Carbon Market Glossary
Looking for a glossary of carbon credit and carbon market related terms and terminology? Climate change is ever evolving, and the market for carbon credits is a complex one, involving many different regulatory bodies and scientific terminologies that might be confusing to people that are new into the space. Luckily, Carbon Dash is here to help with our (in progress) Carbon Credit glossary that covers some of the most important terminologies in the climate change and carbon credit sectors.ย
We have an extensive catalogue of Carbon Credit acronyms also, that might be of use in your journey to understanding the market.ย
Terms
Carbon Accounting
Carbon accounting, also known as greenhouse gas accounting, carbon emissions reporting or carbon footprinting, is the process of quantifying and tracking greenhouse gas emissions and removals - typically for a business, but it can also be for events, products and individuals.
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Carbon Credits
Carbon credits are a tradable financial instrument that represents a unit of carbon dioxide (or other greenhouse gas) emissions that has been reduced or offset through a certified project or activity. They are a key component of carbon markets and cap-and-trade systems, which are designed to incentivize emission reductions by putting a price on carbon emissions.
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Carbon Offsets
Carbon offsets are a mechanism used to compensate for the emissions of greenhouse gases, particularly carbon dioxide (CO2), by supporting projects or activities that reduce or remove an equivalent amount of carbon dioxide from the atmosphere.
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Carbon Sequestration
Carbon sequestration refers to the process of capturing and storing carbon dioxide (CO2) from the atmosphere in various natural or artificial reservoirs to mitigate its impact on climate change.
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Insetting is a tactic related to carbon offsets. While carbon offsetting typically involves purchasing carbon credits from external projects to compensate for an organisation's emissions, carbon market insetting focuses on implementing emission reduction projects within the organisation's own value chain or operations.
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Co-benefits refer to the positive and ancillary outcomes that result from the implementation of carbon offset projects. They are a key component of carbon offset initiatives that generate social, environmental, and economic advantages.
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Additionality within carbon markets is a term that signifies that emission reductions claimed by a carbon offset project are "additional" and not something that would have occurred regardless, with or without carbon credit finance.
Learn more Carbon Market
The carbon market is a financial and economic system that facilitates the trading of carbon credits or allowances as a way to regulate and reduce greenhouse gas emissions. The purpose of the market is to promote the transition to a low-carbon economy.
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Global warming refers to the long-term increase in the average temperature of the Earth's surface and lower atmosphere. The earth's surface has increased approximately 1.3 degrees celsius in the past 100-150 years, and sea temperature has increased approximately 1.01 degrees celsius.
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The Kyoto Protocol is an international treaty aimed at addressing global climate change by setting legally binding emission reduction targets for developed countries (referred to as Annex I countries) and establishing mechanisms to facilitate the reduction of greenhouse gas emissions. It was adopted on December 11, 1997, in Kyoto, Japan, as an extension of the United Nations Framework Convention on Climate Change (UNFCCC), which was established in 1992.
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The Paris Agreement was an agreement reached in 2015 at the 21st Conference of the Parties (COP21) to the United Nations Framework Convention on Climate Change (UNFCCC). The central objective of the Paris Agreement is to limit the increase in global average temperature to well below 2 degrees Celsius (3.6 degrees Fahrenheit) above pre-industrial levels, while pursuing efforts to limit it to 1.5 degrees Celsius (2.7 degrees Fahrenheit).
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Net Zero Emissions
Net Zero is the term attributed to achieving carbon neutrality, and is achieved when you remove as much carbon from the atmosphere as what you emit, thereby having a 'net zero' impact on greenhouse gases in the environment. Net Zero also often refers to the target of Net Zero emissions by 2050, one of the goals set forth by the United Nations and the IPCC.
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These are direct emissions from sources that are owned or controlled by the reporting entity. This category includes emissions from on-site combustion of fossil fuels, industrial processes, and emissions from company-owned vehicles.
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Think of Scope 2 simply as your energy. They are indirect emissions associated with the production of the energy the organization purchases and consumes. Scope 2 emissions mainly result from the generation of electricity, heat, or steam purchased from external sources. They are considered indirect because the organization does not directly control the emissions generated by the energy supplier. The easiest way to reduce Scope 2 emissions is to switch to a renewable energy provider.
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Scope 3
Scope 3 emissions, often referred to as Scope 3 carbon emissions or indirect emissions, are a category of greenhouse gas emissions that originate from activities or sources outside of an organization's direct control but are associated with its operations. They typically represent the largest portion of a company's total emissions and can have a substantial impact on climate change. Scope 3 emissions are usually a lot harder to measure than Scope 1 or 2 emissions.
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