AA and AAU

see Assigned Amount and Assigned Amount Units.

Activities Implemented Jointly (AIJ)

AIJ is a pilot program to test project-based mechanisms for emissions reductions.

Additionality

Under the Kyoto Protocol, certificates from JI and the CDM (see explanations below) will be awarded only to project-based activities where emissions reductions are "additional to those that otherwise would occur". The issue has to be elaborated further by the Parties to the Kyoto Protocol, and on the basis of practical experiences.

AIJ

see Activities Implemented Jointly.

Annex B Countries

Annex B countries are the 39 emissions-capped countries listed in Annex B of the Kyoto Protocol.

Annex I Countries

Annex I countries are the 36 countries and economies in transition listed in Annex I of the UNFCCC. Belarus and Turkey are listed in Annex I but not Annex B; and Croatia, Liechtenstein, Monaco and Slovenia are listed in Annex B but not Annex I. In practice, however, Annex I of the UNFCCC and Annex B of the Kyoto Protocol are often used interchangeably.

Annex II Countries

Annex II of the UNFCCC includes all original OECD member countries plus the European Union.

Assigned Amount (AA) and Assigned Amount Units (AAUs)

The assigned amount is the total amount of greenhouse gas that each Annex B country is allowed to emit during the first commitment period (see explanation below) of the Kyoto Protocol. An Assigned Amount Unit (AAU) is a tradable unit of 1 tCO2e.

Baseline and Baseline Scenario

The baseline represents forecasted emissions under a business-as-usual (BAU) scenario, often referred to as the 'baseline scenario' i.e. expected emissions if the emission reduction activities were not implemented.

BAU

see Business As Usual Scenario.

Bubble

A bubble is a regulatory concept whereby two or more emission sources are treated as if they were a single emission source.

Business As Usual Scenario (BAU)

A business as usual scenario is a policy neutral reference case of future emissions, i.e. projections of future emission levels in the absence of changes in current policies, economics and technology.

Cap and Trade

A Cap and Trade system is an emissions trading system, where total emissions are limited or 'capped'. The Kyoto Protocol is a cap and trade system in the sense that emissions from Annex B countries are capped and that excess permits might be traded. However, normally cap and trade systems will not include mechanisms such as the CDM, which will allow for more permits to enter the system, i.e. beyond the cap.

Carbon Dioxide Equivalent (CO2e)

This is a measurement unit used to indicate the global warming potential (GWP) of greenhouse gases. Carbon dioxide is the reference gas against which other greenhouse gases are measured.

Carbon Market Forecaster

This computer model provides the foundation for the estimation of the present value of carbon permits. Carbon Market Forecaster uses input data from a large number of sources: historical trends, various top-down models, bottom-up studies, expert group surveys and forecasts. The model is highly flexible and is updated continuously.

CDM

see Clean Development Mechanism.

CDM EB

see Clean Development Mechanism Executive Board.

CERs

see Certified Emission Reductions.

Certification

The certification process is the phase of a CDM or JI project when permits are issued on the basis of calculated emissions reductions and verification, possibly by a third party.

Certified Emission Reductions (CERs)

CERs are permits generated through the CDM.

Clean Development Mechanism (CDM)

The CDM is a mechanism for project-based emission reduction activities in developing countries. Certificates will be generated through the CDM from projects that lead to certifiable emissions reductions that would otherwise not occur.

Clean Development Mechanism (CDM) Executive Board (EB)

The CDM EB is accountable to the Conference of the Parties to the Kyoto Protocol (see below). It registers validated project activities as CDM projects.

Commitment Period

The five-year Kyoto Protocol Commitment Period is scheduled to run from calendar year 2008 to calendar year-end 2012.

COP

see Conference of the Parties.

Conference of Parties (COP)

The COP is the supreme body of the United Nations Framework Convention on Climate Change (UNFCCC). The Sixth Conference of the Parties under the UN Framework Convention on Climate Change (COP-6)took place in The Hague 13-24 November 2000. The negotiations in The Hague did not yield decisions on rules for the flexible mechanisms, due to disputes between the EU and the USA on how to account for activities related to so-called carbon sinks. COP6 was therefore formally not ended before agreement was reached at the second part of the conference (COP-6bis) in Bonn, Germany, in July 2001. COP-7 was held 29 October-9 November, 2001, in Marrakech, Morocco. COP-8 was held in New Dehli, India, in October/November 2002, while COP-9 took place in December 2003 in Milan, Italy. COP-10 was held in December 2004 in Buenos Aires, Argentina.

Countries with Economies in Transition (EIT)

Countries that are in the transition from a planned economy to a market-based economy, i.e. the Central and East European countries, Russia, and the former republics of the Soviet Union.

EIT

see Countries with Economies in Transition.

Emission Reduction Unit (ERU)

Permits achieved through a Joint Implementation project.

Emissions to Cap (E-C):

Emissions-to-cap (E-C) is calculated by subtracting the seasonally adjusted cap from emissions (actual or forecasted). This metric gives an indication of whether the market (for a specific period) is producing more or less than the seasonally adjusted cap for that same period. More specifically, if not taking CERs into account, a positive (negative) E-C means that the market is fundamentally short (long), suggesting a buy (sell) signal.

Emissions Trading

Emissions Trading allows for transfer of AAUs across international borders. However, it is a general term often used for the three Kyoto mechanisms: JI, CDM and emissions trading.

ERU

see Emission Reduction Unit.

EU ETS

see European Union Emissions Trading System

Financial additionality

CDM projects have to be financially additional, which means that the projects that Annex I countries support within the framework of the CDM should not be financed by official development aid, but that additional funding is to be made available for such projects.

G77

see Group of 77.

GHGForecast 2.1

This computer model provides the foundation for the estimation of the present value of carbon permits. GHGForecast 2.1 uses input data from a large number of sources: historical trends, various top-down models, bottom-up studies, expert group surveys and forecasts. The model is highly flexible and is updated continuously.

Global Warming Potential (GWP)

The global warming potential is the impact a greenhouse gas (GHG) has to global warming. By definition, CO2 is used as reference case, hence it always has the GWP of 1. GWP changes with time, and the IPCC has suggested using 100-year GWP for comparison purposes. Below is a list of 100-year GWPs:

Carbon dioxide (CO2) GWP: 1

Methane (CH4) GWP: 21

Nitrous oxide (N2O) GWP: 310

Hydrofluorcarbons (HFCs) GWP: GWP: 150 – 11 700

Perfluorcarbons (PFCs) GWP: 6500 – 9 200

Sulphur hexafluoride (SF6) GWP: 23 900

See also Carbon Dioxide Equivalent.

Grandfathering

Method for allocation of emissions, where permits are allocated, usually free of charge, to emitters and firms on the basis of historical emissions.

Greenhouse gases (GHGs)

Greenhouse gases (GHGs) are trace gases that control energy flows in the Earth's atmosphere by absorbing infra-red radiation. Some GHGs occur naturally in the atmosphere, while others result from human activities. There are six GHGs covered under the Kyoto Protocol - carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride (SF6). CO2 is the most important GHG released by human activities.

Group of 77 and China (G77/China)

G77/China is the developing country-group in the climate negotiations, consisting of more than 130 developing countries.

GWP

see Carbon Dioxide Equivalent.

Host Country

A host country is the country where a JI or CDM project is physically located.

Hot Air

Excess permits that have occurred due to economic collapse or declined production for reasons not directly related to intentional efforts to curb emissions.

International Emissions Trading (IET)

Emissions Trading.

Intergovernmental Panel on Climate Change (IPCC)

IPCC was established by World Meteorological Organisation (WMO) and the United Nations Environmental Programme (UNEP) in 1988 to assess scientific, technical and socio- economic information relevant for the understanding of climate change, its potential impacts and options for adaptation and mitigation. It is open to all Members of the UN and of WMO (www.ipcc.ch).

JI

see Joint Implementation.

Joint Implementation (JI)

Joint Implementation is a mechanism for transfer of emissions permits from one Annex B country to another. JI generates ERUs on the basis of emission reduction projects leading to quantifiable emissions reductions.

Kyoto Protocol

The Kyoto Protocol originated at COP-3 to the UNFCCC in Kyoto, Japan, December 1997. It specifies emission obligations for the Annex B countries and defines the three so-called Kyoto mechanisms: JI, CDM and emissions trading.

LULUCF

see Land Use, Land Use Change and Forestry.

Land Use, Land Use Change and Forestry (LULUCF)

The land-use, land-use change and forestry (LULUCF) sector was included under the Kyoto Protocol to take into consideration certain human-induced activities that remove greenhouse gases from the atmosphere, also known as carbon "sinks". While Article 3.3 is limited to afforestation, reforestation and deforestation, Article 3.4 states that additional human-induced activities in the agricultural soils and LULUCF categories may be added by Annex I Parties to offset their emission targets.

Leakage

Decrease or increase of greenhouse gas-related benefits outside the boundaries set for defining a project's net greenhouse gas impacts that result from project activities.

MAC

see Marginal Abatement Cost.

Marginal Abatement Cost (MAC)

The marginal abatement cost is the cost of reducing emissions with one additional unit. Aggregated marginal costs over a number of projects or activities define the marginal abatement cost curve.

Memorandum of Understanding (MoU)

A MoU is an agreement between two parties that aims to formally recognise a joint desire to ultimately conclude an agreement or to achieve goals jointly. It may or may not have legal backing of sanction, depending upon how it is constructed. MoUs are often used as a basis for CDM/JI projects.

National Authorities and Designated National Authorities

The national authority is the official body representing the Government which takes part in the arrangement of CDM/JI projects. For JI host countries, the national authority approves the projects and issues the emission reduction units. For CDM host countries, the designated national authority issues a non-objection letter necessary for the project approval.

Non-Annex I countries

Annex I is an Annex in the UNFCCC listing those countries that are signatories to the Convention and committed to emission reductions. The Non-Annex I countries are developing countries, and they have no emission reduction targets.

Permit

Permits are often used for denoting the tradable units under the Kyoto Protocol, i.e. AAUs, ERU or CERs.

Project Design Document (PDD)

Document completed by project developers in order to register their project under the CDM. (Link: Project Design Document (PDD)).

Sinks

Carbon "sinks" refers to the removal of greenhouse gases (GHGs) from the atmosphere through land management and forestry activities that may be subtracted from a countries allowable level of emissions.

Small scale CDM projects

There is a simplified process for small scale CDM projects which will generate less emissions reductions. They are defined as: renewable energy projects under 15 MW, energy efficiency projects that reduce energy consumption by up to 15 GWh per year; or project activities which emit less than 15 kilotonnes CO2 equivalent per year.

Subsidiary Body for Implementation (SBI)

The SBI advices and assists the COP in matters relating to implementation of the UNFCCC and in preparing its decisions. Click here for the SBI’s documents.

Subsidiary Body for Scientific and Technological Advice (SBSTA)

The SBSTA advices the COP on scientific and technical matters. It provides a link between the scientific information from experts and the policy-oriented needs of the COP. The SBSTA works very closely with the Intergovermental Panel on Climate Change (IPCC).

Supplementarity

Supplementarity is requirement in the Kyoto Protocol stating that emissions trading should be a supplement to domestic action. It reflects the request of the European Union to limit the use of the Kyoto Protocol flexibility mechanisms. It is still not determined how supplementarity should be interpreted.

Umbrella group

The Umbrella group is an informal group of industrialized countries that do not belong to the EU. The group was formed after the adoption of the Kyoto Protocol, and consists of Japan, USA, Canada, Australia, Norway, New Zealand, Iceland, Russia and Ukraine.

UNFCCC

see United Nations Framework Convention on Climate Change.

United Nations Framework Convention on Climate Change (UNFCCC)

The UNFCCC was established 1992 at the Rio Earth Summit. It is the overall framework guiding the international climate negotiations. Its main objective is "stabilisation of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic (man-made) interference with the climate system".

Verification

In order for AIJ, CDM and JI projects to have a formalised validation of an emission reduction stream, a recognised independent third party must confirm that claimed emissions reduction activity has occurred.