Emissions Trading Scheme
Established by the Korea Framework Act on Low Carbon and Green Growth and is scheduled to start in 2015. It will limit emissions from 460 facilities that emit more than 25,000 tons CO2e per year.

Kyoto gases
The six greenhouse gases (GHG) included in the Kyoto Protocol. See Global warming potential.

Kyoto Protocol
The Kyoto Protocol originated at COP-3 to the UNFCCC in Kyoto, Japan, December 1997. It specifies emission obligations for the Annex B countries and defines the three so-called Kyoto flexible mechanisms: JI, CDM and emissions trading. It entered into force on 16 February 2005.

Kyoto Mechanisms, see Flexible Mechanisms

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Land Use, Land Use Change and Forestry (LULUCF)
The land-use, land-use change and forestry (LULUCF) sector was included under the Kyoto Protocol to take into consideration certain human-induced activities that remove greenhouse gases from the atmosphere, also known as carbon "sinks". The following activities referred to in Article 3, paragraphs 3 and 4 of the Kyoto Protocol, as defined in paragraph 1 of the annex to decision 16/CMP.1: afforestation, reforestation, deforestation (the direct human-induced conversion of forested land to non-forested land), revegetation, forest management, cropland management, grazing land management.

Letter of Approval (LoA)
The letter provides formal approval of the project as a JI or CDM project by the Parties involved.

Letter of Endorsement (LoE)
The letter means confirmation to the project sponsor of the preparedness of the host country to endorse the further development of the project in question.

Letter of 'No Objection' (LoNo)
The Letter may be requested on the basis of a Project Identification Note (PIN) in order to gain assurance from the host country to issue the Letter of Endorsement (LoE).

Linking Directive (LD)
LD formally is not a directive on its own but rather 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 authorisation to participate in the flexible mechanisms, and contains additional provisions relating to the establishment of the national emissions inventory.

Long-term Certified Emission Reductions (lCERs), see also Temporary Certified Emission Reductions (tCERs).
Credits issued for an afforestation or reforestation project activity that expires at the end of its crediting period. lCERs are issued for the net anthropogenic greenhouse gas removals by sinks achieved by the project activity during each verification period.

Low Carbon Fuel Standards (LCFS)
The LCFS requires fuel providers to ensure that the mix of fuel they sell in the market meets, on average, a declining target for greenhouse gas emissions measured in grams of carbon dioxide equivalent per unit of fuel energy sold. By 2020, the California LCFS mandates a 10% reduction in the carbon intensity of fuel production and use within California.

LULUCF, Land Use, Land Use Change and Forestry.

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MAC, see Marginal Abatement Cost

Marginal Abatement Cost (MAC)
The cost of reducing emissions by one additional unit. Aggregated marginal costs over a number of projects or activities define the marginal abatement cost curve.

Marrakesh Accords
Agreement reached under the UNFCCC on modalities and procedures of the international climate change policy regime developed at the seventh Conference of the Parties. The Marrakesh Accords cover significant principles for technology transfer, accounting, flexible mechanisms implementation etc.

Meeting of Parties (MOP), see CPM.

Memorandum of Understanding (MoU)
An MoU is an agreement between two parties that aims to formally recognise a joint desire to ultimately conclude an agreement or to achieve goals jointly. It may or may not have legal backing of sanction, depending upon how it is constructed. MoUs between host and investor country are often used as a basis for CDM/JI projects.

Methodologies Panel (Meth Panel)
The Methodologies Panel was established to develop recommendations to the Executive Board on guidelines for methodologies for baselines and monitoring plans and prepare recommendations on submitted proposals for new baseline and monitoring methodologies.

Monitoring refers to the collection and archiving of all relevant data necessary for determining the baseline, measuring anthropogenic emissions by sources of greenhouse gases (GHG) within the project boundary of a project activity and leakage, as applicable.

Monitoring Plan
A monitoring plan provides information on the collection and analysis of all data relevant to the calculation of emission reductions from a project. The full requirements for the monitoring plan are set out in 3/CMP.1, Annex, paragraph 53. The monitoring plan must be included in the Project Design Document (PDD).

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National Allocation Plan (NAP)
Plan from a Member State for how to distribute EU allowances across installations taking part in the EU ETS in that given country.

National Authority, see Designated National Authority or Focal Point.

National Communication
A report submitted in accordance with the UNFCCC and the Kyoto Protocol by which a Party informs other Parties of activities implemented to address climate change.

National Communication
A ministry under China’s State Council that is responsible for the country’s macroeconomic analysis and policy planning.

New Entrant Reserve
In the EU ETS, this is the amount of allowances the countries have set aside for new installations (“new entrants”) or expansions at existing installations.

New South Wales Greenhouse Gas Abatement Scheme (NSW GGAS)
Emissions trading scheme in the Australian state of New South Wales. Operational since 1 Jan, 2003, NSW GGAS uses a benchmark baseline-and-credit principle. The NSW GGAS establishes annual GHG reduction targets, and requires individual electricity retailers and other parties who buy or sell electricity in NSW to meet mandatory benchmarks based on the size of their share of the electricity market, or buy domestic offset credits for overshooting emissions.

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. Annex I is an Annex in the UNFCCC listing those countries that are signatories to the Convention and committed to emission reductions.

NSW GGAS, see New South Wales Greenhouse Gas Abatement Scheme.

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Official Development Assistance (ODA)
A category of development aid which flows from members of the OECD's Development Assistance Committee (developed countries) to countries on the Part I List of Aid Recipients (developing countries). The Conference of the Parties (COP) has decided that projects funded by official development assistance are not eligible under the CDM. Hence, in the Project Design Document, project participants 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 one’s own emissions. In a cap-and-trade scheme, offsets may be used instead of allowances, sometimes up to a limit (see credit limit). CERs and ERUs are types of offset credits

Over the Counter (OTC) market
Trades arranged by brokers, as opposed to trades on exchanges or bilateral (direct) trades.

Operational Entity
An independent entity, accredited by the CDM Executive Board, which validates CDM project activities, verifies and certified emission reductions generated by such projects.

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Pavley Bill
Also known as California Law AB 1493, it was the first law in the US to address the greenhouse gases emitted in auto exhaust. The law mandates a 30 percent reduction in motor vehicle emissions by 2016, starting with model year 2009. AB 1943 has been challenged legally by a number of industries, including the Association of Automobile Manufacturers; the issue is still tied up in the courts.

Permit, see Allowance.

Phase 1 In the EU ETS this refers to the first trading period, i.e. the three years 2005-2007. This was considered a test period for several of the aspects crucial for the functioning of a cap-and trade emission trading system, such as how to provide the compliance companies the allowances they needed, how to verify that the reported emissions were correct, and whether compliant companies should be allowed to carry over (‘bank’) unused allowances into the subsequent trading period. In late 2007 the marked was flooded with emission allowances, and prices fell to zero as the market operators realised that they were not allowed to ’bank’ these into 2008.

Phase 2 In the EU ETS this refers to the second trading period, i.e. the years 2008-2012. Having learned from mistakes in the first years, the cap was tightened. Free allocation (also known as grand-fathering) continued to be the dominant way of transferring EUAs to the compliant companies, although some member states chose to auction up to 10 percent of their allowances. In these countries the compliance companies thus had to pay for their needed allowances. It also meant revenues for these member states’ treasuries. In phase 2, the detailed distribution to each separate compliant entity was decided in so-called National Allocation Plans (NAPs), set up by each member state and approved (often with adjustments) by the European Commission. Unused phase 2 allowances can be carried over (‘banked’) into 2013 (phase 3). In phase 2 approximately 2 billion allowances have been issued every year. This was believed to be just a little less than the compliant companies needed to cover their emissions, but following the economic crisis both industry and power companies have reduced their production, thereby lowering their emissions down toward a level closer to 1.9 billion. Towards the end of phase 2 it became clear that the market had an accumulated oversupply of roughly one full year of issuance (close to 2 billion).

Phase 3 In the EU ETS this refers to the third trading period, i.e. the years 2013-2020. Phase 3 will see some major changes in the EU ETS, most importantly the increase use of auctions that will be held regularly on new platforms that are currently being set up. Going forward, the compliant power companies will have to buy all their needed allowances at these auctions. As an exception to this rule, some Central and Eastern European member states are allowed to continue to give free allocations to their power companies (up to a certain share of their needs). Compliant industry companies will continue to benefit from free allocations, as these are considered more vulnerable to competition from peer companies in other countries that are not subject to pay for their carbon emissions. The exact distribution of allowances will be decided down to installation level by the European Commission, based on the plans received from the different member states. From 2013 onwards the cap will be reduced annually by a factor of 1.74 percent. This will reduce the yearly issuance but will not in itself bring the market in balance by 2020.

Programme of Activities (PoA)
A voluntary action, implementing a policy, measure or stated goal, managed by a public or private entity, and which results in emission reductions or removals that are additional. A PoA can last for 28 years. Subactivities – or CDM programme activities (CPAs) – can be added at any time during this period. Often referred to as programmatic CDM.
Link: CDM-PoA-DD: http://cdm.unfccc.int/EB/033/eb33_repan41.pdf

Project Design Document (PDD)
Document describing the characteristics of a CDM or JI project, completed by project developers in order to register their project. (Link: CDM Project Design Document (PDD) and JI Project Design Document (PDD)). The draft JI PDD form shall be applied provisionally until the COP/MOP has adopted it in accordance with the JI guidelines.

Project Idea Note (PIN)
This is a short form of project description (about 6 pages) that provides such basic information about the project as type, size and location of the project; estimation of the anticipated total amount of Greenhouse Gas (GHG), reduction compared to the "business-as-usual" scenario, etc.

Perfluorocarbons or PFCs
One of the six GHG controlled by the Kyoto Protocol. PFCs are a by-product of aluminium smelting and are replacement for CFCs in manufacturing semiconductors.

Primary transaction
A transaction where the seller is the original owner (or issuer) of the carbon asset. A commonly used acronym for primary CER is “pCER.”

Pre-Certified Emission Reductions (pre-CERs)
A unit of GHG emission reductions that has been verified by an independent auditor but has not yet undergone the procedures and may not yet have met the requirements for registration, verification, certification and issuance of CERs or ERUs.

Prompt-start CDM
The agreement that CDM projects starting 1 Jan 2000 or later can obtain CERs (as opposed to JI projects, whose crediting period could not start until the Kyoto period started 1 Jan 2008).

Public Comment Period, see Validation.

Publicly owned Utility (POU)
A public utility (usually just a utility) is a company that maintains the infrastructure for a public service, usually referring to power, natural gas and water delivery. Publicly owned utilities include municipal utilities that are locally owned and operated

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Reduced emissions from deforestation and degradation (REDD)
Reducing emissions from deforestation and [land] degradation. Mitigation action that seeks to preserve existing carbon stocks in forests (typically tropical rainforests), peat lands etc. The approach would be additional to project-based efforts such as the CDM. Issues to be solved are permanence, leakage, monitoring and baselines.

Regional Greenhouse Gas Initiative (RGGI)
A regional cap and trade system that currently includes Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont. In addition, the District of Columbia, Pennsylvania, the Eastern Canadian Provinces, and New Brunswick are observers in the process. The scheme covers CO2 emissions from power plants in the region, and requires a 10 percent reduction in these emissions by 2018. The first three-year compliance period started on 1 January 2009. In 2011, the states commenced a review process in order to determine whether to tighten the emissions cap so that emitters would be incentivized to reduce internal emissions further. The review process should be completed in 2013.

Registration is the formal acceptance by the Executive Board of a validated project activity as a project activity. Registration is the prerequisite for the verification, certification and issuance of credits related to that project activity.

Regional Greenhouse Allowance (RGA)
Tradable unit under the Regional Greenhouse Gas Initiative, corresponds to 1 short ton (0.907 metric tonne).

see Regional Greenhouse Gas Initiative.

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Secondary Transaction
A transaction where the seller is not the original owner (or issuer) of the carbon asset. A commonly used acronym for secondary CERs is “sCER.”

Secondary Market
The secondary market signifies the second transaction or trading of Certified Emissions Reductions (CERs) related to CDM projects or Emission Reduction Units (ERUs) from JI projects.

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 was coined the autumn 2011, as a way to address the huge over-supply of EUAs in the European Carbon Market. A possible ‘set-aside intervention’ was much discussed over the winter and spring 2012. Before a substantial discussion could be started on the precise nature of a set-aside, the European Commission instead presented proposals for the ‘back-loading’ of allowances.

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.

Small scale CDM projects
There is a simplified process for small scale CDM projects that will generate less emissions reductions. They are defined as: renewable energy projects under 15 MW, energy efficiency projects that reduce energy consumption by up to 60 GWh per year; or project activities which emit less than 60 kilotonnes CO2 equivalent per year.

Subsidiary Body for Implementation (SBI)
Body advising and assisting the COP in matters relating to 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 needs of the COP. The SBSTA works closely with the Intergovernmental Panel on Climate Change (IPCC).

Sulfur Hexafloride or SF6
One of six GHGs curbed under the Kyoto Protocol. It is mostly used in the heavy industry to insulate high-voltage equipment and assist in the manufacturing of cable-cooling systems.

Supplementarity is a provision in the Kyoto Protocol stating that emissions trading should be a supplement to domestic action. This provision is the basis for the European Union’s limitation on the imports of CERs and ERUs.

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Temporary Certified Emission Reductions (tCERs), see also Long-term Certified Emission Reductions (lCERs).
Credits issued for an afforestation or reforestation project activity under the CDM that expires at the end of the commitment period following the one during which it was issued. tCERs are issued for the net anthropogenic greenhouse gas removals by sinks achieved by the project activity since the project start date.

Tokyo Emissions Trading System
Initiated by the Tokyo Metropolitan Government and started in 2010, covers about 1400 buildings and industrial facilities in the Tokyo Metropolitan area; aims to eventually cover about 40% of region’s emissions.

Track 1 and Track 2 JI Projects
To host Track 1 (fast-track) JI projects, a country has to meet the following criteria: a) be a Party to the Kyoto Protocol; b) calculated assigned amount; c) establish national registry; d) submit the annually required inventory; e) establish system for the estimation of emissions and sinks; and f) submit additional information on the assigned amount.
If host country meets all criteria, it is free to implement JI projects under Track 1: apply its own criteria and approve the project and emission reductions according to its own rules. In case a host country meets only a)-c) criteria mentioned above, it is eligible for Track 2 JI projects. Second track JI more closely resembles the CDM. Projects must be examined and the emissions reduced or sequestered verified by an independent entity before any transfer of ERUs can occur.

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Umbrella group
An informal group of industrialised countries that do not belong to the EU but occasionally acts as an negotiating bloc on specific issues. The group was formed after the adoption of the Kyoto Protocol, and consists of Japan, USA, Canada, Australia, Norway, New Zealand, Iceland, the Russian Federation and Ukraine. It has evolved from the JUSSCANNZ (see above).

Unilateral CDM project
CDM project that does not include an Annex 1 project participant.

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 Lichtenstein) were transferred to a new common system under the auspices of the European Commission. The centralisation of the accounts was motivated by the need to put an end to thefts and frauds that had been a recurrent problem in some of the national registries. The new system operates with stricter security rules, such as double authentication of trades and a 26-hour transaction delay.

United Nations Framework Convention on Climate Change (UNFCCC)
The UNFCCC was established 1992 at the Rio Earth Summit. It is the overall framework guiding the international climate negotiations. Its main objective is "stabilisation of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic (man-made) interference with the climate system".

Upstream Cap
An "upstream" cap and trade system is one in which the entities supplying or importing carbon-rich fuels into the market would be required to surrender allowances (see also: downstream Cap). The proposed Australian Carbon Pollution Reduction Scheme uses an upstream approach for transportation and some other emission categories.

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Validation, see also Determination and Public Comment Period.
The process of independent evaluation of a CDM project by an designated operational entity according to requirements to CDM projects.

Validation and Verification Manual
Mandatory guidance for the DOEs in undertaking their validation and verification work. Agreed by the CDM Executive Board at its 44th meeting in November 2008.

Verification, see also Determination.
The process of formal confirmation by a recognized independent third party that inventories and carbon reduction claimed by participants in carbon trading schemes are in conformity with reality and established rules. Under the CDM, verification is performed by designated operational entities (DOEs).

Verified Carbon Standards (VCS)
VCS is a certification standard for offset credits in the voluntary market. The standard provides for for project-level quantification, monitoring, and reporting, validation, and verification of greenhouse gas emission reductions or removals. 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 carbon reduction projects that are assessed and verified by third party organisations, noth through the UNFCCC.

Voluntary carbon market
The sum of all transaction of carbon credits in non-compliance markets. The generation of non-compliance credits — or voluntary offset credit supply — comprises the reduction of GHG emissions for the purpose of selling them to voluntary end users and not to compliance buyers. Voluntary markets for emissions reductions include generation and transaction of carbon credits in non-compliance markets. The voluntary market permits the use of credits such as verified emission reductions (VERs), non-verified emission reductions (ERs) and prospective emission reductions (PERs), as well as the non-compliance use of CERs, ERUs, EUAs and other credits and allowances generated for the compliance market.

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. It sets various requirements for project developers, such as third-party verification and measures to avoid double counting of carbon offsets, e.g. the use of registries.

see Validation and Verification Manual.

Voluntary Gold Standard
A voluntary standard, launched in May 2006 by WWF-UK and endorsed by 45 environmental NGOs. It is a simplified version of the CDM Gold Standard and is only available for projects in developing countries.

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Western Climate Initiative (WCI)
Regional initiative launched in February 2007 by states and provinces along the western rim of the United States, Canada, and Mexico. WCI is a collaboration of independent 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. Only California and Quebec have passed regulations which aim to reduce greenhouse gas emissions.