Non-exhaustive, ever-growing.
Jargon and acronyms got you down? Have no fear, the jargon decoder is here. This is a rolling list of jargon and acronyms that are decoded, explained in (hopefully) plain English, and contextualized to help you make sense of things a bit better.
Rather than organizing alphabetically, I have organized the jargon by relevance to an overarching subject (e.g. CDM falls under Kyoto Protocol) so there is more context to how terms are used.
Compliance Markets –– These are mandatory markets under a government regulatory body, where a certain number of emissions credits are issued per year and a cap is implemented to ratchet down those allowed over time. Compliance markets are also often referred to as Emissions Trading Systems, or ETS programs and cap-and-trade systems (see ETS entry). Compliance markets make up the majority of transactions in carbon markets today, with an estimated market size of $851 billion in 2021.
ETS, Emissions Trading Systems (also Cap-and-Trade systems) – Emissions Trading Systems are the classic market-driven mechanism for emissions reductions for policymakers. These are often referred to as “compliance markets” when they come under legal regulation. In an ETS, a limit, or cap, is set on the emissions that regulated entities can emit and this cap aligns with that jurisdiction’s decarbonization targets. This sets a price on carbon emissions per ton and each entity is typically given a certain level of emissions allowances that are either distributed through allocation by a larger regulatory entity or through an auction, depending on the policy. Over time, this cap on total emissions gets ratcheted down and the price of carbon permits goes up. Based on that cap, over-emitting companies can trade emissions allowances with under-emitting companies, or purchase offsets depending on how many offsets are permitted within an ETS’s policies. The most notable examples of ETSs are The EU ETS, The California Cap-and-Trade Program, the Regional Greenhouse Gas Initiative, the New Zealand ETS, The China ETS, and the now out-of-commission Chicago Carbon Exchange, which was one of the few voluntary exchanges.
California Cap-and-Trade –– Launched in 2013, the California Cap and Trade program is an emissions trading system designed to reduce GHG emissions with 85% of emissions under regulation. The program has a firm cap on the emissions businesses can emit and provides flexibility to make the lowest-cost reductions first. The program has reduced California’s emissions by 5.3% from 2013-2017 while gross state product (GSP) has increased.
China’s National ETS –– China’s National Emissions Trading System launched in 2021, as the world’s largest carbon market by volume with over 2000 power plants responsible for over 4 billion tons of CO2e emissions and will be a major market mechanism used to curb emissions at a peak before 2030 and to help reach net zero by 2060.
CCERs, China Certified Emissions Reductions –– The unit of emissions reductions in China’s National Emissions Trading System. One unit is one ton of emissions.
EU ETS, European Union ETS –– Launched in 2005, The EU ETS is one of the largest ETS programs in the world and is in line with the EU’s target to reduce emissions to 55% of the 1990’s baseline. Currently, the legislation is expected to achieve emissions reductions of 51% by 2030 compared to 2005.
EUA, EU Allowance Unit –– The unit of emissions reductions in the EU ETS. One unit is one ton of emissions.
NZ ETS, New Zealand ETS–– The NZ ETS is the world’s first ETS system that covers all sectors of the economy, including forestry, agriculture and all six major greenhouse gases: CO2, CH4, N20, SF-6, HFC, and PFC. The NZ does not accept imported units and operates through three domestic mechanisms: the Permanent Forest Sink Initiative, Negotiated Greenhouse Agreements, and Projects to Reduce Emissions.
UNFCCC, United Nations Framework Convention on Climate Change –– The UNFCCC is a United Nations entity “tasked with supporting a global response to climate change” and was launched in 1992 at the UN’s Rio Convention. It is considered the parent treaty of the Paris Agreement of 2015. 197 countries are part of the UNFCCC, and they host COP on an annual basis.
COP, Convening of Parties –– COP is the decision-making body of the UNFCCC that is represented by all countries under the UNFCCC. Key tasks are to review communications and inventories of parties and assess progress and measures taken to achieve UNFCCC’s targets. Major COPs for carbon markets are COP 3 in Kyoto; COP 11 in Montreal; COP 15 in Copenhagen; COP 21 in Paris; and COP 26 in Glasgow.
Kyoto Protocol –– The Kyoto Protocol is an international treaty that operationalized the United Nations Framework Convention on Climate Change. Industrialized countries committed to reducing the emissions of six greenhouse gases: carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and hexafluoride sulfur. The Kyoto Protocol established flexible market mechanisms based on the trade of emissions permits in the form of International Emissions Trading, The Clean Development Mechanism, and Joint Implementation.
International Emissions Trading –– As part of the Kyoto Protocol, countries are allowed to sell spare emissions, or AAUs, to countries that are exceeding their emissions targets.
AAU, Assigned Amount Units –– the allocated emissions per country based on the Kyoto Protocol. This is a country’s emissions “budget”. If they go over, they would have to purchase credits or offsets to hit their budget targets. If they are under, they can sell those AAUs to an over-emitting country. One unit is one ton of emissions.
CDM, Clean Development Mechanism –– Defined in Article 12 of the Kyoto Protocol, the CDM allows developing countries to earn certified emission reduction (CER) credits by developing projects to reduce emissions, such as a wind or solar farm. These CERs could then be traded and sold, particularly with industrialized countries to help them meet their emissions targets.
CER, Certified Emissions Reduction –– a credit for emissions reductions based on a project developed through the Clean Development Mechanism.
ERU, Emission Reduction Unit –– The tradable unit from a JI project under Kyoto Protocol that applies to emissions reductions projects. One unit is equal to one ton of emissions.
RMU, Removal Unit –– A tradable carbon credit representing one ton of GHG gases absorbed by a carbon sink through a removal project. One unit is equal to one ton of emissions.
The Paris Agreement –– Adopted during COP 21 in Paris, the Paris Agreement is a legally binding international treaty signed by 196 parties to limit global warming to at least 2 degrees Celsius, and preferably 1.5 degrees, compared to pre-industrial levels. The Paris Agreement operates on a five-year cycle with increasing increments of action. In 2020, countries were to submit their Nationally Determined Contribution (NDC) plans and now work regularly within an Enhanced Transparency Framework (ETF) to report and track progress toward their NDCs.
NDCs, Nationally Determined Contributions –– NDCs are the plans and actions taken by each country that has signed the Paris Agreement to reduce national emissions and adapt to climate change. Together, these NDCs map out actions taken to achieve the Paris Agreement targets and are required to be updated and resubmitted every five years to the UNFCCC as the progression of ambition of the Paris Agreement increases over time.
ETF, Enhanced Transparency Framework –– The ETF is the way that the UNFCCC and its Paris Agreement signatories track progress and take stock of actions taken by countries toward achieving their NDCs. Each country must report its progress, have it reviewed by technical experts, and adapt based on feedback on progress.
Article 6 –– Under the Paris Agreement, Article 6 allows countries to trade carbon credits with other countries to help meet climate targets and acts as a rule book for engagement in this market-driven emissions mitigation approach, which is essentially an international compliance carbon market. Article 6 was adopted at COP 26 in Glasgow and builds in market-driven and non-market approaches to reducing emissions. Countries can trade emissions reductions among themselves, and a similar approach as the CDM will also be available to support the reductions of global emissions.
Article 6.2 –– Article 6.2 essentially permits countries to engage in bilateral and multilateral agreements to trade emissions reductions and removals in units called ITMOs.
ITMO, Internationally Transferred Mitigation Outcomes –– ITMOs are the tradable units under the Paris Agreement, particularly under Article 6, in this new compliance market. These units can be measured in CO2e (carbon dioxide equivalent) for emissions or KWh (kilowatt-hours) for renewable energy.
Article 6.4 –– Article 6.4 operates similarly to the CDM under Kyoto Protocol and establishes a new, unnamed multilateral global carbon market to allow for the sale of carbon credits, known as A6.4ERs. Project developers will have to register their projects with the “supervisory body” (as it’s known now until it gets a better name). The supervisory body and host country have to approve the credit before it can be issued, but then countries, companies, and even individuals can purchase these credits.
A6.4ERs, Article 6.4 Emissions Reductions –– These are the tradable units of emissions reductions under Article 6.4.
Article 6.8 –– This part of Article 6 recognizes non-market mechanisms of cooperation through financing, technology transfer, and capacity building to reduce emissions though no direct emissions reductions take place.
Corresponding Adjustment –– These adjustments extend beyond this international compliance market to voluntary carbon markets too to ensure that double counting of credits doesn’t take place. This corresponding adjustment is used to make sure that if a credit is used in the voluntary market, it cannot be used again in the compliance market and vice versa.
Climate Warehouse Program –– An initiative under the World Bank that is developing the infrastructure required to connect an international carbon market. They are developing transparent systems to track and audit carbon credit data, and are potentially using blockchain and distributed ledger technologies to keep data secure and transparent.
VCM, Voluntary Carbon Markets –– Voluntary Carbon Markets are, as the name suggests, voluntary. With more corporations setting climate commitments, achieving these targets largely relies on the purchase of offsets in the form of carbon credits, particularly in industries that are especially tough to decarbonize. In VCMs, project developers supply carbon credits, either in the form of removals or avoidances. Avoidances are sourced from projects that prevent carbon from being emitted into the atmosphere, either through reduced emissions, investing in wind and solar projects in developing countries to prevent a coal-based power plant from being built, clean cookstoves, and avoided deforestation and land degradation. Removals are typically sourced from ecosystem regeneration projects, and more recently, technology-based solutions like direct air capture and bio-oil combined with geologic sequestration (note: the distinction between tech and nature is pretty flawed; I prefer thinking in terms of durability). Standards organizations such as Verra, Gold Standard, and the Climate Action Reserve seek to ensure that these credits are up to standard with climate science based on a growing number of methodologies.
VER, Voluntary Emissions Reduction –– a general term that represents a ton of emissions reductions that have voluntarily been reduced or removed outside of the scope of the Kyoto Protocol. They can be developed and calculated according to one of several carbon credit standards in the market, and should at least be verified by an independent third party such as Verra, Gold Standard, etc., and independently audited.
Verra –– Founded in 2005 as a nonprofit, Verra is one of the most prominent standards organizations for certifying carbon emissions reductions. It was created as a means of ensuring quality standards for transacting carbon credits outside of the Kyoto Protocol. This quality standard is known as the Verified Carbon Standard. Verra develops and manages an extensive set of standards and methodologies along with its credit registry to help countries and companies purchase reputable carbon credits.
VCS, Verified Carbon Standard –– The VCS Program is the world’s most widely used standard and is run by Verra. There are over 1,800 certified VCS projects around the world and are comprised of both emissions reductions and removals projects. The objective of the VCS program is to ensure the credibility of these projects. Each project certified by the VCS must use or submit a new carbon accounting methodology approved by Verra, and the project must be independently audited by a certified third party and the Verra team to ensure standards are met.
VCU, Verified Carbon Unit –– Under the Verified Carbon Standard, the carbon credits that meet Verra’s standards are issued as VCUs which represent one ton of emissions. Based on Verra’s standards, these credits must be real, additional, measurable, permanent, independently verified, and unique/used only once.
GS, Gold Standard –– The Gold Standard for the Global Goals was developed as a voluntary offset program that applies to both voluntary offsets as well as those under the CDM of the Kyoto Protocol. Gold Standard credits are particularly relevant for purchasers who are interested in climate, community, and biodiversity impact alongside their credit purchase. Gold Standard issues VERs for the voluntary market and CERs for compliance markets.
CAR, Climate Action Reserve –– The Climate Action Reserve is a leading standard, verification, and registry organization focused on the North American market.
ACR, American Carbon Registry –– Founded in 1996 as the GHG Registry, ACR is the first private carbon credit registry in the world. They develop science-based standards and methodologies, verification oversight and offset issuances and maintain records of their offsets on their registry.
CORSIA, Carbon Offsetting and Reduction Scheme for International Aviation –– CORSIA is the first of its kind carbon market mechanism for an entire industry sector. CORSIA’s goal is to offset the emissions growth of the aviation sector since 2020. Airline companies will eventually have to offset aviation emissions from international travel by 2027. There will be two voluntary phases of offsetting between 2021 to 2023 and 2024 to 2026 where operators between states that have volunteered to join the scheme will participate. From 2027 on, CORSIA will operate more like a compliance market and includes 90% of international travel with acceptances for least developed countries and small island countries.
VCMI, Voluntary Carbon Markets Integrity Initiative –– The VCMI, launched in 2021, is a demand-side platform for stakeholders to improve the integrity of participation in voluntary carbon markets. The VCMI seeks to deliver guidance on how countries and corporations can participate in voluntary carbon markets credibly, drive more capital and more ambitious decarbonization strategies on the demand side, and monitor and ensure transparency in supply-side efforts to offer high-quality carbon offsets.
ICVCM, Integrity Council of the Voluntary Carbon Markets –– The ICVCM (previously the TSVCM) is an independent governance body committed to increasing the volume of high-quality carbon credits in the voluntary markets. The ICVCM is responsible for developing the CCP, Core Carbon Principles.
CCP, Core Carbon Principles –– The CCP are expected to be the industry standard thresholds for high-quality carbon credits. Currently, the ICVCM is launching its first white paper on the CCP that will open for public input later in 2022.
TSVCM, Taskforce for Scaling Voluntary Carbon Markets –– The precursory initiative evolved into the ICVCM. The TSVCM was launched in 2021 by Mark Carney and Bill Winters along with 450+ organizations and delivered a comprehensive framework for required actions to improve the integrity of the Voluntary Carbon Markets (their publication on Scaling Voluntary Carbon Markets is a must-read).
SBTi, Science-Based Targets Initiative –– The SBTi is a collaborative initiative between the United Nations and several other organizations that helps corporations set climate targets that align with the Paris Agreement and promotes best practices in emissions reductions for companies. SBTi launched in 2015 when the Paris Agreement was proposed and currently has over 3,000 companies participating; 1,500+ have made science-based targets and over 1,100 have committed to net-zero targets.
CDR, Carbon Dioxide Removal –– Processes that remove carbon dioxide from the atmosphere and sequester it through a variety of means, with varied permanence. CDR includes both nature-based and more technological means of removal and sequestration including anthropogenically-enhanced ecosystem regeneration, the use of biochar, and direct air capture or bio-oils with geologic sequestration.
Carbon Credits vs. Carbon Offsets –– Often used interchangeably but they are not quite the same thing. Carbon credits represent the tradable permit equivalent to one ton of CO2e that essentially gives a company permission to emit a ton of carbon. A carbon offset is an investment in a carbon avoidance or removal project as a means of reducing the carbon impact of a person or organization’s activities. Carbon credits can be used as offsets, but offsets can be accomplished through other activities.
Avoidance vs. Removal –– Avoidance relates to activities that prevent emissions from being emitted into the atmosphere such as preventing ecosystems from being degraded or investing in renewable energy projects to avoid fossil fuel power plants from being developed. Removal relates to activities that remove carbon from the atmosphere, including things like ecosystem restoration/regeneration or engineered solutions like direct air capture or enhanced weathering.
NBS, Nature-Based Solutions –– NBS refers to actions that help restore ecosystems, and biodiversity, and align local communities with the preservation and continued restoration of nature.
NCS, Natural Climate Solutions (see also NBS) –– NCS is considered a subset of NBS with a particular focus on using nature to reduce or remove carbon from the atmosphere. These practices are typically related to ecosystem preservation, restoration, and changing land management practices to improve and maintain natural carbon sinks.
AFOLU, Agriculture, Forestry, and Other Land Use –– these sectors are identified as major sources of greenhouse gas emissions because of the carbon stocks that are contained in forests and soils and because of the potential to maintain and increase global carbon sinks through regeneration and sustainable practices.
LULUCF, Land Use Land-Use Change, and Forestry –– Terrestrial carbon sinks in vegetation and soils in the form of forests, grasslands, mangroves, etc. are heavily impacted by human activity. Human activity through land use, land-use change, and forestry is considered a mechanism for shifting the carbon sequestration potential of a carbon sink. For instance, improved grazing practices to regenerate grasslands. The biggest concern with LULUCF is the non-permanence of these stocks and the release of GHGs back into the atmosphere.
TBS, Technology-Based Solutions –– A somewhat inaccurate categorization of CDR methods that typically refers to engineered carbon removal practices, such as direct air capture or bio-oils with geologic sequestration, etc. The dichotomy between technology-based and nature-based solutions can blur as innovations and methods emerge over time.
MRV, Measuring, Reporting, and Verification –– All carbon mitigation projects must go through a robust MRV process to validate the accuracy of the project. “Measuring” entails the actual measurement of the carbon sequestration, co-benefits, and other elements of the project design. “Reporting” relates to the reporting format and whether the data measured is being reported consistently and transparently. “Verification” relates to the independent, third-party cross-checking that makes sure that the data gathered and reported is accurate. The MRV process is awash with concerns about transparency and accuracy and is also a lead cause of time lag for project developers, but is necessary to ensure market integrity.
Additionality –– Additionality is about demonstrating whether or not a carbon removal project would have happened because of an intervention; it’s about trying to determine causality. Additionality is an important factor in determining whether a carbon removal project can count as negative emissions from a baseline.
Baseline –– This is the “business as usual” scenario that demonstrates what the impact would be if a carbon project was not carried out. The baseline is what the project is compared to to demonstrate impact; there is a high risk of inflating the baseline to show more impact and therefore generate more carbon credits.
Double Counting –– A market problem where a carbon credit for reductions or removals is counted more than once through double issuance, double use, or double claiming. These three double-counting issues can occur at different places in the value chain.
Double Issuance –– Double issuance is a double counting problem that happens at a project and registry level of the value chain when one ton of emissions is used to issue two different credits typically in separate registries. The credit should be canceled in one registry before being offered in another.
Double Use –– Double use is a double counting problem that occurs on the demand side of the value chain, where an organization uses one carbon credit to fulfill two different emissions reductions or removal purposes. A carbon credit must only be used once and retired after use.
Double Claiming –– Double claiming is a double counting problem on the demand side where two different entities use the same carbon credit to achieve their goals. This is a likely situation between a government and a company within that government's jurisdiction, e.g. once by a country, and once by an airline company under CORSIA. The corresponding adjustment intervention under Article 6 is intended to prevent this.
Fungibility –– Fungibility refers to the ability for a carbon credit to be uniform and interchangeable; a ton of carbon sequestered should be of equal value to any other ton of carbon sequestered. This is not the case with carbon credits on the voluntary market as buyers have different preferences in terms of types of projects or various co-benefits associated with specific projects.
Permanence –– Permanence relates to the likelihood of emissions re-enter the atmosphere after sequestration. From an ecological lens, natural climate solutions have a lower permanence, typically between 1 to 100 years, than engineered and geologic sequestration solutions, which are far more permanent solutions with a time scale of hundreds to thousands of years.
Durability –– Durability is closely linked to permanence but also includes factors that drive the longevity of a carbon project outside of the carbon sequestration science such as socioeconomic incentives, land tenure changes, political, institutional shifts, and management practices that can end up releasing the carbon that was sequestered.
Leakage –– Leakage happens when carbon emitting actions that were supposed to be prevented by a project just end up moving outside of the scope of the project. An example would be deforestation in a REDD+ project relocating to a different area outside of the project boundary and into a buffer zone area.
Retirement –– Since carbon credits can only be used once, when a carbon credit is used to claim against a country or organization’s emissions, then it is moved to a retirement account and cannot be used again.
Vintage –– Carbon credits have vintages, or years that the emissions reduction or removal took place. Oftentimes, verification processes can take a couple of years to complete from the start of the project to the point where the credits are officially offered in the market. Therefore some projects generate credits from emissions reductions that took place several years ago. Typically, older vintages are valued less because of buyer preference for improved practices and more innovative projects on the market today.
REDD, Reduced Emissions from Deforestation and Degradation –– These are carbon projects that are intended to sustain and protect naturally occurring carbon sinks, like rainforests, from being cut down or encroached on by land degrading practices such as converting forests to agricultural farms or pasturelands for cattle.
REDD+, Reduced Emissions from Deforestation and Degradation Plus (conservation/enhancement) –– The same as above applies, but the “plus” goes beyond REDD to add focus on conservation and enhancement of forest stocks which began to be included in REDD+ requirements in 2013.
Jurisdictional Approach –– This is an alternative model of REDD+ where a private company can partner with a national or subnational governmental body that owns the REDD+ project and help the government operate the project instead of directly owning it. Studies have shown that jurisdictional approaches to REDD+ have better governance and institutional longevity (durability) and authority to implement land-use change interventions. Currently, market demand is shifting toward jurisdictional REDD+ versus project-based REDD+ (privately owned and operated).
Nesting –– After COP 26, countries around the world committed to cutting deforestation in half; in doing so, the additionality of REDD+ projects is becoming questionable. One opportunity for enhancing carbon sinks in these carbon initiatives is through a nested approach which means that additional carbon projects (regenerative projects) can be nested into jurisdictional REDD+ projects that will likely be under governmental ownership in the future.
Agroforestry –– Including trees and shrubs in agricultural and animal farmlands as a means of increasing carbon removal impact alongside socio-economic benefits.
Afforestation –– The creation of new forests in areas that were not previously forested, e.g. planting new trees. The problem with afforestation is that there is a time lag from when the tree was planted until it can reach a meaningful sequestration scale.
Reforestation –– The regrowth of trees and forest cover on land that had previously been forested.
Passive Regeneration –– Passive regeneration refers to the process of naturally allowing ecosystems to recover from degradation without intervention. This is on the opposite side of typical reforestation practices that involve the active planting of nursery-grown sapling trees to be planted in an environment for reforestation purposes.
ANR, Assisted Natural Regeneration –– ANR blends active and passive regeneration, often with indigenous practices, by removing barriers to natural regeneration such as preventing cattle grazing, removing invasive species, and implementing controlled burning to remove forest fire fuel. Studies show that ANR results in regeneration in 30% of the time that reforestation requires.
Regenerative Agriculture –– Regenerative agriculture is a method of growing agricultural products that restores soil health and has potential soil carbon sequestration benefits. These practices often involve no-till farming, diversified crop rotations, and the use of cover crops. Regenerative Agriculture is of questionable carbon sequestration impact because of the low permanence and uncertainty around regenerative practices (e.g. no-till practices only for a few years and then eventually tilling) that can easily be reversed resulting in carbon being released back into the atmosphere.
SOC, Soil Organic Carbon –– SOC is a potential carbon solution that uses the photosynthesis of plants to remove carbon from the atmosphere and sequester the carbon in the biomass of soils. Most soils globally are far from their saturation potentials, so there is a big opportunity for carbon storage in this biomass. Grassland restoration is a high potential SOC project with deep soil sequestration impact resulting in higher durability compared to regenerative agriculture which mostly sequesters carbon in top soils and is therefore prone to be released more easily.
Blue Carbon –– Relates to natural climate solutions that are coastal ecosystem projects such as mangrove, tidal marsh, and seagrass conservation and restoration projects. Blue carbon projects are promising sources of carbon credits due to their higher durability, permanence, and carbon sequestration impact (mangroves sequester 4x the amount of carbon as compared to the mass equivalent sequestration of forestry projects).
Biochar –– Using biochar in soil environments is considered a medium-duration (durability of 100 to 1000 years) CDR solution. Biochar is created through biomass pyrolysis and that biochar is buried underground, resulting in carbon sequestration as well as additional co-benefits that increase soil and plant health. This solution is readily available and is cost-competitive.
BECCS, Bioenergy with Carbon Capture and Storage –– An engineered CDR technology that uses biomass in the form of agricultural waste or woodlands to create energy through the burning of the biomass; the carbon from that energy production is captured and then stored underground in geologic reservoirs.
Bio-Oil CDR –– The process of taking biomass and converting it into carbon-rich oils that are sequestered in wells used for industrial waste or salt caverns left over from oil and gas companies. Charm Industrial is an innovative company that delivers this form of CDR.
CCUS, Carbon Capture, Utilization, and Storage –– CCUS refers to the method of capturing carbon and either using the carbon in another process (CCU) to create a new product that sequesters the CO2 in a durable way (CCUS) or capturing the carbon, typically from an industrial process and storing it durably, typically through geologic storage (CCS). CCS has been used since the 1970s as a means of enhanced oil recovery.
DAC, Direct Air Capture –– Direct Air Capture is a nascent CDR technology that captures carbon dioxide from the atmosphere through ambient air by using either liquid or solid sorbents that convert the CO2 into a steady stream that is typically sequestered into geologic storage. The process is currently quite energy intensive and costly, though is anticipated to drive down the cost curve over time.
Geologic Storage –– Geologic storage is the process of storing compressed CO2 deep underground in previously used carbon reservoirs that once held hydrocarbons (e.g. fossil fuels). This is the highest durability storage reservoir for sequestered CO2, having permanence of over thousands of years.
See an acronym or bit of jargon that needs to be added? Find me on twitter at @alexnprather and let me know!