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Accredited Independent Entity (AIE): an entity accredited by the JISC and responsible for the determination of whether a project and the ensuing reductions of anthropogenic emissions by sources or enhancements of anthropogenic removals by sinks meet the relevant requirements of Article 6 of the Kyoto Protocol and the JI guidelines.

Assigned Amount Units (AAU): Carbon credits that can be traded, sold, or bought at the discretion of the holder. the AAu's are redeemable for the emission of one metric tonne of carbon. AAU's can be used or stored at any time. AAU's are not to be bought, sold, or traded from a non-ratifying country.

Baseline: the scenario that reasonably represents the anthropogenic emissions by sources of greenhouse gases (GHG) that would occur in the absence of the proposed project activity. A baseline shall cover emissions from all gases, sectors and source categories listed in Annex A (of the Kyoto Protocol) within the project boundary.

Cap and Trade: an emissions trading system that sets limits, or caps, on total emissions. Participants are granted emissions allowances. Participants can sell their unused (surplus) allowances to other participants who can’t reduce their emissions as cost effectively.

Carbon Dioxide Capture and Storage (CCS): a process that separates CO2 from industrial and energy-related sources. The CO2 is then stored underground in long-term isolation from the atmosphere.

Carbon Offset: generic term representing a specific, project-based reduction in emissions of greenhouse gases. Emissions levels resulting from the project are compared to what would have happened in a busines-as-usual scenario. Any difference can then be verified against a standard to create a Verified Emission Reduction (VER), or, if it is taken through the CDM process, a CER may be generated. VERs are often used by companies to offset their own emissions, hence the name carbon offsets.

Certified Emission Reductions (CERs): a unit issued under the CDM equal to one metric tonne of carbon dioxide equivalent, calculated using global warming potentials.

Chicago Climate Futures Exchange (CCFE): A derivatives exchange that offers standardized and cleared futures and options contracts on emission allowances and other environmental commodities. A subsidiary of the Chicago Climate Exchange.

Clean Development Mechanism (CDM): the purpose of the clean development mechanism is to assist parties not included in Annex I of the UNFCCC in achieving sustainable development and in contributing to the ultimate objective of the Convention, and to assist Parties included in Annex I in achieving compliance with their quantified emission limitation and reduction commitments.

Designated Operational Entity (DOE): an entity designated by the by the CDM Executive Board as qualified to validate proposed CDM project activities as well as verify and certify reductions in anthropogenic emissions by sources of greenhouse gases (GHG) and net anthropogenic GHG removals by sinks.

Determination: an AIE is responsible for the determination of whether a JI project and the ensuing reductions of anthropogenic emissions by sources or enhancements of anthropogenic removals by sinks meet the relevant requirements of Article 6 of the Kyoto Protocol and the JI guidelines.

Emission Reduction Unit (ERU): A unit issued under the JI equal to one metric tonne of carbon dioxide equivalent, calculated using global warming potentials.

Emissions Trading: allows for the transfer of emission allowances between companies covered by a Cap and Trade program and compliance with an environmental objective (the cap) at the lowest possible cost.

Environmental attributes: The environmental benefits associated with the generation of one megawatt hour of electricity from a renewable generation facility. Environmental attributes of renewable energy facilities include reduced or avoided emissions, infinite fuel supply, power supply diversity etc. Environmental attributes are sometimes referred to as Renewable Energy Certificates (RECs).

Environmental markets: Mechanisms / regulatory structures designed to use market-based forces to address specific environmental challenges. The most common environmental markets are Cap and Trade systems (like the EU ETS) and markets designed to develop renewable energy.

Greenhouse Gases (GHG): Gases in the Earth’s atmosphere that are thought to contribute to global warming. Some GHGs occur naturally in the atmosphere, while others result from human activities. The most common greenhouse gases include carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride.

Green Power Marketers: Energy providers that provide some sort of “green power” option to their consumers – these are often backed up with the purchase of renewable energy credits.

Monitoring: 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 CDM project activity and leakage, as applicable.

Nitrogen Oxides (NOx): Formed by the oxidation of atmospheric nitrogen. Produced during fuel combustion process. These emissions contribute to the production of ground level ozone and smog.

Project: A measure, operation or action aimed at reducing anthropogenic emissions by sources and/or enhancing anthropogenic removals by sinks of greenhouse gases.

Project boundary: encompasses all anthropogenic emissions by sources of greenhouse gases (GHG) under the control of the project participants that are significant and reasonably attributable to the CDM project activity.

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

Renewable Energy Certificates (RECs): A renewable energy facility, such as a wind farm, delivers electricity into the power grid. Customers can acquire the environmental attributes associated with this renewable energy without buying the intermittant power. These attributes are encapsulated into a REC. One REC is issued for each megawatt-hour (MWh) of renewable electricity produced and put onto the grid.

Renewable Obligation Certificates (ROCs): One ROC equals one megawatt-hour (MWh) of renewable electricity produced and supplied to the grid in the UK. Electricity suppliers in the UK use ROCs to meet the mandatory ‘Renewables Obligation’ legislation.

Renewable Portfolio Standards (RPS): A state- (or possibly federal) level policy that requires that a minimum amount (usually a percentage) of electricity supply provided by each retail electricity supplier is sourced from a renewable resource.  

Renewable Resources: Sources of electricity, such as solar electric, wind, geothermal, biomass and hydroelectric. A resource is called renewable if it can be naturally replenished. In general, renewables have lower environmental impacts than non-renewables.

Sulphur Oxides (SOx): A family of gases, including SO2, formed by the oxidation of sulphur. Emitted in various industrial processes, in particular from the combustion of coal to produce power. SO2 reacts with atmospheric water vapor to produce sulfuric acid.

Validation: the process of independent evaluation of a project activity by a designated operational entity against the requirements of the CDM.

Verification: the periodic independent review and determination by a designated operational entity of monitored reductions in anthropogenic emissions by sources of greenhouse gases (GHG) that have occurred as a result of a registered CDM project activity during the verification period.