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CDM Bazaar Glossary
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Assigned Amount Unit


Unit measured in tonnes of carbon dioxide equivalent, in which Annex I country targets are denominated, under the Kyoto Protocol.



Approved Consolidated Methodology


Large-scale methodology to calculate emission reductions for a project, approved for use by the Executive Board of the CDM. Consolidated from a number of approved methodologies (AMs).





According to the Kyoto Protocol, all Clean Development Mechanism (CDM) projects are required to achieve emissions reductions which are additional to those which would have occurred in the absence of the project.



Approved Methodology


Methodology to calculate emission reductions for a large-scale CDM project, approved by the Executive Board of the CDM.



Afforestation and reforestation


Afforestation and reforestation as CDM project activities.

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Bundling signifies the bringing together of several CDM project activities, to form a single CDM project activity in order to reduce CDM-related transaction costs.

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Carbon Credit Note


A fully underwritten obligation (in the form of a note or bond) to deliver a carbon credit (Certified Emission Reduction) to the purchaser at a specified future date.



Clean Development Mechanism


Flexible mechanism introduced by the Kyoto Protocol governing project-level carbon credit activities in non-Annex I countries.



Certified Emission Reduction


Carbon credit from a CDM project, expressed in tonnes of CO2 equivalent (tCO2e).



Carbon dioxide


The most common greenhouse gas.



Carbon dioxide equivalent


Unit in which different greenhouse gases can be measured in terms of the amount of carbon dioxide (CO2) that would have the same global warming potential.

Crediting period




The crediting period for a CDM project activity is the period for which reductions from the baseline takes place. Project participants shall choose the starting date of a crediting period to be after the
date the first emission reductions are generated. Normal CDM projects have either fixed (10 years) or renewable (3x7 years) crediting periods.

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Debundling is defined as the fragmentation of a large scale project activity into smaller parts. A small scale project activity that is part of a large scale project activity is not eligible to use the simplified procedures for small-scale CDM project activities.



Designated National Authority


Climate change focal point of a member country of the UNFCCC which approves CDM projects in the project host country.



Designated Operational Entity


Organisation accredited by the EB for validating CDM projects.

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Executive Board of the CDM


International authority which supervises the registration of CDM projects and CDM related procedures.

Equity IRR


Equity Internal Rate of Return


The return on an equity investment. This represents the yield of the project for the equity investors, after any debt financing has been taken into account. See also IRR.



Emission Reduction Purchase Agreement


Contractual agreement for the purchase of CERs.



Energy Service Company


Company which specialises in the provision of energy services, e.g. energy efficiency.



EU ETS Allowance


Carbon credits created as a tradable commodity under the EU ETS, expressed in tonnes of CO2 equivalent.



 European Union EmissionsTrading Scheme


Cap-and-trade scheme for carbon dioxide emissions from major industrial sectors within the EU.



 Emission Reduction Unit


Carbon credit from a Joint Implementation (JI) project, expressed in tonnes of CO2 equivalent (tCO2-e).

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Greenhouse Gas


Defined by the Intergovernmental Panel on Climate Change as one of a group of six gases (CO2 - Carbon dioxide, CH4 Methane, N2O - Nitrous oxide, PFCs Perfluorocarbons,  HFCs Hydrofluorocarbons, SF6 - Sulphur hexafluoride) which contribute to human-induced climate change.



Green Investment Scheme


A scheme to promote the environmental effectiveness of AAU transfers between Annex I countries, by earmarking revenues from these transfers for environmentally-related purposes in the seller countries.



Global Warming Potential


The different potencies of GHGs with regards to their impact on climate change, expressed in comparison to the GWP of carbon dioxide, which is 1.

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Internal rate of return


Indicator for the profitability of an investment.



International Transaction Log


Global electronic transfer system to enable trading of carbon credits under the Kyoto Protocol.

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Joint Implementation


Mechanism introduced by the Kyoto Protocol governing project-level carbon credit activities between Annex I countries.

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Kyoto Protocol


International legal instrument on climate change containing emission reduction commitments for Annex 1 Parties.

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Letter of Approval


Letter issued by the Designated National Authority (DNA) in the approval process of a CDM project.



Land use, land-use change and forestry


Kyoto Protocol jargon for terrestrial carbon sink activities (forestry, agriculture, etc.).

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Micro Finance Institutions


Financing institutions which focus on micro credits. These institutions are typically located in rural areas of less-developed countries.



Meeting of Parties


With the coming into force of the KP, the CoP started to function as a Meeting of Parties to the Kyoto Protocol.

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National Allocation Plan


Document prepared by each EU Member State in advance of each Phase of the EU ETS, setting out allocations to individual installations in that country for that phase.



Non-Governmental Organisation


A special interest group with no affiliation to the government.



New Methodology


A new methodology submitted for approval to the Methodology Panel of the CDM Executive Board.

Non-Annex I countries



Countries not listed in Annex I to the UNFCCC; generally developing countries.



Net Present Value


Sum of the future discounted cash flows of a project.

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Official Development Assistance


Development aid from developed to developing countries.



Over The Counter


Bilateral trades between a buyer and a seller, not mediated through an exchange.

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Prototype Carbon Fund


Early carbon fund established by the World Bank.



Project Design Document


Document that needs to be prepared and submitted to the CDM Executive Board through a Designated Operational Entity (DOE) in order to register a CDM project.



Project Idea Note


Preliminary CDM feasibility study; not a statutory part of the CDM process but often produced to facilitate host country approval and/or financing of a project.



Program of Activities


A voluntary coordinated action by a private or public entity which coordinates and implements any policy/measure or stated goal (i.e. incentive schemes and voluntary programmes), which leads to GHG emission reductions. An unlimited number of project activities under a PoA can be registered as a single CDM project. PoA is often referred to as Programmatic CDM.



Power Purchase Agreement


Contractual agreement for the purchase of electricity generated by a project.

Primary Market




The Primary Market signifies the first transaction of Certified Emissions Reductions (CERs) related to a specific CDM project. CERs can be sold either as the volume of a whole project or as a pool of Primary Market CERs from a certain share of a project or from several projects.

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Registration is the formal acceptance by the Executive Board of a validated project activity as a CDM project activity. Registration is the prerequisite for the subsequent verification, certification and issuance of Certified Emissions Reductions (CERs) related to that project activity.



Removal Unit


Carbon credit from a LULUCF project in an Annex I country, expressed in tonnes of CO2 equivalent (tCO-e).

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Secondary Market



The Secondary Market signifies the second transaction or trading of Certified Emissions Reductions (CERs) related to CDM projects. Secondary Market CERs can be traded a pool of CERs from a certain share of a project or from several projects.



Special Purpose Vehicle


Legal entity established for a specific purpose, for example to carry out a single project.





Refers to the Methodology to calculate emission reductions for a small-scale project, approved by the CDM EB.

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Tonnes of carbon dioxide equivalent


Common unit for carbon credits.

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United Nations Environment Programme


United Nations body dealing with matters to do with the environment.



United Nations Framework  Convention on Climate Change


International legal instrument to address climate change, signed in 1992.

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Validation is the process of independent evaluation of a project activity by a Designated Operational Entity (DOE) against the requirements of the CDM on the basis of the Project Design Document (PDD)



Voluntary Emission Reduction


Carbon credit which has been verified by an independent third party, but not otherwise approved under the Kyoto Protocol. Carbon credit created specifically for the voluntary offset market.

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About the glossary
The CDM Bazaar Glossary is a list of terms and acronyms related to the carbon market which may be used in the CDM Bazaar. A more comprehensive glossary of terms commonly used in the Project Design Documents of CDM projects can be found here.


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