Carbon Credits Glossary

Additional – A project must demonstrate that without carbon financing, it wouldn’t happen. Projects have to meet legal, performance and financial standards.

Carbon Credit (CC) – Generated from a specific project activity that destroys, sequesters or avoids greenhouse gas (GHG) emissions. One credit is equivalent to 1 Mt (metric tonne) of greenhouse gas emissions.

Carbon – a euphemism to describe the amount of carbon dioxide (CO2) and all GHG, or greenhouse gas emissions, in the atmosphere.

Carbon Market – is the buying and selling of GHG, or greenhouse gas emissions, worldwide. Businesses are given an allowance of how many metric tons of CO2 they can emit. Those who emit less than their allowance can sell the extra to businesses that emitted more than their allowance.

Cap and Trade – Governments or companies are given emission targets (caps) and can purchase tradable emissions allowances to compensate for going over a cap. One cap is generally valued as one metric ton of CO2 emissions.

Carbon Permit – A permit gives its holder the right to pollute up to a certain level.

Carbon Footprint – The total amount of greenhouse gases that are emitted into the atmosphere each year by a person, family, building, organization or company.

Clean Development Mechanism (CDM) – The system established under the Kyoto Protocol through which countries meet emissions targets by purchasing carbon credits that fund sustainable development projects.

Co-benefits – the economic, social, and climate benefits found in a single policy or measure created to address climate change.

Commodity Broker – an entity that buys and sells carbon credits that are not yet retired. They collect a margin on the sale of this service.

Emissions Obligation – Total amount of annual CO2 emissions from a company that are regulated under the California cap-and-trade system.

Gold Standard – A certification standard for offset projects in countries that don’t have emission reduction targets under the Kyoto Protocol.

Greenhouse Gas (GHG) – stands for greenhouse gas. These gases include CO2 (carbon dioxide), CH4 (methane), N2O (nitrous oxide), HFCs (hydrofluorocarbons), PFCs (perfluorocarbons), and SF6 (sulfur hexafluoride). Some programs also include NF3 (nitrogen trifluoride).

Greenhouse Gas Effect – is caused when GHG, or greenhouse gases, get trapped by the Earth’s atmosphere and retain heat.

Guarantees of Origin (GO) – The European Union mandate that all member states must disclose to consumers the proportion of their electricity consumption that is generated from renewable energy.

Greenhouse Gas Registry – a public listing platform for recognizing businesses that have reported third-party verified GHG, or greenhouse gas, inventories, as well as reduced emissions.

Kyoto Protocol – The United Nations protocol ratified in 1997 that established carbon emission reduction targets for participating nations (notably excluding the United States).

LCFS – stands for Low Carbon Fuel Standard and is a measure that was enacted by former California Governor Schwarzenegger to develop alternative fuel markets as well as reduce the carbon intensity of transportation fuels by replacing 10% of gasoline or diesel with alternative fuels such as ethanol, biodiesel, renewable diesel, compressed natural gas, or biogas. LCFS credits are not the same as carbon credits.

LEED – stands for Leadership in Energy and Environmental Design and is a globally-recognized rating system to measure the sustainability of all building types and all building phases. LEED is not related to GHG or the carbon market.

Permanent – Carbon credits only count as an emissions reduction once purchased and cannot be reversed.

Project Design Document (PDD) – An essential technical document that outlines a carbon credit project’s strategy and methods.

Project Protocol – a document published by the Greenhouse Gas Registry. A carbon project developer will follow the methodology and meet all the criteria specified in the project protocol.

Quantification – in this regard, this addresses the number of tonnes of GHG, or greenhouse gas.

Real – The project exists and the credits represent measurable reductions in greenhouse gases.

REC – stands for Renewable Energy Certificate and is a tool used to document the origins of one MWh (megawatt) of renewable energy between the electricity generator (wind, solar, hydro, etc.), the electricity purchaser, and its stakeholders.

REDD+ – stands for Reduce Emissions from Deforestation and Forest Degradation and is an international framework to both stop the destruction of forests and to implement forest management programs. It fosters environmental conservation and restoration, economic stimulus, training, and entrepreneurship based on data that GHGs (greenhouse gases) increase as forest stock decreases. REDD+ projects provide positive social benefits such as making bricks of charcoal with branches and twigs, rather than cutting down trees.

Registered – Carbon Credits can be used only once and must be registered with a unique serial number.

Registry – is a third-party program to verify, account for, measure, and collect data for GHG, or greenhouse gas, emissions to be traded on the carbon market.

Regulatory Offsets – Offsets purchased to fulfill a regulated emissions cap. 

Renewable Energy Certificate (REC) – RECs are issued when one megawatt-hour (MWh) of electricity is generated and delivered to the electricity grid from a renewable energy resource.

Reseller – is similar to a commodity broker, but on a smaller scale. A reseller sells to the end-user.

RNG Programs – stands for Renewable Natural Gas and is a program giving gas customers a choice to purchase a percentage of their usage as natural gas, which is produced from biomass, and is interchangeable with liquified petroleum gas.

SDG – stands for Sustainable Development Goals and is a list of 17 goals, as laid out by the United Nations, for a more sustainable future. Of the 17, four are climate-related, including climate action.

TIGR – stands for Tradable Instrument for Global Renewables and is an online platform from which to track and trade RECs in Asia, Africa, and the Americas.

Validation – at the beginning stages, validation is a process of having a qualified accredited third-party audit of a carbon project. This assures that the project meets the GHG, or greenhouse gas, program criteria.

Verification – a process of having a qualified, accredited third-party audit of a carbon project after it has generated carbon credits. This assures that the carbon credits are genuine and bonafide.

Verified Carbon Standard (VCS) –  A standard for certifying carbon emission reductions that is managed by the nonprofit Verra. 

VOC – stands for Volatile Organic Compound and are organic and man-made chemicals that impact indoor air quality and may pose health risks. A VOC is not a GHG. VOC’s are often found in building materials, home and personal products, and activities such as smoking cigarettes or burning wood.

Voluntary Offsets – Offsets purchased for any other reason like a corporate sustainability program.

WRC – stands for Water Restoration Certificate and is a certificate confirming the purchase of 1,000 gallons of water to offset water usage and restore critical rivers or streams, particularly at times when water is needed the most.