This document provides definitions for carbon offset and climate change terms. It defines terms like AAUs, additionality, afforestation, carbon credits, carbon footprint, carbon neutrality, clean development mechanism (CDM), and emissions trading. It also summarizes concepts like embodied energy, fossil fuels, greenhouse gases, Kyoto Protocol mechanisms, and renewable energy resources. The document is a glossary that concisely defines key terms related to offsets, emissions, and climate policy.

1. Glossary of Carbon Terms
Information Supplied By ECO Carbon Offsets
AAU
AAU stands for ‘Assigned Amount Unit’ within the Kyoto Protocol. These are tradable carbon
credits. Countries have made commitments under Annex B to accept targets for reducing
greenhouse gases. Under Article 17, if countries in Annex B have a surplus of AAUs because
they have met their emission reduction targets, then these surplus AAU credits may be sold to
other Annex B countries who have not met their targets.
Kyoto also created other types of carbon credits, most well known amongst the other types are
ERUs, and CERs.
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Abatement
The process of reducing the level of greenhouse gas emissions.
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Additionality
‘Additionality’ is an important criteria under the Kyoto Protocols to determine whether a carbon
reduction project actually qualifies as a carbon abatement project.
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2. Under the ‘Additionality’ Rule, projects only qualify if they are additional to what would have
happened anyhow in the normal day-to-day course of conducting business. If a particular
project or development would have happened anyhow – then it does not pass the
‘Additionality’ test and will not qualify as a carbon offset project which may be sold on the
carbon market.
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Afforestation
Afforestation is the process of planting trees for carbon sequestration purposes to create forests
on land that was previously unforested, typically for longer than a generation. Afforestation may
be as the result of planting; direct seeding or by other human induces intervention to encourage
the redevelopment of the native forest.
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AGO
Australian Greenhouse Office – now part of the Department of Climate Change.
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Avoided Deforestation
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3. Avoided Deforestation is the protection of existing forests in circumstances whereby the trees
could otherwise be legally cut down. Eligible under the Kyoto Protocol for Carbon Emissions
Credits.
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Carbon Credit
A Carbon credit is the term used to describe a reduction/offset of one tonne of greenhouse gas
emissions bought by a business to lower or eliminate their carbon footprint. (Also see
‘Offsets’)
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Carbon Footprint
Carbon Footprint is the term used to describe and quantify, in tonnes of CO2, the amount of
greenhouse gas emissions produced by a business in the course of conducting its operations.
These emissions are produced by the use of various business inputs such as transport;
electrical power; and various services purchased by an organisation.
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Carbon Neutral
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4. After a business has measured its carbon footprint, it may purchase carbon offsets to negate its
carbon emissions. A company is then classed as carbon neutral.
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Carbon Sequestration
Carbon Sequestration is the process of removing carbon from the atmosphere (or sea) and
storing it in some medium. Bio-sequestration is the term used when this process is conducted
by vegetation.
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Carbon Sink
A Carbon Sink is the name given to a pool of carbon extracted from the atmosphere.
Trees/forests, for instance, represent a carbon sink because they remove carbon dioxide from
the atmosphere and store it in their trunks; roots; branches and leaves. Currently we are using
the atmosphere itself as a carbon sink with which to store all the industrial pollution.
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CERs
Certified Emission Reductions (CER) units are a type of carbon credit issued under Kyoto’s
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5. Clean Development Mechanism (CDM). One CER is equal to one tonne of CO2 equivalent.
CERs are issued from emission reductions derived from approved CDM projects after suitable
verification has been done and the project has been certified as producing genuine emission
offsets. CERs are used to count towards offsetting the emissions of a country as part of that
nation’s compliance with its Kyoto obligations to reduce its green house gas emissions. In
addition, CERs can also be used under the European Union’s Emissions Trading Scheme (by
both companies and governments) to offset their emissions. EU country members are: Austria;
Belgium; Cyprus; Czech Republic; Denmark; Estonia; Finland; France; Germany; Greece;
Hungary; Ireland; Italy; Latvia; Lithuania; Luxembourg; Malta; Netherlands; Poland; Portugal;
Slovakia; Slovenia; Spain; Sweden; & the UK.
CERS are held / registered, by both Government and private corporations, at a specific carbon
account at the UN.
CERS can also be issued for emission removal through afforestation programs carried out
under the CDM forestry projects.
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CDM
CDM is an acronym for ‘Clean Development Mechanism’. It is a structure set up by Kyoto
whereby projects located in developing countries, designed to reduce greenhouse gas
emissions, can be used to generate carbon credits, known as CERs. These can be sold to
industrial countries to meet their Kyoto carbon reduction targets.
The projects include renewable energy generation, reforestation and switching to clean fuels.
However, although deforestation accounts for approximately 20% of the world’s greenhouse
gasses, it has only attracted 1% of CDM funding. This is in spite of the fact that forestation
offsets account for 36% of the voluntary carbon market.
There is a simplified and less costly process for small-scale CDM projects. Small scale is
defined as: renewable energy projects under 15 MW, energy efficiency projects that reduce
energy consumption by up to 15 GWh per year; projects which emit less than 15 kilotonnes
CO2e pa.
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CH4
CH4 is the chemical formula for Methane.
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CO2e
CO2 is the chemical formula for Carbon Dioxide. The ‘e” in CO stands for equivalent.
2e
There are six Greenhouse Gases (GHG) specified by Kyoto. They vary in importance
according to their contribution to what is termed their ‘Greenhouse Warming Capacity’ (GWC)
over a 100 year period: The GWC are as follows: Carbon dioxide (CO2) is set at: 1, Methane
(CH4) is set at: 23 times more dangerous than CO2; Nitrous oxide (N2O) is: 310;
Hydrofluorcarbons (HFCs) as between: 150 – 11,000; Perfluorcarbons (PFCs) as between:
6,000 – 9,000; and Sulphur hexafluoride (SF6) as : 23,900. Consequently, 1 tonne of Methane
emissions would be expressed as representing 25 Tonnes CO2e.
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Embodied Energy
Embodied Energy is a term which refers to that energy utilised in the production of goods. It is
the energy taken to manufacture products which are in turn purchased for use by the business
which procures them. Such as the energy required in constructing desks, motor vehicles;
buildings; or computers which might be purchased be a legal firm and used in the delivery of its
services to its customers.
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ERU
ERU is an acronym for Emission Reduction Unit. The ERU is a trading unit under Kyoto’s
Joint Implementation (JI) mechanism (see Kyoto Implementation Mechanisms). An ERU is
generated when there is a verified reduction of Greenhouse Gases under the JI mechanism.
One ERU equals one tonne of CO2e. ERUs are bought and sold between Annex 1 countries.
Emission Reduction occurs when emissions that would otherwise be vented into the
atmosphere are avoided. For instance, when methane gas emissions from landfill dumps is
avoided through Local Councils capturing those biogas methane emissions and using them as a
power source.
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Flaring
The sale of carbon offsets derived from the burning of waste/flare gas which converts it into
carbon dioxide emissions which have a lower CO2e value. For instance, Methane is 25 times
as potent as CO2 as a Greenhouse gas. The difference can be claimed as a carbon offset.
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Fossil Fuels
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8. Fossil fuels are those ‘fuel’ deposits derived from organic matter deposited into the various
stratum layers of the earth through the death and accumulation of organic life forms. Because
of this they are considered as non-renewable sources of energy. They include mainly Coal;
Gas; and Oil. Less economic accessible sources include tar sands.
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Food Miles
Food miles is a measure of the physical transportation distance which food travels in its
marketing distribution channel from the growing of the food: to storage; to processing; to
warehousing and storage, and finally to the point of sale to the consumer. The food mile
measurement also takes into account the mechanism of transportation. For instance, air
transport is rated more CO2e intensive that rail transport. Accordingly, food miles, being a
metric of both distance and mode of transport, enables the GHG emissions from one type of
food source to be compared with any another.
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Fugitive Emissions
Fugitive emissions refer to those greenhouse gas emissions lost in the distribution process of
delivering power to the consumer. This can occur, for instance, in the leakage of electricity from
a power pipeline or in the leakage of gas from a gas pipeline. It also occurs in the production
stages of coal; gas or oil from the unintentional release of methane gas.
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9. GGAS
Throughout the World, often in frustration with the progress of their own national governments
to provide leadership on Climate Change, various States have developed their own emission
reduction schemes and standards. California, as a State of the USA, is perhaps the most
outstanding example. In Australia, GGAS is a New South Wales Greenhouse Gas Reduction
Scheme (NSW GGAS) based in Sydney.
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Gold Standard
The Gold Standard, based in Geneva, was launched in 2003 by internationally respected
Not-For-Profit groups (headed by the WWF) as a tool to provide project developers with a
mechanism whereby they can ensure that projects initiated under the Kyoto CDM and JI
mechanisms are genuine and credible projects which result in reduced carbon emissions and
improved environmental results. The Gold standard certification applies only to technological
projects (renewable power projects or to energy efficient technologies) and not to forestry.
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Greenhouse Gases (GHGs)
GHGs are atmospheric gases that cause global warming and climate change. The major GHGs
are carbon dioxide (CO2); methane (CH4); nitrous oxide (N20); hydrofluorocarbons (HFCs):
perfluorocarbons (PFCs); and sulphur hexafluoride (SF6).
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Greenhouse Gas Equivalent (CO2e)
The ‘e” in CO2e stands for equivalent to carbon dioxide emissions. There are six Greenhouse
Gases specified by Kyoto. They vary in importance according to their contribution to
Greenhouse Warming capacity over a 100 year period: Carbon dioxide (CO2) is set at: 1,
Methane (CH4) is set at: 23 more dangerous than CO2; Nitrous oxide (N2O) is: 310;
Hydrofluorcarbons (HFCs) as between: 150 – 11,000; Perfluorcarbons (PFCs) as between:
6,000 – 9,000; and Sulphur hexafluoride (SF6) as : 23,900.
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Inter- governmental Panel on Climate Change (IPCC)
The IPCC was established in 1988 by the UN and the World Meteorological Organization and is
the peer body on climate change and associated methodology.
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ISO 14000
ISO stands for ‘International Organization for Standardization’. ISO 14000 is a set of
international framework standards for the management and audit of greenhouse gas emission
reduction programs.
ISO 14064 (2006): is a set of Standards for accounting and verification of greenhouse gas
reduction projects.
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11. ISO 14065: specifies the competency requirement standards for companies undertaking
greenhouse gas validation and verification assignments.
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IPCC
Intergovernmental Panel on Climate Change (see above)
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Kyoto Protocol
The Kyoto Protocol is an initiative of the UNFCCC (United Nations Framework Convention on
Climate Change). It’s objective is reducing the increase in greenhouse gases and then
stabilising GHG emissions. It came into force in 2006. Individual sovereign governments must
ratify the agreement before it becomes binding upon them. Kyoto commits industrialised nations
to cut their greenhouse gas emissions by 5.2 per cent of their 1990 levels by 2012. Australia
signed Kyoto agreement 11 March 2008.
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Kyoto Protocol Mechanisms
The Kyoto Protocol has three mechanisms to achieve cuts in emissions: (1) the Clean
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12. Development Mechanism (CDM), (2) Joint Implementation (JI) and (3) Emissions Trading.
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Kyoto Offset Units
The main type of offset units nominated by Kyoto, to enable countries meet their emission
targets are: AAUs, ERUs, and CERs.
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LULUCF
LULUCF is an acronym for ‘Land use, land-use change and Forestry’ projects. Some forestry
activities create carbon sinks in forests and soil. Other forestry activities, such as land clearing,
result in an increase in carbon emissions. Deforestation, particularly in Brazil, Indonesia and
parts of Africa, account for about 20% of greenhouse gas emissions because it results in a
reduction of greenhouse gases being removed from the atmosphere. Planting trees leads to a
decrease in atmospheric emissions because trees absorb CO2 from the atmosphere.
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Mitigation
Mitigation refers to human action to either reduce emissions or to absorb emissions already
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13. produced by locking them in a carbon sink. Examples of reducing emissions include the use of
alternative power sources such as solar and wind power. Examples of carbon sinks are forests
sequestering carbon from the atmosphere.
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NCAT
NCAT is an acronym for the National Carbon Accounting Toolbox. This provides tool to
measure GHG emissions and carbon in land uses.
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Monoculture
The practice of planting trees of a single species. Monoculture does not replicate the
biodiversity of the previous vegetation and is more susceptible to being wiped out by disease
since all of the plantings are of the same type, with the same weaknesses and all are
susceptible to the same disease.
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Offsets
Carbon Offsets, also known as Carbon Credits, are produced in one of two ways – either as
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14. result of reducing the level of greenhouse gases emitted into the atmosphere, or as a result of
initiating activities which absorb GHG emissions already present in the atmosphere. Projects
which reduce the level of GHGs emitted into the atmosphere are typified by alternative power/
renewable energy activities (such as windfarms) which replace the energy which would
otherwise have been derived from fossil fuels (like coal or oil). Projects, which absorb
greenhouse gas emissions, create a carbon sink. Planting of forests are typical of such carbon
sinks. One Carbon Credit equals one tonne of C02e. The Australian price for a carbon offset is
around $20 per tonne. Carbon Offsets are purchased by organisations to offset their carbon
footprint emissions. For example, emission quantities of 500 tonnes of carbon-equivalent pa
(fairly typical for a 2nd level law firm) would require 500 carbon offsets and cost the business
approximately $10,000 at $20 per tonne.
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RECs
Renewable Energy Credits. Derived from projects such as windfarms; solar power ;
hydroelectric power and biofuels.
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REDD
There is a class of offset mechanisms referred to as the REDD scheme. REDD is an acronym
for Reducing Emissions from Deforestation and forest Degredation.
Basically, REDD credits provide carbon offsets in return for the protection or avoidance of the
destruction of forests. This avoidance of land clearance is sometimes referred to as ‘Avoided
Deforestation’. REDD Payments are a device which protects existing forests from destruction.
REDD offsets represent a potentially powerful force to channel financial investments from
Industrialised Nations to encourage Developing Nations retain their old growth forests.
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15. Although REDD credits are not yet accepted in the EU compliance system, REDDs are a
popular and growing offset type and accounted for 29% of all credits sold in the voluntary
market in 2010.
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Reforestation
Reforestation is the process of restoring forests on land that was once forested but on which
trees were cut down for other agricultural farming purposes before 31st December 1999.
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Renewable Energy Resources
Renewable energy refers to energy generated from a natural source quickly replenished by
natural process. Examples include: wind; timber; and bio-mass (eg corn stubble). If a natural
resource is consumed more quickly than nature can renew that resource, it is no longer
considered as renewable.
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RERs
RERs is an acronym for Registered Emission Reduction units. They are called Registered
because they are registered on the land with the Land Titles Office and subject to the Forest
Property Act under a registered Forest Property Agreement in each of the Australian States
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16. RERs carbon offsets are produced from the carbon dioxide sequestered by trees. These are an
offset (like REDDs & VERs) sold in the voluntary market to organisations wishing to offset their
carbon emissions. One RER equals one tonne of CO2e.
In order for a RER to be recognised as a carbon offset, it has to meet the Kyoto planting and
reforestation standards. Standards are important to provide buyers with dependability.
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Retire
Retiring carbon credits means to remove them from the carbon trading market. The concept
was introduced to ensure that once a carbon credit has been sold or retired, it cannot be traded
any further. If a fully grown tree has sequestered 3 tonnes of CO2 and it has been used to
offset the emissions from a vehicle for one year, you cannot use the same tree to offset new
emissions the following year. Its carbon has already been fully accounted for. It cannot be
resold. This is why carbon asset registers are so important. The process of retiring carbon
offsets avoids them being sold or bought more than once – so preventing double counting.
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Revegetation
Revegetation is the name given to the process of restoring woodland, with a minimum area of
0.05 hectares, through human intervention and for the purpose of storing carbon in a plantation
project which does not meet the definitions of afforestation and reforestation.
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17. Sequestration
Sequestration is the process of absorbing carbon dioxide from the atmosphere and storing it in
a carbon sink .
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SF6
Sulphur hexafluoride.
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Sink (Carbon)
A Carbon Sink is the name given to a pool of carbon extracted from the atmosphere. Trees, for
instance, represent a carbon sink because they remove carbon dioxide from the atmosphere
and store it in their trunks; roots; branches and leaves. Overall, we are using the atmosphere
itself as a carbon sink in which to store all of our industrial pollution.
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Soil Carbon
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18. Soil is a significant storage sink for carbon. Increasingly, soil carbon capture will become part of
Emission Trading Schemes. The amount of carbon in the soil increases with the amount
microbial activity in the soil. Organic farming offers significant potential in this area.
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Stationary Energy Emissions
Stationary Energy Emissions are basically emissions arising from either the process of
generating electricity or from the production of other fuels consumed in the manufacturing,
construction or domestic sectors. These fuels include gas; coal; biomass; petroleum and liquid
gas.
Another way to view Stationary Energy is to define it in the negative as those emissions which
are not included under other the major emission categories – such as those arising from:
Transport; Agriculture; Waste; Fugitive Emissions; Land Use and some Industrial Processes.
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UNFCCC
The United Nations Framework Convention on Climate Change. UNFCC was established at the
Rio Earth Summit in 1992.
It set up a framework wherein the purpose was to limit the impact on the climate from human
induced activities by stabilising the volume of greenhouse gas in the atmosphere to a level
which will not damage the atmosphere and cause dangerous climate change.
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VERs
VERs is an acronym for Verified or Voluntary Emission Reduction units. These are a type of
credit offset sold in the voluntary market to organisations wishing to offset their carbon
emissions. VERs are created and verified outside of the Kyoto protocol under voluntary
certification standards. One VER equals one tonne of CO2e. VERS can be an important
source of additional income to a project to enable new energy-reducing projects meet their
return on investment targets.
In order for a VER to be recognised as a carbon offset, it has to meet certain standards.
Standards are important to provide buyers with dependability. There are several VERs
standards. These include: The Voluntary Carbon Standard (VCS), the CDM Gold Standard;
VER +; and the California Climate Action Register.
VERs are essentially produced from technological and industrial process which have the effect
of reducing the amount of CO2e being emitted into the atmosphere. These include the likes of;
solar technology; biomass electricity generation; windfarm technology; hydropower from rivers;
production of electricity or heat from methane captured from landfill; and utilisation of methane
in coal mines.
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Voluntary Market
The carbon emission reduction ‘Voluntary’ market refers to those businesses and
organisations who are not legally obliged or ‘mandated’ by legislation to offset their carbon
emissions but who may wish to do so for reasons other such as leadership; environmental
responsibility; or for marketing purposes. The ‘Voluntary’ market covers both suppliers and
buyers of carbon offsets. These offsets can take the form of Verified Emission Reductions units
(VERs), or Registered Emission Reduction units (RERs), or REDDs (Reducing Emissions from
Deforestation and forest Degredation).
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