Alongside establishing a new type of market commodity, the carbon trading market also has its own language.
The following is a list of commonly used terms and acronyms:
- Annex 1 countries - The annex to the Convention specifying which developed country Parties and other Parties to the Convention have committed themselves to limiting anthropogenic missions and enhancing their greenhouse gas (GHG) sinks and reservoirs.
- Assigned Amount (AA) - The total quantity of valid emissions allowances (Kyoto units) held by a Party within its national registry. The initial assigned amount for a Party is determined by its base year emissions, and its emission limitation and reduction objective.
- Clean Development Mechanism (CDM) - A Kyoto Protocol mechanism that allows Annex I Parties to purchase emission allowances from projects in non-Annex I Parties that reduce or remove emissions. The emission allowances from CDM projects are called certified emission reductions (CERs).
- Commitment Period - The time frame in which the Kyoto Protocol’s emission limitation and reduction commitments apply. The first commitment period is 2008 – 2012.
- International Transaction Log (ITL) - An electronic data system, administered by the secretariat, which monitors and tracks Parties’ transactions of Kyoto units.
- Issuance - The term used to refer to the creation of an individual Kyoto unit.
- Joint Implementation (JI) - A Kyoto Protocol mechanism that allows Annex I Parties to purchase emission allowances from projects in other Annex I Parties that reduce or remove emissions. The emission allowances from JI projects are called emission reduction units (ERUs).
- JI Track 2 - One of two approaches for verifying emission reductions under JI, whereby each JI project is subject to verification procedures established under the supervision of the Joint Implementation Supervisory Committee (JISC). JI Track 2 procedures require that each project be reviewed by an accredited independent entity to determine whether the project meets the requirements.
- Kyoto Mechanisms - The three mechanisms for transferring and acquiring emission allowances between Parties under the Kyoto Protocol. They are emissions trading, JI and the CDM.
- National System - A Party’s institutions and procedures for the planning, preparation and archiving of GHG inventory data.
- National Registry - An electronic database maintained by a Party, or group of Parties, for the transfer and tracking of units in accordance with the Kyoto Protocol rules.
What are the Different Types of Kyoto Unit?
- Assigned Amount Units (AAU) – issued by the national registry to participants and represent the allowable levels of emissions. A Kyoto unit representing an allowance to emit one metric tonne of carbon dioxide equivalent. (CO2 eq). AAUs are created (issued) up to the level of a Party’s initial assigned amount.
- Removal Units (RMU) - issued by the national registry, these units are given for net removals from land use, land-use change and forestry activities
- Emission Reduction Units (ERU) – issued by the national registry, these units are converted from AAUs or RMUs on the basis of JI projects
- Certified Emissions Reductions (CER) – issued via the CDM Registry, these are credits given for emissions reductions certified for and achieved through a CDM project
- Temporary CERs (tCER) – issued via the CDM registry, these are credits that are given for emissions removals certified for an afforestation or reforestation CDM project. This unit is to be replaced upon expiry at the end of the second commitment period
- Long term CERs (lCER) - issued via the CDM registry, these are credits that are given for emissions removals certified for an afforestation or reforestation CDM project. This unit is to be replaced upon expiry at the end of the project’s crediting period, or in the event of storage reversal or non-submission of a certification.