A

AAU

Assigned Amount Unit

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

ACM

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).

Additionality

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.

AM

Approved Methodology

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

A/R

Afforestation and reforestation

Afforestation and reforestation as CDM project activities.

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B

Bundle

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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C

CCN

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.

CDM

Clean Development Mechanism

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

CER

Certified Emission Reduction

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

CO2

Carbon dioxide

The most common greenhouse gas.

CO2-e

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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D

Debundling

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.

DNA

Designated National Authority

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

DOE

Designated Operational Entity

Organisation accredited by the EB for validating CDM projects.

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E

EB

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.

ERPA

Emission Reduction Purchase Agreement

Contractual agreement for the purchase of CERs.

ESCO

Energy Service Company

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

EUA

EU ETS Allowance

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

EU ETS

 European Union EmissionsTrading Scheme

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

ERU

 Emission Reduction Unit

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

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G

GHG

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.

GIS

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.

GWP

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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I

IRR

Internal rate of return

Indicator for the profitability of an investment.

ITL

International Transaction Log

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

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J

JI

Joint Implementation

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

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K

KP

Kyoto Protocol

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

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L

LoA

Letter of Approval

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

LULUCF

Land use, land-use change and forestry

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

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M

MFIs

Micro Finance Institutions

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

MoP

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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N

NAP

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.

NGO

Non-Governmental Organisation

A special interest group with no affiliation to the government.

NM

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.

NPV

Net Present Value

Sum of the future discounted cash flows of a project.

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O

ODA

Official Development Assistance

Development aid from developed to developing countries.

OTC

Over The Counter

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

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P

PCF

Prototype Carbon Fund

Early carbon fund established by the World Bank.

PDD

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.

PIN

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.

PoA

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.

PPA

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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R

Registration

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.

RMU

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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S

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.

SPV

Special Purpose Vehicle

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

SSC

Small-scale

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

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T

tCO2e

Tonnes of carbon dioxide equivalent

Common unit for carbon credits.

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U

UNEP

United Nations Environment Programme

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

UNFCCC

United Nations Framework  Convention on Climate Change

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

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V

Validation

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)

VER

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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