Carbon offset Glossary

A
A/R Projects
Afforestation and Reforestation Projects
AAUs
Assigned Amount Units. The emissions units are allocated to developed countries based on their Kyoto Protocol target and can be traded. One AAU equals one tonne of CO2e.
ABARE
The Australian Bureau of Agricultural and Resource Economics, is a government economic research agency which provides independent research and forecasting on numerous specialised areas, including the quality of the Australian environment. For more information, see here.
Abatement
Adjustments within communities and ecosystems to cope with changing climate conditions. Examples include; the construction of flood walls to protect property from stronger storms and heavier precipitation, or the planting of agricultural crops and trees more suited to warmer temperatures and drier soil conditions.
ACCC
Australian Competition and Consumer Commission. An independent Commonwealth statutory authority formed in 1995 to administer the Trade Practices Act 1974 and other acts. The ACCC promotes competition and fair trade in the market place to benefit consumers, business and the community. Its primary responsibility is to ensure that individuals and businesses comply with the Commonwealth competition, fair trading and consumer protection laws.
Adaptation
Actions taken to help communities and ecosystems cope with changing climate conditions, such as the construction of flood walls to protect property from stronger storms and heavier precipitation, or the planting of agricultural crops and trees more suited to warmer temperatures and drier soil conditions.
Additionality
To be a robust offset, a project must be proven to be 'additional' to what would have occurred anyway. Additionality has 3 main components:
- financial additionality where the project needs to go beyond business as usual practice,
- regulatory additionality where the project needs to go beyond existing legal requirements, and
- environmental additionality where the emission reductions cannot be counted toward another emission reduction scheme or commitment.
Afforestation
The direct human-induced conversion of land that has not been forested for a period of at least 50 years to forested land through planting, seeding and/or the human-induced promotion of natural seed.
AGO
The Australian Greenhouse Office has now been incorporated into the Department of Climate Change.
AGO Factors and Methods Workbook
The workbook has now been updated and replaced by the National Greenhouse Accounts Factors. For more information, see here.
AGO GF
'Australian Greenhouse Office Greenhouse Friendly' Abatement Program was launched in 2001 and now forms part of the Australian Government's Greenhouse Challenge Plus programme. It provides businesses and consumers with the opportunity to sell and purchase greenhouse neutral products and services and broaden the basis for investment in additional greenhouse gas abatement. For more information, see here.
Anthropogenic emissions
Greenhouse-gas emissions resulting from human activities. Anthropogenic sources of greenhouse gases include industry, agriculture, mining, transportation, construction, and deforestation.
AP7 (formerly AP6)
Asia-Pacific Partnership on Clean Development and Climate sets up a non-binding partnership between the governments of Australia, People's Republic of China, India, Japan, South Korea, Canada and the United States. The partnership sets out a voluntary framework for action, which encourages cooperation between member parties and the private sector to develop and implement clean energy technologies.
Australia's National Greenhouse Accounts
A comprehensive set of reports outlining Australia’s greenhouse gas emissions. Further information is available at: http://www.greenhouse.gov.au/inventory/
Australian Standard 4978
This standard provides a common approach to determining how much carbon a given area of forest can be expected to remove from the atmosphere, taking account of the species of tree, how densely the trees are planted and a number of other factors. top
B
Biodegradable materials
Materials capable of being broken down rapidly by living organisms such as bacteria and fungi. This natural process of decay usually makes the materials harmless in a relatively short period of time. Food, sewage and most natural organic substances are biodegradable but manufactured materials such as glass, heavy metals and most types of plastic are not biodegradable.
Biofuels
Biofuels are renewable fuels made from biomass that can be used to supplement or replace the fossil fuels (such as petroleum and diesel) used in transport. The two main biofuels are ethanol and biodiesel. Ethanol is produced from the fermentation of sugar or starch in crops such as corn and sugar cane. Biodiesel is made from vegetable oils in crops such as soybean, or from animal fats.
Biomass
Biomass is non-fossilized and organic biodegradable material that can be used as fuel or for industrial production. Most commonly, biomass refers to plant matter grown for use as Biofuels, but it also includes plant or animal matter used for production of fibres, chemicals or heat. Biomass may also include biodegradable wastes that can be burnt as fuel.
Broker
A broker is an intermediary, who buys and sells carbon offsets on behalf of clients.
Bundled offsets
Bundled offsets are emissions that do not come from one single project but are a collection of offsets from various projects. The bundles are sometimes from a mixture of accreditation schemes and types. top
C
Call option
A call option is a financial contract between two parties, the buyer and the seller of an abatement option. It is the option to buy abatement at a specified time in the future. The buyer of the option has the right, but not the obligation to buy an agreed quantity of abatement from the seller of the option at a certain time for a certain price (the strike price). The seller (or "writer") is obligated to sell the commodity (e.g. carbon offsets). The buyer pays a fee (called a premium) for this right.
Cap and Trade
A term used to describe an emissions trading system, where total emissions are limited or 'capped'. Permits are issued up to that cap, and a market allows those participants emitting less than the quota to sell their excess permits to emitters needing to buy extra permits to meet their quota.
Carbon (natural) Sequestration
Carbon (natural) sequestration refers to the long-term storage of carbon in forests and vegetation, soils or in the oceans.
Carbon Calculation
A method of calculating the amount of greenhouse gas emissions produced in a certain time frame from an activity. Carbon calculation can be done for anything from one car journey to a whole business or industry. There are a number of different calculation methods used in the carbon offset market.
Carbon credit
A generic term to assign a value to an emission, reduction or offset of greenhouse gas emissions. A carbon credit usually is equivalent to one tonne of CO2e.
Carbon cycle
Carbon, in various forms, continuously circulates between the living world, the atmosphere, oceans and the Earth's crust. There are many different processes by which carbon is exchanged between these locations, which are collectively referred to as the carbon cycle.
Carbon dioxide (CO2)
A greenhouse gas that is produced as a by-product of oil and gas production, burning fossil fuels and biomass, as well as from all animals, plants, and a number of other natural sources. Carbon dioxide is the principal anthropogenic greenhouse gas that affects the earth’s temperature.
Carbon footprint
A measure of the greenhouse gas emissions attributable to an activity; it is commonly used at an individual, household or business level. It calculates the direct and indirect amount of CO2-e emissions produced.
Carbon Innovators Network
EPA Victoria set up this forum for organisations that want to address the strategic and practical issues of greenhouse gas emissions. The network aims to stimulate debate and innovation in carbon management, provide the support and tools organisations need to develop sound carbon management strategies, and transform climate change from a business cost to a business opportunity. Find out more about the Carbon Innovators Network here.
Carbon Management Principles
A set of Principles developed by EPA Victoria to guide carbon management strategies. They are, in order: Measure, Set objectives, Avoid, Reduce, Switch, Sequester, Assess and Offset. Find out more about the carbon management principles here.
Carbon neutral
A voluntary mechanism where an activity, event, household, business or organisation is responsible for no net emissions of greenhouse gases and can therefore be declared carbon neutral in that specific area. Carbon neutrality can be achieved by reducing emissions as far as possible (e.g. energy efficiency, purchasing renewable energy) and then purchasing offsets for any residual emissions in order to achieve zero net emissions.
Carbon offset
A carbon offset is an investment in a project or activity that reduces greenhouse gas (GHG) emissions or sequesters carbon from the atmosphere that is used to compensate for GHG emissions from your own activities. For more information see here.
Carbon Pollution Reduction Scheme (CPRS)
Australia's cap and trade scheme which will come in to effect in 2010. The CPRS will place a limit, or cap, on the amount of carbon pollution industry can emit and allow trading of carbon credits. It will concentrate on the biggest polluters, by placing obligations on around 1000 Australian companies in total. However it will effect all Australians through indirect price increases.
Carbon price
An economic value placed on the emission of greenhouse gases into the atmosphere from human activity. This price is designed to create an incentive to avoid emitting. A carbon price is usually derived from either a carbon tax or a price under an ETS.
Carbon tax
A tax on greenhouse gas emissions that leads to a carbon price.
Carbon Trading
A term used to describe an ETS involving greenhouse gas emissions.
CCB Standards
The standard focuses exclusively on bio-sequestration (forestry) projects and emphasizes the social and environmental benefits of such projects. CCBS is a project design standard and offers rules and guidance for project design and development. For more information, see here.
CCS
Carbon capture and storage (CCS) or geosequestration involves capture, transport, injection and long-term storage of GHGs in underground geological formations for the primary purpose of mitigating greenhouse gas emissions.
CCX
Chicago Climate Exchange is a US-based financial institution that operates a voluntary carbon trading programme. Find out more here.
CDM
Clean Development Mechanism is a Kyoto Protocol mechanism under which projects set up in developing countries to reduce GHGs generate tradeable credits called CERs. The credits can be used by industrialised nations to help meet their Kyoto reduction targets. Find out more here.
CERs
Certified Emission Reductions are credits generated under Kyoto's CDM. One CER unit is equivalent to the reduction of one metric tonne of CO2e. They are designed to be used by industrialised countries to count towards meeting their Kyoto targets. They can also be used as part of domestic targets, for example EU companies and governments use them as offsets against their emissions under the EU Emissions Trading Scheme.
CFL
Compact fluorescent lamps use less power and have a longer rated life than incandescent light bulbs and therefore use less energy across their lifecycle.
Chlorofluorocarbons (CFC's)
Chemical substances containing carbon and fluorine. Prior to 1990 these were used widely in a range of technologies, such as a propellant gas for sprays and refrigeration. They can deplete the ozone layer and also contribute to global warming.
Clean coal
Refers to types or aspects of coal-fired electricity production, which is purported to have a reduced impact on the environment. For example flue gases can be treated with steam with the purpose of removing sulfur dioxide, and reburned so as to make the carbon dioxide in the flue gas economically recoverable.
CO2e
Carbon dioxide equivalent. In order to compare emissions between the six Kyoto Protocol greenhouse gases they have been assigned a global warming potential (GWP) measured in carbon dioxide equivalents to reflect their influence on warming the atmosphere. GWP is a relative scale, where CO2 = 1. The other gases are given a number based on their effect on the atmosphere relative to CO2. For example, methane has a GWP of 21, meaning it has 21 times the amount of heating capacity of CO2.
Coal seam gas (CSG)
Occurring naturally within coal deposits, this gas is largely composed of methane, which is also the principal component of natural gas.
Composting
The natural biological decomposition of solid organic wastes such as food scraps, paper and lawn clippings, creating a soil-like substance called humus, which can be used instead of artificial fertilisers. The decomposition process produces methane and carbon dioxide, therefore when composting occurs in controlled areas these greenhouse gases can be prevented from entering the atmosphere. Composting also reduces the amount of waste going to landfill.
CRS
Origin Energy's Carbon Reduction Scheme is an offsetting scheme that draws upon existing mandatory and voluntary frameworks. For more information see here. top
D
DEFRA
UK Government Department for Environment, Food and Rural Affairs. For more information see here.
Double counting
Double counting can happen when two or more businesses claim the same emissions reduction. This can happen if an offset is sold to two or more entities, or when an entity upstream of the project unknowingly claims the reduction as its own. The establishment of protocols, and the use of an offsets registry can ensure offsets are adequately accounted for.
Double selling
Double selling occurs when a carbon offset is either sold by the producer and or retailer to more than one buyer. Therefore the emission reductions do not account for the total amount of emissions reductions the buyers have paid for. top
E
Emissions Reductions
A measurable reduction in the level of greenhouse gases being emitted by a country, state, organisation or individual.
Emissions Trading
Usually means an ETS. In relation to the Kyoto Protocol, Annex I countries can trade emissions reduction credits in order to comply with their Kyoto-assigned targets. (See also ETS.)
Energy efficiency (EE)
Energy efficiency improvements refer to a reduction in the energy used for a given service (heating, lighting, etc.) or level of activity. Such savings are generally achieved by substituting technologically more advanced equipment to produce the same level of end-use services (e.g. lighting, heating, motor drive) with less electricity.
Energy Saver Incentive Scheme
Energy Saver Incentive is the public name for the Victorian Energy Efficiency Target (VEET)
EPA Victoria
Environment Protection Authority Victoria. For more information see here.
ERU
An Emission Reduction Unit is a Kyoto Protocol unit equal to 1 metric tonne of CO2e. ERUs are generated from activities to reduce greenhouse emissions from the joint implementation mechanism under the Kyoto Protocol.
ETS
An ETS is an organised system of emissions trading that can be applied within businesses, states, countries and also internationally. Through an ETS an organisation is allocated an allowance for the amount of greenhouse gases it is permitted to produce. These systems allow those who reduce emissions beyond their obligations to sell their excess emission capacity to others within the ETS who are unable to meet their own emission reduction targets. There are two broad types of emissions trading schemes, cap and trade and baseline and credit.
Exercise price
Generally refers to a fixed price in a contract between two parties. Where the contract requires delivery of the abatement, the trade will be at the exercise price, regardless of the spot price (market price) at that time. See also strike price. top
F
Forward contract
A forward contract is an agreement between two parties to buy or sell an asset (e.g. carbon offsets) at a specified point of time in the future. The price of the abatement is paid before the asset changes hands.
Forward crediting
The buyer pays for and receives a certain number of offsets for emissions reductions or sequestration that will occur in the future. See also Forward sell.
Forward delivery
The buyer pays the purchase price for a certain number of offsets that have yet to be produced. The offsets will be delivered to the buyer once they have been realised and verified.
Forward price
The forward price (or sometimes forward rate) is the agreed upon price of an asset (e.g. carbon offsets) in a forward contract.
Forward purchases
The buyer invests the money upfront but does not get the credits until they are actually produced. These are long-term commitments that are predominantly done on a large scale.
Forward rate
The forward rate (or forward price) is the agreed upon price of an asset (e.g. carbon offsets) in a forward contract.
Forward sell
The sale of carbon offsets for emissions reductions or sequestration that have not yet occurred and therefore can not be precisely measured.
Fossil fuels
Fossil fuels are non-renewable sources of energy formed from fossilised organic matter. Coal, oil and natural gas are the most widely used fossil fuels in energy production. Most of Australia's primary energy is derived from fossil fuels.
Fugitive emissions
Fugitive greenhouse gas emissions are waste or loss in the process of fuel production, storage, or transport, such as methane given off during oil and gas drilling and refining, or leakage of natural gas from pipelines.
Full fuel cycle emissions factors
Gives the quantity of emissions released per unit of energy for the entire fuel production and consumption chain. This term is used in the National Greenhouse Accounts Factors but is not used in the GHG Protocol.
Fungibility
In relation to carbon offsets, fungibility is the interchangeability of a carbon credit or permit between certification schemes or programs.
Futures contract
A futures contract is a standardized contract, to buy or sell a specified commodity (e.g. carbon offsets) at a certain date in the future, at a market determined price (the futures price). A futures contract gives the holder the obligation to make or take delivery under the terms of the contract, whereas an option grants the buyer the right, but not the obligation.
Futures exchange
A central financial exchange where people can trade standardized futures contracts; that is, a contract to buy specific quantities of a commodity (e.g. carbon offsets) at a specified price with delivery set at a specified time in the future. top
G
Geosequestration
Also known as carbon capture and storage (CCS), geosequestration is the process of capture, transport, injection and long-term storage of CO2 in underground geological formations for the primary purpose of mitigating greenhouse gas emissions.
GF
See AGO GF
GGAS
See The NSW Greenhouse Gas Abatement Scheme
GHG (Greenhouse Gases)
Greenhouse Gases in the earth's atmosphere absorb and re-emit infrared radiation. The Kyoto Protocol lists six major greenhouse gases, which vary in their relative warming effect. The six gases are: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), HFCs (hydrofluorocarbons), PFCs (perfluorocarbons) and sulphur hexafluoride (SF6).
GHG Protocol
See WRI / WBCSD GHG Protocol
Gold Standard
A certification standard for carbon offset projects. Initiated by WWF, SSN and Helio International, the Gold Standard for CDM projects was launched in 2003 after wide-ranging stakeholder consultation among key actors of the carbon market as well as governments. For more information see here.
Gold Standard VER
Is a certification standard for carbon offset projects, specifically aimed at small scale projects. (See Gold Standard above). For more information see here.
Greenhouse effect
The greenhouse effect is a term that describes how natural gases in the earth's atmosphere allow the infrared radiation in to warm the earth's surface, but also prevent much of the heat escaping from the earth into the atmosphere. The problem we now face is that human actions are increasing the concentrations of these gases, creating the prospect of global climate change.
GreenPower standard
An accreditation standard for Australian renewable energy operated collaboratively by Australian governments. To be eligible for the GreenPower Standard a company must demonstrate that the renewable energy sources meet strict environmental standards and comes from a new renewable energy facility that was built since January 1997. Renewable resources eligible for the GreenPower Standard include solar power, wind, biomass, hydro-electric power, geothermal energy and wave and tidal power. For more information, see here.
GS
Global Sustainability @ RMIT University. For more information see here.
GWP
Global warming potential (GWP) measured in CO2e, is the potency of greenhouse gases, meaning their ability to trap heat in the atmosphere, through the difference in time greenhouse gases remain in the atmosphere, and their effectiveness in absorbing outgoing infrared radiation. The GWP is a numerical measure relative to carbon dioxide, the most abundant greenhouse gas. So carbon dioxide itself has a GWP of 1 and, for example, methane has a GWP of 21. top
H
Hedge
In finance, a hedge is a position established in one market in an attempt to balance exposure to the price risk another obligation.
Hedging
Hedging is a strategy designed to minimize exposure to such business risks as changing prices for commodities (e.g. carbon offsets).
Hydrofluorocarbons (HFCs)
Major releases of HFCs are from leakage from refrigeration equipment during operation and its end-of-life destruction. Minor releases arise from the use of HFC-containing aerosols, air conditioners and metered dose inhalers.HFCs have very high global warming potentials (140 to 11,700 times that of carbon dioxide). top
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IPART
Independent Pricing and Regulatory Tribunal of New South Wales is an independent body that oversees regulation in the water, gas, electricity and public transport industries in NSW.
IPCC
Intergovernmental Panel on Climate Change is an international scientific panel which informs the UNFCCC approximately every 5 years with the latest scientific, technical and socio-economic evidence on climate change. With representatives from 130 nations it is the world's pre-eminent scientific advisory body on climate change.
ISO 14000
ISO 14000 is a set of international standards, which provide a framework for the development of an environmental management system (EMS) and supporting audit programs. The ISO 14000 series are intended to help organisations comply with applicable laws, regulations and requirements and to continually improve on their environmental performance.
ISO 14064
A global GHG accounting, reporting and verification standard. The goal of the standard is to 'provide a set of unambiguous and verifiable requirements or specifications to support organisations and proponents of GHG emissions reductions projects.'
ISO 9001 and 14001
ISO 9001 (quality) and ISO 14001 (environment) are "generic management system standards". ISO 9001 contains a generic set of requirements for implementing a quality management system and ISO 14001 for an EMS. These two standards can be applied to any organisation.
ISO14065
ISO 14065 defines requirements for companies performing greenhouse gas validation and verification. The standard provides assessing organisations with a basis for assessing the competence of validation and verification companies.
ITL
International Transaction Log is a centralized database of all tradable credits under the Kyoto Protocol, and is the application that verifies all international transactions and their compliance with Kyoto rules and policies. top
J
JI
The Kyoto Protocol Joint Implementation mechanism allows developed countries to earn credits in the form of Emission Reduction Units (ERUs) when they finance projects that reduce net greenhouse gas emissions in another developed country. For more information see here. top
K
Kt
Kilotonnes = 1,000 tonnes.
Kyoto Protocol
An international agreement linked to the UNFCCC and sharing its aim of stabilising atmospheric concentrations of greenhouse gases, but requiring separate ratification by governments. The Kyoto Protocol, among other things, sets binding targets for the reduction of greenhouse-gas emissions by industrialized countries. It entered into force for ratifying countries in February 2006 and commits developed nations to collectively cut their greenhouse gas emissions by 5.2 per cent of 1990 levels by 2012. Came into force in Australia on 11 March 2008.
Kyoto Protocol Mechanisms
Three procedures established under the Kyoto Protocol to increase the flexibility and reduce the costs of making greenhouse-gas emissions cuts; they are the Clean Development Mechanism (CDM), Joint Implementation (JI) and Emissions Trading. For more information, see here. top
L
Landfill
A hole in the ground where domestic waste and waste products from industry are put and covered with soil.
Landfill Gas
The gas that is generated by the decomposition of waste in landfills.
Leakage
In relation to carbon offsets, leakage is the direct or indirect increase in GHG emissions from a greenhouse gas reduction project, which is also measurable and attributable to the project.
Life Cycle Assessment (LCA)
LCA is the investigation and valuation of the environmental, economic and social impacts of a product or service. A product’s life cycle starts when the raw materials are extracted from the earth through to processing, transport, use, reuse, recycling or disposal. For each of these stages, the impact is measured in terms of the resources used and environmental impacts caused.
LPG
Liquefied Petroleum Gas is a mixture of hydrocarbon gases, used mostly in transport
LULUCF
A Kyoto Protocol acronym that stands for human-induced 'Land Use, Land-Use Change and Forestry'. Some of these activities result in greenhouse emissions and some lead to greenhouse gases being removed from the atmosphere. For example, land clearing generates greenhouse gas emissions. Planting trees can lead to greenhouse gases being absorbed from the atmosphere. top
M
Methane
Methane (CH4) is a greenhouse gas with a GWP of 21.
Methane (from) coal
A by-product of the coal formation process. Coalmines are generally vented to ensure the safety of employees. Methane can also be captured and then flared into the atmosphere, or burnt to generate energy.
Methane (from) landfill
Decomposting matter emits a range of gases including methane. Methane emitted from landfills can be captured and then flared into the atmosphere, or burnt to generate energy
Methane (from) livestock
Certain types of animals release methane, either directly or from manure. This can be captured and then flared into the atmosphere, or burnt to generate energy.
Micro-hydro
Hydroelectric power installations that typically produce up to 100 kW of power and are often installed in small dammed pools, at the top of a waterfall or on a river.
Monoculture
The practice of producing or growing one single crop over a wide area.
MRET
Mandatory Renewable Energy Target. The Australian Government has a policy commitment of a 20 percent share for renewable energy in Australia's electricity supply by 2020. top
N
National Greenhouse Accounts Factors
The National Greenhouse Accounts (NGA) Factors is an Australian guide to emission factors from a range of sectors that is used by companies to calculate greenhouse gases. It is prepared by the Department of Climate Change and replaces the AGO Factors & Methods Workbook. For more information, see here.
NCAS
The National Carbon Accounting System tracks emissions (sources) and removals (sinks) of greenhouse gases from Australian land based systems. It underpins National Greenhouse Gas Inventory reporting, and provides a basis for emissions projections to assess progress towards meeting Australia's emissions target.
NCAT
The National Carbon Accounting Toolbox provides the tools for tracking greenhouse gas emissions and carbon stock changes from land use and management.
NEM
National Electricity Market. A wholesale market for the supply of electricity for most of Australia, Queensland, NSW, ACT, Victoria and South Australia.
NGAC
New South Wales Greenhouse Gas Abatement Certificate is a tradeable commodity used in the NSW GGAS. One NGAC represents the abatement of one tonne of CO2e associated with the consumption of electricity in NSW. NGACs are transferable certificates that may only be created by accredited abatement certificate providers.
NGAS
See NSW GGAS
NGERS
The National Greenhouse and Energy Reporting System is based on the National Greenhouse and Energy Reporting Act 2007, which was passed on 29 September 2007. The Act establishes a mandatory reporting system for corporate greenhouse gas emissions and energy production and consumption. The Act commences on 1 July 2008. Further information is available at: http://www.greenhouse.gov.au/reporting/index.html
NGO
A non-governmental organisation.
NGPAP
National GreenPower Accreditation Program. The system used to issue GreenPower Standards.
Nitrous oxide
Agriculture accounts for the majority of nitrous oxide (N2O) emissions in Australia, The transport sector also contributes to emissions of N2O. N2O has a high global warming potential of about 310 times that of CO2.it breaks down very slowly – over about 120 years
Not-for-profit
In the Carbon Offset Guide not-for-profit entities must have appropriate legal status, which means that they must have a formal structure; be self-governing; be private; be non-profit-distributing; and have some meaningful degree of voluntary involvement.
NSW GGAS
New South Wales Greenhouse Gas Abatement Scheme commenced on 1 January 2003 and targets are set until 2012. It is one of the first mandatory greenhouse gas emissions trading schemes in the world. GGAS aims to reduce greenhouse gas emissions associated with the production and use of electricity. For more information see here. top
O
Option
In finance, an option is a contract between a buyer and a seller that gives the buyer the right—but not the obligation—to buy or to sell offsets at a later day at an agreed price. In return for granting the option, the seller collects a payment from the buyer. A call option gives the buyer the right to buy the offset / credit; a put option gives the buyer of the option the right to sell the offset / credit.
ORER
The Office of the Renewable Energy Regulator is a statutory authority established to oversee the implementation of the Australian Government's mandatory renewable energy target (MRET). top
P
PDD
A Project Design Document is the official application drawn up by an entity applying for project approval under the Clean Development Mechanism (CDM). PDDs must be validated by an independent third party, then approved and registered by the CDM Executive Board before a project qualifies as a CER carbon credit earner.
Permit
In relation to carbon offsets, a permit is a legal permission authorising the holder to emit a defined quantity of greenhouse gases. Under an ETS a permit is equivalent to one tonne of CO2e. If a company emits less greenhouse gases than authorised they can sell their permits within the trading scheme.
Perofluorocarbons (PFCs)
Most emissions of PFCs in Australia are generated during aluminium production. PFCs have extremely high global warming potentials (5000 to 10,000 times that of carbon dioxide). However, because they are only released in relatively small amounts, their contribution to global warming is minor. Due to their stability they have very long atmospheric lifetimes (thousands of years).
Photovoltaic (PV)
Photovoltaic cells are used in solar panels to convert sunlight directly into electricity.
Plan Vivo System
An offset project method for small-scale community-based LULUCF projects with a focus on promoting sustainable development and improving rural livelihoods and ecosystems. For more information, see here.
Project developer
The person or organisation that set up an offset generating project for the purpose of selling carbon offsets and reducing greenhouse gas emissions.
Project developer
A person or organisation with the intention to develop greenhouse emissions reductions projects.
Prompt delivery
The buyer pays the agreed price for a specific number of offsets which have already been generated and are delivered to the buyer promptly.
Put option
A put option gives the buyer of the option the right, established through a contract to sell the offset / credit. For put options, the abatement is sold at the strike price. top
R
Rainforest Alliance certification
Rainforest Alliance Certification Programs cover agriculture, forestry, tourism, and community conservation enterprises. The Rainforest Alliance works to conserve biodiversity and ensure sustainable livelihoods by transforming land-use practices, business practices and consumer behaviour. For more information, see here.
REC
Renewable Energy Certificates in Australia are issued by the Australian Government's Office of Renewable Energy Regulator. They are equivalent to one-megawatt hour of renewable electricity. RECs can be bought and sold both by electricity retailers and by other businesses in order to meet the legal requirements of MRET.
Reforestation
The reestablishment of forest on land that was previously forested but converted to another use before 31.12.1989.
Renewable resources
A natural resource qualifies as a renewable resource if it is replenished by natural processes at a rate comparable to its rate of consumption. Oxygen, fresh water, timber, and biomass can all be considered renewable resources. However they can become non-renewable resources if used at a rate greater than the environment's capacity to replenish them.
Retailer
Carbon offset retailers either fund or purchase carbon offsets in large quantities and then on sell them to individual consumers in smaller quantities.
Retire
In the context of carbon offsets, this means to remove a carbon credit or permit from the market. As a result of retirement those offsets cannot be traded any further. Retiring offsets is a means of regulating offsetting and preventing companies and individuals from selling or buying offsets that have already been used.
RFI
Radiative Forcing is the change in radiation received at the surface of the earth due to the emission of greenhouse gases. The Radiative Forcing Index calculates the impact non-CO2 emissions have on the earth in terms of CO2. RFI is usually used in relation to aviation.
RMUs
Removal Units are carbon credits that are derived from LULUCF projects in industrialised countries that absorb carbon dioxide. An RMU is equal to one metric tonne of CO2e. top
S
Sequester
The uptake and storage of carbon from the atmosphere. For example trees and other plants sequester carbon dioxide from the atmosphere as they grow, through the process of photosynthesis.
Sinks
Any process which removes a greenhouse gas from the atmosphere. Major sinks include forests and other vegetation.
Spot price
The spot price or spot rate of an offset product is the price that is quoted for immediate (spot) settlement (payment and delivery) for commodity (e.g. carbon offsets). Spot settlement is normally one or two business days from trade date. This is in contrast with the forward price established in a forward contract or futures contract, where contract terms (price) are set now, but delivery and payment will occur at a future date.
Spot trades
The purchase or sale of abatement (e.g. carbon offsets) for immediate delivery. Spot trades are settled "on the spot" (usually within one or two business days), as opposed to at a set date in the future. Futures transactions that expire in the current month are also considered spot trades. Spot trades are also known as "cash trades". Spot trades are the opposite of forward contracts.
Stationary energy emissions
Includes emissions from electricity generation and from fuels consumed in the manufacturing, construction and commercial sectors, and emissions from other sources like domestic heating.
Strike price
Generally refers to a fixed price in a contract between two parties. Where the contract requires delivery of the abatement, the trade will be at the strike price, regardless of the spot price (market price) at that time. See also exercise price.
Sulphur Hexafluoride
Sulphur hexafluoride (SF6) is a man-made chemical. The major sources of SF6 release include leakage from electrical switchgear, from magnesium smelting processes and use in semiconductor manufacture. It has by far the highest global warming potential (23,900 times that of carbon dioxide), however it is only released in relatively small amounts. Due to its st
Supply chain
A network of retailers, distributors, transporters, storage facilities, and suppliers that participate in the production, delivery, and sale of a product to the consumer.
Surrender
In an ETS, countries or businesses are allocated carbon credits or permits, usually for a designated time frame. They must then surrender one carbon credit for each tonne of carbon dioxide equivalent (CO2e) emitted within the relevant time frame. This ensures the credits are not double-counted. top
T
T
Tonne
tCO2e, MtCO2e
Tonnes of CO2e, and millions of tonnes of carbon dioxide equivalent. This is the metric measurement unit for greenhouse gas emissions.
Trader
Carbon offset traders purchase carbon offsets in bulk from project developers with the plan to sell the offsets to consumers in smaller quantities at a higher price. top
U
UNFCCC
The United Nations Framework Convention on Climate Change was established in 1992 at the Rio Earth Summit and currently has 189 signatory countries. It is aimed at stabilising atmospheric concentrations of greenhouse gases. top
V
VCS 2007
Is a certification standard for carbon offset projects. It provides a global standard for voluntary GHG emission reduction and removal projects and their validation and verification.
VCU
Voluntary Carbon Unit. Description of carbon offset derived from accreditation to the Voluntary Carbon Standard (VCS) Program.
VEEC
Victorian Energy Efficiency Certificates are created under the Victorian Energy Efficiency Target (VEET) scheme. One VEEC is equal to 0.1 tonnes of CO2e of energy savings, which is accredited via a certificate system. Certificates are then surrendered to the scheme administrator to achieve compliance. Retailers will need to surrender a specific amount of certificates to ensure they are meeting their responsibilities for the overall reduction of greenhouse gas emissions.
VEET
The Victorian Energy Efficiency Target (VEET) is the target within the Energy Saver Incentive, the mandatory energy efficiency target scheme in Victoria that commenced on 1 January 2009. The legislative requirement is administered by the Essential Services Commission, while compliance is placed on energy retailers through the Victorian Energy Efficiency Target Act 2007.
VER
Verified Emission Reductions or Voluntary Emissions Reductions are tradable credits for greenhouse emission reduction activities generated to meet voluntary demand for carbon credits by organisations and individuals wanting to offset their own emissions. VERs can be generated from projects to which a range of circumstances might apply, including:
- are either based in a country that has not ratified the Kyoto Protocol (e.g. USA) or does not have the infrastructure to support CDM project development;
- have not yet been registered under the CDM;
- fall outside the scope of the CDM;
- are too small to warrant the costs of CDM approval;
- are specifically developed for the voluntary market.
VER+
The VER Plus (VER+) is a carbon offset standard and closely follows the Kyoto Protocol’s project-based mechanisms (CDM and JI). It does not focus on co-benefits. The VER+ standard was developed by TÜV SÜD, a Designated Operational Entity (DOE) for the validation and verification of CDM projects. It was designed for project developers who have projects that cannot be implemented under CDM yet who want to use very similar procedures as the CDM. The VER Plus was launched in mid 2007.
Voluntary Carbon Standard Program
The VCS Program includes the standard (VCS 2007) and the Program Guidelines 2007. The VCS Program provides a new global standard and criteria for validating, measuring, and monitoring voluntary carbon offset projects. For more information, see here. top
W
WRI / WBCSD GHG Protocol
See GHG Protocol. top
Z
ZAR
South African currency, pronounced 'Rand'.