| Additionality |
A reduction in GHG Emissions is deemed “additional” only if the reduction would not have taken place in the absence of the incentive created by the voluntary carbon offset market. Achieving “additionality” increases the value of the carbon offset. |
| Avoidance Projects |
One of the two main types of projects that produce carbon credits or offsets. Avoidance projects avoid the release of GHG Emissions into the atmosphere by reducing activities that tend to emit large numbers of GHG Emissions or by protecting natural resources. |
| Carbon Credits |
Tradeable permits that each represent the right to emit one metric ton of carbon dioxide or other greenhouse gases. |
| Carbon Offsets |
Measures of the amount of carbon avoided or permanently removed from the atmosphere. A carbon offset represents one metric ton of carbon dioxide or equivalent greenhouse gases avoided or removed. |
| Certified Emissions Reduction (CER) Credit |
Relating to the Kyoto Protocol, a marketable carbon credit generated by the Clean Development Mechanism (CDM) that represents the equivalent of offsetting one metric ton of carbon dioxide. A CER can be traded or sold to count towards meeting an industrialized country’s GHG Emissions–reduction targets under the Kyoto Protocol. |
| The Clean Development Mechanism (CDM) |
One of three market-based mechanisms introduced by the Kyoto Protocol to assist countries in finding ways to meet their GHG Emissions reductions targets. The CDM allowed industrialized countries to implement an emissions reduction project in a developing country and, in doing so, generate a marketable Certified Emissions Reduction (CER) credit. |
| Climate Reserve Tons (CRTs) |
Tradeable carbon offsets issued by the Climate Action Reserve in the voluntary carbon market. |
| Compliance Carbon Markets |
One of two categories of carbon markets that allows participants to buy and sell carbon credits or carbon offsets to comply with rules or regulations imposed by regulatory or governance organizations. |
| Core Carbon Principles |
A framework and assessment procedure for identifying and issuing carbon offsets released by the Integrity Council for the Voluntary Market in 2022. |
| Corresponding Adjustments |
An accounting mechanism that requires a host country to deduct (or “un-count”) a sold carbon offset from its own NDCs so that the buyer country can count the offset against its NDCs. This mechanism was established at Glasgow with the ratification of Article 6 of the Paris Agreement and seeks to address double-counting. |
| Double Counting |
The idea that multiple entities are claiming benefits from the same carbon offset. |
| Emissions Reduction Purchase Agreement (ERPA) |
A legally binding contract between buyers and sellers of carbon offsets. |
| Environmental, Social and Governance (ESG) Objectives |
Objectives set within a company in order to manage the organization's impact on social and environmental sustainability directly. The trading of carbon offsets in the voluntary market can help companies meet their ESG objectives. |
| Glasgow Climate Change Conference |
A 2021 climate conference that ratified Article 6 of the Paris Agreement. |
| Greenhouse Gas (GHG) Emissions |
The release of gases that contribute to the greenhouse effect via human activity. Both carbon credits and carbon offsets aim to reduce GHG Emissions. |
| The International Emissions Trading (IET) Mechanism |
One of three market-based mechanisms introduced by the Kyoto Protocol to assist countries in finding ways to meet their targets. The IET mechanism allowed industrialized countries with unused, excess carbon allowances to sell these excess allowances to other industrialized countries that exceeded their targets. |
| Internationally Transferred Mitigation Outcomes (ITMOs) |
One of two market-based approaches provided under Article 6 of the Paris Agreement that allows countries to meet their NDC obligations by trading for and acquiring carbon offsets earned from the reduction of GHG Emissions. ITMOs are the new unit of carbon reduction established by the Paris Agreement for international carbon markets that will replace CERs established under the Kyoto Protocol. |
| Joint Implementation (JI) |
One of three market-based mechanisms introduced by the Kyoto Protocol to assist countries in finding ways to meet their targets. The JI allows industrialized countries to collaborate jointly with each other in pursuing and implementing emissions reduction projects in order to meet their Kyoto targets. |
| Kyoto Protocol |
An international treaty that came into effect in 2005, setting legally binding targets for 37 industrialized countries to limit or reduce their overall greenhouse gas emissions. |
| Nationally Determined Contributions (NDCs) |
National plans highlighting climate change mitigation, including climate-related targets for greenhouse gas emission reductions. The Paris Agreement requires each country to create and submit NDCs on a five-year cycle. |
| Removal Projects |
One of two main types of projects that produce carbon credits or offsets. Removal projects are aimed at removing GHG Emissions already released into the atmosphere by using nature-based and or technology-based methods. |
| Retirement |
The process whereby a carbon offset is used and removed, meaning that the carbon offset can no longer be sold or traded on any exchange. Retirement occurs after the reduction in GHG Emissions has been deducted from the final owner’s carbon footprint. |
| Paris Agreement |
A legally binding, international treaty on climate change adopted in 2015 that effectively replaced the Kyoto Protocol. The Paris Agreement called on both industrialized and developing countries to set and meet emissions goals. |
| Sustainable Development Mechanism (the SDM) |
One of two market-based approaches provided under Article 6 of the Paris Agreement that allows countries to meet their NDC obligations by trading for and acquiring carbon offsets earned from the reduction of GHG Emissions. The SDM aims to reduce overall global GHG Emissions. |
| Validation and Verification Body (VVB) |
An independent third party pre-approved by the carbon offset registry that conducts an audit of the project design during the auditing stage of the carbon offset certification process. |
| Verified Carbon Units (VCUs) |
Tradeable carbon offsets issued by Verra in the voluntary market. |
| Verified Emission Reductions (VERs) |
Tradeable carbon offsets issued by the American Carbon Registry in the voluntary market. |
| Vintage of a Carbon Offset |
The year GHG Emissions reductions for an issued offset were deemed to have occurred. The vintage of a carbon offset can be indicative of the quality of the carbon offset and its underlying project, and thus is a principal factor in determining the carbon offset’s value. |
| Voluntary Carbon Markets |
One of two categories of carbon markets. Voluntary carbon markets allow for the trading of carbon offsets that are not bought or sold on the compulsory carbon markets to meet GHG Emissions requirements imposed by regulatory bodies. Most carbon offsets are traded in voluntary markets and cannot be used to achieve GHG Emissions reduction targets under an applicable compliance regime. Certain carbon offsets, however, are permitted to be used to achieve compliance with a compulsory regime. |
