Carbon markets glossary.

The requirement that a carbon project produces emission reductions that would not have occurred without the incentive of credit revenue.

Nature-based carbon-removal methodology that establishes or restores forests on non-forested land.

Governs how countries can trade emission reductions (ITMOs) toward their Nationally Determined Contributions.

Includes renewables, methane capture, avoided deforestation. Faces higher additionality scrutiny than removals.

Combines biomass energy with CCS to produce net-negative emissions when biomass is sustainably sourced.

Under IOSCO principles and the EU BMR, benchmark administrators are accountable for methodology, governance, and control frameworks of published indices.

A tradable instrument representing one tonne of CO2 equivalent that has been avoided, reduced, or removed from the atmosphere by a certified project.

Allowance under California's cap-and-trade program, traded on ICE and CME.

The ICVCM's ten-principle framework used to label credits as high-integrity across governance, emissions impact, and sustainable development.

A 0–100 score across seven weighted dimensions — carbon activity, credit quality, ESG, transition, financial, sentiment, and innovation — rebalanced quarterly.

Government-mandated cap-and-trade systems (EU ETS, UK ETS, California CaT, RGGI) where regulated entities surrender allowances against actual emissions.

Requires companies to reduce Scope 1/2/3 by at least 90% and neutralize residuals with permanent removals by their target year.

The host country deducts a traded ITMO from its own emissions inventory so the buyer country can count it.

ICAO's market-based measure obliging international airlines to offset growth in CO2 emissions above a baseline.

Engineered removal that pulls CO2 directly from ambient air and stores it geologically or in products.

Occurs when the same tonne of CO2 is claimed by two entities — solved by transparent registries and corresponding adjustments under Article 6.

The primary compliance instrument in the EU ETS — one EUA represents the right to emit one tonne of CO2 equivalent.

The World Resources Institute / WBCSD framework that defines Scope 1/2/3 accounting for greenhouse gas emissions.

Issues Gold Standard for the Global Goals credits with strong safeguards and SDG co-benefits.

Practices that convey a false impression of a company's environmental impact — a major driver of ESG regulatory action and litigation risk.

Sets the Core Carbon Principles (CCPs) — a global benchmark for high-integrity carbon credits.

A+ (≥85), A (75–84), B (60–74), C (45–59), D (30–44), F (<30).

Publishes the Principles for Financial Benchmarks, which govern how indices must be constructed, governed, and disclosed.

The unit of trade under Article 6.2 — one tonne of CO2e reduction transferred between countries with corresponding adjustments.

Emission reductions in a project's boundary that are offset by increased emissions outside it, e.g. forest protection shifting logging pressure elsewhere.

Smith School of Enterprise's principles for using offsets credibly — prioritize reductions, shift toward removals, and use durable storage over time.

The durability of a carbon removal or avoidance — nature-based projects face reversal risk from fire, disease, or land-use change.

A carbon-credit methodology paying tropical countries to protect standing forests and enhance carbon stocks.

Verra, Gold Standard, ART TREES, ACR, CAR, Puro.earth — each maintains a serial-numbered registry of credits.

Distinct from avoidance credits — includes DAC, BECCS, biochar, enhanced weathering, and durable nature-based removals.

The act of cancelling a carbon credit against a specific emission so it can never be resold — the only way a credit produces a claim.

Cap-and-trade program for power-sector CO2 emissions across US Northeast and Mid-Atlantic states.

Certifies corporate emissions targets against pathways aligned with the Paris Agreement's 1.5°C goal.

Greenhouse gas emissions released directly by a company's operations — combustion in company-owned boilers, furnaces, and vehicles.

Emissions embedded in purchased electricity, steam, heating, or cooling consumed by the company.

All other indirect emissions across a company's value chain — supplier operations, business travel, product use, and end-of-life treatment.

Allowance under the UK ETS, functionally similar to an EUA, denominated in tonnes of CO2 equivalent.

Publishes the Claims Code of Practice, which governs how companies can credibly claim contribution to climate action using carbon credits.

Operates the Verified Carbon Standard (VCS), the most widely used methodology set in the VCM.

Metadata attached to a credit indicating when the underlying emission reduction or removal took place.

Buyers voluntarily purchase and retire carbon credits to offset emissions outside any regulatory obligation.