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Abatement	Abatement is the reduction in the quantity of intensity of greenhouse gas emissions.
Absorption of Radiation	The uptake of radiation by a solid body, liquid or gas. The absorbed energy may be transferred or re-emitted.
Acid Rain	Also known as "acid deposition." Acidic aerosols in the atmosphere are removed from the atmosphere by wet deposition (rain, snow, fog) or dry deposition (particles sticking to vegetation). Acidic aerosols are present in the atmosphere primarily due to discharges of gaseous sulphur oxides (sulphur dioxide) and nitrogen oxides from both anthropogenic and natural sources. In the atmosphere these gases combine with water to form acids.
Acid Rain Program	This program in the United States was established under the Clean Air Act Amendments of 1990, it established a cap and trade system for reducing SO₂ emissions from power plants.
Activities Implemented Jointly (AIJ)	AIJ is a UNFCCC established pilot program to allow private entities in one country to reduce, sequester or avoid emissions through a project in a different country. The pilot phase ends in 2000. AIJ has evolved into Joint Implementation under the Kyoto Protocol.
Activity data	Information that quantifies an action in units so that one may calculate emissions generated by that action. One example of activity data for business travel is miles flown on commercial airlines.
Additionality	According to the Kyoto Protocol Articles on Joint Implementation and the Clean Development Mechanism, Emissions Reduction Units (ERUs) will be awarded to project-based activities provided that the projects achieve reductions that are "additional to those that otherwise would occur". The issue is subject to further clarification by Parties. Some now make the distinction between environmental additionally and economic/financial additionality. Under financial additionality, projects will only earn credit if funds additional to existing ODA commitments are specifically committed to achieve the greenhouse gas reductions. This creates uncertainty over whether commercially viable projects will be eligible to earn credits under the Kyoto Protocol and for this reason, Financial Additionality may not remain in the Kyoto Protocol. (Source: IPIECA) Environmental additionality requires that emission reductions represent a physical reduction or avoidance of emissions over what would have occurred under a business as usual scenario.
Aerosols	Particles of matter, solid or liquid, larger than a molecule but small enough to remain suspended in the atmosphere. Natural sources include salt particles from sea spray and clay particles as a result of weathering of rocks, both of which are carried upward by the wind. Aerosols can also originate as a result of human activities and in this case are often considered pollutants. See also Sulphate Aerosols.
AEU	Australian Emission Unit - Unit iof trade in the Australian Carbon Pollution Reduction Scheme (Au CPRS) - Australia's domestic emissions trading scheme.
Afforestation	The Revised 1996 IPCC Inventory Guidelines defines afforestation as the planting of new forests on land which historically been covered by forest.
Albedo	The ratio of reflected to incident light; albedo can be expressed as either a percentage or a fraction of 1. Snow covered areas have a high albedo (up to about 0.9 or 90%) due to their white colour, while vegetation has a low albedo (generally about 0.1 or 10%) due to the dark colour and light absorbed for photosynthesis. Clouds have an intermediate albedo and are the most important contributor to the Earth's albedo. The Earth's aggregate albedo is approximately 0.3.
Alliance of Small Island States (AOSIS)	AOSIS is a group of countries formed during the Second World Climate Conference in 1990 that includes 35 states from the Atlantic, Caribbean, Indian Ocean, Mediterranean and Pacific. AOSIS countries are small islands and low-lying coastal developing countries that are particularly vulnerable to the effects of climate change such as sea level rise, coral bleaching and the increased frequency and intensity of tropical storms. These countries share a common objective on environmental and sustainable development matters.
Allocation	Allocation is the number of credit or allowance permits provided to an emissions source (e.g. company with net emissions) by a jurisdictional regulatory body during a specific compliance period. Allocation of permits occurs primarily through grandfathering or auctioning.
Allometric Equation	An equation that uses known growth measurements to estimate related unknown growth measurements (e.g. using tree trunk girth measurements to estimate root biomass).
Allowance	Allowances are the unit of trade under closed systems. Allowances grant the holder the right to emit a specific quantity of pollution once (eg. one tonne). The total quantity of allowances issued by regulators dictates the total quantity of emissions possible under the system. At the end of each compliance period each source must surrender sufficient allowances to cover their emissions during that period.
Animal Waste Methane Recovery	Large farms that require animal confinement (hogs, dairy, etc.) incorporate large, uncovered lagoons to store manure until it is used as fertiliser. Methane produced from the waste decomposition is released into the atmosphere during lagoon storage and after fertiliser is spread on the field. Recovery technologies include installing an anaerobic digester (microbial breakdown in a controlled covered environment capturing the CH₄) and utilising the captured methane (CH₄) to produce energy, technology that involves the injection of the waste under the soil.
Annex B Countries	Annex B countries are the 39 emissions-capped industrialised countries and economies in transition listed in Annex B of the Kyoto Protocol. Legally-binding emission reduction obligations for Annex B countries range from an 8% decrease (e.g., various European nations) to a 10% increase (Iceland) in relation to 1990 levels during the first commitment period from 2008 to 2012.
Annex I Countries	Annex I countries are the 36 industrialised countries and economies in transition listed in Annex I of the United Nations Framework Convention on Climate Change (UNFCCC or the Convention). Their responsibilities under the Convention are various, and include a non-binding commitment to reducing their greenhouse gas emissions to 1990 levels by the year 2000. Note that Belorussia and Turkey are listed in Annex I but not Annex B; and that Croatia, Liechtenstein, Monaco and Slovenia are listed in Annex B but not Annex I. In practice, Annex I of the Convention and Annex B of the Kyoto Protocol are used almost interchangeably. However, strictly speaking, it is the Annex I countries which can invest in Joint Implementation (JI) / Clean Development Mechanism (CDM) projects as well as host JI projects, and non-Annex I countries which can host CDM projects. This is true, despite the fact that it is the Annex B countries which have the emission reduction obligations under the Kyoto Protocol.
Annex II Countries	Annex II of the United Nations Framework Convention on Climate Change (UNFCCC or the Convention) includes all original OECD member countries plus the European Union. Under Article 4.2 (g) these countries have a special obligation to help developing countries with financial and technological resources.
Anthropogenic	Derived from human activities.
Ask	See Offer
Assigned Amount (AA) and Assigned Amount Units (AAUs)	The assigned amount is the total amount of greenhouse gas that each country is allowed to emit during the first commitment period of the Kyoto Protocol. This total amount is then broken down into measurable units.
Atmosphere	The mixture of gases surrounding the Earth. The Earth's atmosphere consists of about 79.1% nitrogen (by volume), 20.9% oxygen, 0.036% carbon dioxide and trace amounts of other gases. The atmosphere can be divided into a number of layers according to its mixing or chemical characteristics, generally determined by its thermal properties (temperature). The layer nearest the Earth is the troposphere, which reaches up to an altitude of about 8 km (about 5 miles) in the polar regions and up to 17 km (nearly 11 miles) above the equator. The stratosphere, which reaches to an altitude of about 50 km (31 miles) lies atop the troposphere. The mesosphere which extends up to 80-90 km is atop the stratosphere, and finally, the thermosphere, or ionosphere, gradually diminishes and forms a fuzzy border with outer space. There is relatively little mixing of gases between layers.
Auctioning	Auctioning is a method for issuing emissions permits to emitters and firms in a domestic emissions trading regime based on a willingness to pay for the permits. This method of allocation may be combined with Grandfathering.
Au CPRS	Australian Carbon Pollution Reduction Scheme - Australia's domestic emissions trading scheme
Avoided Emissions	Avoided emissions would have been emitted under a business as usual scenario but were avoided due to the implementation of an emission reduction project.

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Banking	Within the Kyoto Protocol, emission permits not used in one commitment period can be saved or 'banked' for future use in a subsequent compliance period.
Baseline Emissions	The emissions that would occur without policy intervention (in a business-as-usual scenario). Baseline estimates are needed to determine the effectiveness of emissions reduction programs (often called mitigation strategies).
Baseline and Baseline Scenario	The baseline represents the forecast emissions of a company, business unit or project, using a business as usual scenario, often referred to as the 'baseline scenario' i.e. expected emissions if the firm did not implement emission reduction activities. This forecast incorporates the economic, financial, technological, regulatory and political circumstances within which a firm operates.
Berlin Mandate	A ruling negotiated at the first Conference of the Parties (COP 1), which took place in March, 1995, concluding that the present commitments under the Framework Convention on Climate Change are not adequate. Under the Framework Convention, developed countries pledged to take measures aimed at returning their greenhouse gas emissions to 1990 levels by the year 2000. The Berlin Mandate establishes a process that would enable the Parties to take appropriate action for the period beyond 2000, including a strengthening of developed country commitments, through the adoption of a protocol or other legal instruments.
Bid	A bid is the price a prospective buyer is willing to pay.
Bilateral Transaction or trade	A trade that does not include an intermediary exchange and is made on a direct one-on-one basis.
Binding Targets	Binding targets are agreed or mandated emission limits on an entity that are to be met at a specific point of time or period.
Bio-fuel	Bio-fuel is extracted from dry organic matter or combustible oils produced by plants .e.g. alcohol (from fermented sugar), black liquor from the paper manufacturing process, wood and soybean oil.
Biogeochemical Cycle	The chemical interactions that take place among the atmosphere, biosphere, hydrosphere and geosphere.
Biomass Energy	Energy produced by combusting renewable biomass materials such as wood. The carbon dioxide emitted from burning biomass will not increase total atmospheric carbon dioxide if this consumption is done on a sustainable basis (i.e., if in a given period of time, regrowth of biomass takes up as much carbon dioxide as is released from biomass combustion). Biomass energy is often suggested as a replacement for fossil fuel combustion which has large greenhouse gas emissions.
Biomass Generation	Biomass generation is a biomass fuel gasification plant that produces electricity.
Biosphere	The region on land, in the oceans, and in the atmosphere inhabited by living organisms.
Broker	A Broker acts as an intermediary between a buyer and a seller, usually charging a commission for the services provided.
Bubble	A bubble is a regulatory concept whereby two or more emission sources are treated as if they were a single emission source. This creates flexibility to apply pollution control technologies to whichever source under the bubble has the most cost effective pollution control options, while ensuring the total amount of emissions under the bubble meets the environmental requirements for the entity. Bubbles are closed systems. Article 4 of the Kyoto Protocol allows a bubble to be formed between Annex B countries, for example the European Union nations.
Building Efficiency	Building Efficiency relates to energy efficiency for heating, cooling, and lighting and the use of energy-saving appliances and equipment.
Business As Usual Scenario (BAU)	Estimate of a company's future and current emissions under normal operating circumstances. Depending on the scope of the business as usual scenario this may incorporate some emission reduction regulatory controls including carbon taxes etc.
Buyer	A legally recognised entity (individual, corporation, not-for-profit organisation or government, etc.) who acquires credits, reductions or allowances from another legally recognised entity through a purchase, lease, trade or other means of transfer

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Cap and Trade	The Cap and Trade system involves trading of emission allowances, where the total allowance is strictly limited or 'capped'. A regulatory authority established the cap which is usually considerably lower (50% to 85%) than the historic level of emissions. Allowances are created to account for the total allowed emissions (an allowance is a unit of measurement refer AAU). Trading occurs when an entity has excess allowances, either through actions taken or improvements made, and sells them to an entity requiring allowances because of growth in emissions or an inability to make cost-effective reductions.
Capital Costs	Costs associated with the capital or investment expenditures on land, plant, equipment and inventories. Unlike labour and operating costs, capital costs are independent of the level of output.
Capital Stocks	The accumulation of machines and structures that are available to an economy at any point in time to prune goods or render services. These activities usually require a quantity of energy that is determined largely by the rate at which that machine or structure is used.
Carbon Cycle	The global scale exchange of carbon among its reservoirs, namely the atmosphere, oceans, vegetation, soils and geologic deposits and minerals. This involves components in food chains, in the atmosphere as carbon dioxide, in the hydrosphere and in the geosphere.
Carbon Dioxide Equivalent (CO₂e)	Is the universal unit of measurement used to indicate the global warming potential (GWP) of each of the 7 greenhouse gases. It is used to evaluate the impacts of releasing (or avoiding the release of) different greenhouse gases.
Carbon Dioxide or CO₂	A naturally occurring gas that is a by-product of burning fossil fuels and biomass, land use changes and other industrial processes. Carbon dioxide is the reference gas against which other greenhouse gases are measured.
Carbon Equivalent (CE)	A metric measure used to compare the emissions of the different greenhouse gases based upon their global warming potential (GWP). Greenhouse gas emissions in the U.S. are most commonly expressed as "million metric tons of carbon equivalents" (MMTCE). Global warming potentials are used to convert greenhouse gases to carbon dioxide equivalents. Carbon dioxide equivalents can then be converted to carbon equivalents by multiplying the carbon dioxide equivalents by 12/44 (the ratio of the molecular weight of carbon to carbon dioxide). Thus, the formula to derive carbon equivalents is: MMTCE = (million metric tons of a gas) * (GWP of the gas) * (12/44)
Carbon Offsets	See Offsets.
Carbon Sequestration	It refers to projects that capture and store carbon in a manner that prevents it from being released into the atmosphere for a specified period of time. The storage area is commonly referred to as a carbon sink. Carbon Sequestration projects include: > Forest Sequestration > Land Conservation > Soil Conservation & Land Use > Waste CO₂ Recovery/Deep Injection
Carbon Sink	Biomass or other land-based systems that allow carbon to be stored. Sinks include forests, soils, oceans, or underground in depleted oil and gas reservoirs, coal seams and saline aquifers.
Carbon Taxes	A surcharge or levy on the carbon content of oil, coal and/or gas to discourage the use of fossil fuels, with the aim of reducing carbon dioxide emissions.
CDM Executive Board	The CDM Executive Board has an oversight role in the development and dissemination of standards to promote the consistency of CDM projects across the globe. The CDM Executive Board was established by the COP/MOP during COP7 in Marrakech. The Board comprises of 10 members and 10 alternatives. The CDM Executive Boards is to approve: > Develop and implement its operational procedures > New Methodologies > Accredit Designated Operational Entities (DOE) > Issue Emission reduction credits earned through CDM projects, known as 'Certified Emissions Reductions' (CERs). > In addition the Executive Board may establish committees, panels or working groups to assist it in the performance of its functions.
Certification	Emission reductions are certified by independent third parties through a verification process. Certification is to endorse the existence, eligibility and title of the emission reduction (in relation to the underlying project). Once certification has occurred the emission reduction then becomes a separate tradable commodity.
Certified Emission Reductions (CERs)	Annex I investors in Clean Development Mechanism (CDM) projects can earn Certified Emission Reduction units (CERs) for the amount of greenhouse emission reductions achieved by their CDM projects, provided they meet certain eligibility criteria. For example, CERs generated under the CDM will only be recognised when: the reductions of greenhouse gas emissions are additional to any that would occur in the absence of the certified project (see Additionality) requirements of the Host Country are met and the CDM Adaptation charge is paid ie. the Levy to offset climate change adaptation costs in "vulnerable" developing countries. This levy is generally envisioned as an initial percentage of the total financing cost and is paid up front by the project sponsor, in the form of either currency or emission credits, which are then auctioned. Proceeds are held in an adaptation fund for later disbursement.
Chlorofluorocarbons and Related Compounds	This family of anthropogenic compounds includes chlorofluorocarbons (CFCs), bromofluorocarbons (halons), methyl chloroform, carbon tetrachloride, methyl bromide, and hydrochlorofluorocarbons (HCFCs). These compounds have been shown to deplete stratospheric ozone, and therefore are typically referred to as ozone depleting substances. The most ozone-depleting of these compounds are being phased out under the Montreal Protocol.
Clean Development Mechanism (CDM)	The CDM is a mechanism established by Article 12 of the Kyoto Protocol for project-based emission reduction activities in developing countries. The CDM is designed to meet two main objectives: to address the sustainable development needs of the host country, and to increase the opportunities available to Parties to meet their reduction commitments.
Climate	The average weather (usually taken over a 30-year time period) for a particular region and time period. Climate is not the same as weather, but rather, it is the average pattern of weather for a particular region. Weather describes the short-term state of the atmosphere. Climatic elements include precipitation, temperature, humidity, sunshine, wind velocity, phenomena such as fog, frost, and hail storms and other measures of the weather.
Climate Change	A change of climate which is attributed directly or indirectly to human activity that alters the composition of the global atmosphere and which is in addition to natural climate variability over comparable time periods (Source: UNFCCC)
Climate Feedback	An atmospheric, oceanic, terrestrial or other process that is activated by the direct climate change induced by changes in radiative forcing. Climate feedbacks may increase (positive feedback) or diminish (negative feedback) the magnitude of the direct climate change.
Climate Lag	The delay that occurs in climate change as a result of some factor that changes only very slowly. For example, the effects of releasing more carbon dioxide into the atmosphere may not be known for some time because a large fraction is dissolved in the ocean and only released to the atmosphere many years later.
Coal Bed Methane Recovery	A Coal Bed Methane emission reduction project captures methane released from coal bed seams during the mining process for flaring or energy use.
Cogeneration	The process by which two different and useful forms of energy are produced at the same time. For example, while boiling water to generate electricity, the leftover steam can be sold for industrial processes or space heating.
Commercial/Industrial Efficiency	Commercial/Industrial Efficiency projects reduce fuel consumption and emissions by applying innovative technologies in energy- and waste-intensive industries. Practices include advanced manufacturing and refining processes; cogeneration; efficient steam systems; waste-to-energy; and electric motors and drives.
Commitment Period	The five year Kyoto Protocol Commitment Period is scheduled to run from calendar year 2008 to calendar year 2012 inclusive.
Compliance	The rules and regulations outlined in the Kyoto Protocol are satisfied.
Conference of Parties (COP)	The COP is the supreme body of the United Nations Framework Convention on Climate Change (UNFCCC). The role of the COP, which consists of more than 170 nations that ratified or acceded to the Framework Convention on Climate Change, is to promote and review the implementation of the convention.
Countries with Economies in Transition (EIT)	The Central and East European countries, Russia, and the former republics of the Soviet Union that are in transition from centrally-planned economies to market-based economies.
Credit	The term 'Credits' are used in a number of contexts, most commonly in relation to emission reductions that have been achieved in excess of the required amount for: > Joint Implementation, also known as Emission Reduction Units (ERUs) or > Clean Development Mechanism projects, specifically known as Certified Emission Reductions (CERs)
Credit For Early Action	Within the Kyoto Protocol, Annex B governments can not receive credits before the first commitment period (2008-12) towards their emission obligation, except under the Clean Development Mechanism. However some governments have suggested giving credit for early action taken before 2008 with the intent to stimulate investment in their emission abatement projects.
Cryosphere	The frozen part of the Earth's surface. The cryosphere includes the polar ice caps, continental ice sheets, mountain glaciers, sea ice, snow cover, lake and river ice and permafrost.

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Damage Function	The relation between changes in the climate and reductions in economic activity relative to the rate that would be possible in an unaltered climate.
Deforestation	The process of removing forested areas. Examples include cutting or burning to provide land for agricultural purposes, residential or industrial building sites, roads etc., or harvesting the trees for building materials or fuel.
Desertification	The progressive destruction or degradation of existing vegetative cover to form desert. This can occur due to overgrazing, deforestation, drought and the burning of extensive areas. Once formed, deserts can only support a sparse range of vegetation. Climatic effects associated with this phenomenon include increased albedo, reduced atmospheric humidity and greater atmospheric dust (aerosol) loading.
Developed Countries	Industrialised countries (identified in Annex I and Annex B of the Kyoto Protocol).
Developing Countries	Countries in the process of industrialisation which have constrained resources to address their economic and environmental problems. Developing countries also referred to as Less Developed Countries (LDC).
Differentiation	Within the Kyoto Protocol, this refers to differing national circumstances that might require differing emission reduction obligations.
Direct Emissions	Emissions that are produced by a source controlled by a company. Examples include operations within a company-owned factory or gasoline burned in a company car. See also "indirect emissions."
Distributed generation	A popular term for localized or on-site power generation.
Diurnal Temperature Range	The difference between maximum and minimum temperature over a period of 24 hours.
Draft Deal	Bids/offers that are currently under negotiation between a buyer and seller to reach mutually acceptable terms (price, volume, etc). The end-point of a draft deal is a final deal.
Draft Trades	Is a deal which the buyer is in the process of compiling, and is saved within draft trades. The buyer can edit and add other trades to this saved document. Once decided on the trade, it can be submitted to the broker.
Dynamic Baseline	Dynamic baseline is a forecast baseline which adjusts to the changes in the business environment over time.

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Early Action	The action of reducing emissions, investing in Clean Development Mechanism projects, Joint Implementation or trading emissions before the start for the Kyoto Commitment Period.
Early Crediting	Article 12 within the Kyoto Protocol, indicates that 'early crediting' will be given for Clean Development Mechanism projects undertaken between 2000 and 2008 as opposed to credit for other emission reductions which will begin in 2008. (This is distinct from "Credit for Early Action" programs).
Eddy Mixing	Mixing due to small scale turbulence processes (eddies). Such processes cannot be explicitly resolved by even the finest resolution Atmosphere-Ocean General Circulation Models currently in use and so their effects must be related to the larger scale conditions.
Eligibility Criteria	The Kyoto Protocol and jurisdictional criteria that must be met by an emissions reduction project to produce reductions which can be banked, traded or offset against emissions.
El Nino	A climatic phenomenon occurring irregularly, but generally every 3 to 5 years. El Ninos often first become evident during the Christmas season (El Nino means Christ child) in the surface oceans of the eastern tropical Pacific Ocean. The phenomenon involves seasonal changes in the direction of the tropical winds over the Pacific and abnormally warm surface ocean temperatures. The changes in the tropics are most intense in the Pacific region, these changes can disrupt weather patterns throughout the tropics and can extend to higher latitudes, especially in Central and North America. The relationship between these events and global weather patterns are currently the subject of much research in order to enhance prediction of seasonal to interannual fluctuations in the climate.
Emission	Pollutant released into either air or waterways from industrial processes, households or transportation vehicles.
Emission Allowance	Emission allowances are the total emissions allowed to be released by an emission source (often a net emitting firm) within a given period of time. Emission Allowance are created by a regulating entity and distributed to emitters by grant, auction or a combination of the two.
Emission Inventory	Emission Inventory is an archive of historical emissions. An emission inventory can begin once systems boundaries are defined.
Emission Leakage	Emission Leakage or 'Leakage' refers to emission reductions in one location being offset by an increase in emissions in another location. For example, emissions could be reduced in an Annex I nation by moving an emissions intensive industry to a non-Annex I nation. Thus lowering emissions in the Annex I nation and increasing emissions in the non-Annex I nation.
Emission Offset	See Offset.
Emission Permit	See Permit.
Emission Reduction Unit (ERU)	Under the Kyoto Protocol, a specified amount of greenhouse gas emissions reductions achieved through a Joint Implementation project.
Emission Reporting Boundaries (or 'System Boundaries')	Are the scope of emission sources included in an emission inventory or forecast for a particular firm. This scope can be defined according to jurisdictional reporting requirements or it can be broader which may allow greater opportunities for reductions. For example, national requirements may only require a business to report on emissions from the production cycle but the firm's own internal reporting boundaries may include emissions from waste etc.
Emission Targets	Emission targets are emission limits imposed on emitters by a regulatory body.
Emission Taxes	Surcharge or levy placed on emissions sources, usually on a per tonne basis. Emission taxes are designed to provide incentives to firms and households to reduce their emissions as a means to control pollution (carbon tax is a subset of an emissions tax).
Emissions Cap (or Cap)	A regulatory device that sets a ceiling on emissions that can be released into the atmosphere within a designated timeframe. Within the Kyoto Protocol Annex B countries agreed to caps on emissions within the 2008-2012 timeframe in reference to 1990 emissions levels. Caps are effectively the same as 'Allowances' however caps more often refer to national emission limitations and allowances to individual emitters.
Emissions Credit	Under a cap-and-trade emissions trading system, an allowance received by an organization for avoided emissions that may be sold or traded to another organization, allowing the second organization to exceed its emissions level.
Emissions factor	A unique value for scaling emissions to activity data in terms of a standard rate of emissions per unit of activity (e.g. tonnes of carbon dioxide emitted per litre of fossil fuel consumed).
Emissions Forecast	An emission forecast refers to the forecasts of emissions produced by an emitter for its internal management purposes. Forecasts are hypothetical and incorporate knowledge about the firm's future operational, regulatory and economic impacts to determine emission projections. This process is to baseline forecasting except that baselines are used to quantify emission reductions and are subject to far more scrutiny.
Emissions intensity	A level or amount of emissions per some unit of economic output, such as GDP, sales revenue or goods produced.
Emissions Trading	Emissions Trading is a general term used for the three Kyoto Protocol flexibility mechanisms. It is a market-based system that allows firms the flexibility to select cost-effective solutions to achieve established environmental goals. With emissions trading, firms can meet established emission goals by: (a) reducing emissions from a discrete emissions unit; (b) reducing emissions from another place within the facility; (c) securing emission reductions from another facility, or (d) securing emission reductions from the marketplace. Emissions trading encourages compliance and financial managers to pursue cost-effective emission reduction strategies and provides incentives to emitters to develop the means by which emissions can inexpensively be reduced.
Energy Intensity	Ratio of energy consumption and economic or physical output. At the national level, energy intensity is the ratio of total domestic primary energy consumption or final energy consumption to gross domestic product or physical output.
Enhanced Greenhouse Effect	The natural greenhouse effect has been enhanced by anthropogenic emissions of greenhouse gases. Increased concentrations of carbon dioxide, methane, and nitrous oxide, CFCs, HFCs, PFCs, SF₆, NF₃, and other photochemically important gases caused by human activities such as fossil fuel consumption and adding waste to landfills, trap more infra-red radiation, thereby exerting a warming influence on the climate. See Climate Change and Global Warming.
Environmental Additionality	See Additionality.
Equivalent CO₂	The concentration of CO₂ that would cause the same amount of radiative forcing as a given mixture of CO₂ and other greenhouse gasses.
Escalation Rate	Calculation that factors in cost increases to a bid or offer on a stream of reductions.
EUA	European Allowance - unit of trade in European Union Emissions Trading Scheme ( EU ETS)
EU Bubble	Under the Kyoto Protocol, the individual countries that comprise the European Union have aggregated their emissions and accepted an aggregated emissions reduction target. This has been reallocated back to the individual countries to allow differentiation of national reduction programs. The arrangement allows the target to be shared among all countries within the bubble.
EU ETS	European Union Emissions Trading Scheme
Evapotranspiration	The sum of evaporation and plant transpiration. Potential evapotranspiration is the amount of water that could be evaporated or transpired at a given temperature and humidity, if there was plenty of water available. Actual evapotranspiration can not be any greater than precipitation, and will usually be less because some water will run off in rivers and flow to the oceans. If potential evapotranspiration is greater than actual precipitation, then soils are extremely dry during at least a major part of the year.
Externalities	The inadvertent impact on the well-being of a person or group that results from the activities of another person, group or entity. For example the impact of environmental degradation resulting from an activity that is not incorporated into the economics of the activity.

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Falsifiability Rule	Science today recognizes that there is no way to prove the absolute truth of any hypothesis or model, since it is always possible that a different explanation might account for the same observation. In this sense, even the most well established physical laws are "conditional". Hence, with scientific methodology it is never possible to prove conclusively that a hypothesis is true, it is only possible to prove that it is false.
Feedback Mechanisms	A mechanism that connects one aspect of a system to another. The connection can be either amplifying (positive feedback) or moderating (negative feedback). See also Climate Feedback.
Final Deal	Fully matched and negotiated bids/offers that are under contract for delivery.
Final Energy	Energy supplied that is available to the consumer to be converted into useful energy (e.g. electricity at the wall outlet).
Financial Additionality	See Additionality.
Flexibility Mechanisms	The Kyoto Protocol has provisions that allow for flexibility in how, where and when emissions reductions are made via three mechanisms: the Clean Development Mechanism, International Emission Trading and Joint Implementation. These mechanisms have been established to increase flexibility and hence reduce the costs of reducing emissions.
Fluorocarbons	Carbon-fluorine compounds that often contain other elements such as hydrogen, chlorine or bromine. Common fluorocarbons include chlorofluorocarbons and related compounds (also know as ozone depleting substances), hydrofluorocarbons (HFCs), and perfluorocarbons (PFCs).
Forcing Mechanism	A process that alters the energy balance of the climate system, i.e. changes the relative balance between incoming solar radiation and outgoing infrared radiation from Earth. Such mechanisms include changes in solar irradiance, volcanic eruptions, and enhancement of the natural greenhouse effect by emission of carbon dioxide. See also Radiative Forcing.
Forest Sequestration	Sequestration includes afforestation which increases land's sequestration rates as it is the process of establishing a forest on land not previously forested and reforestation which increases the capacity of the land to sequester carbon by replanting forest biomass in areas where forests were recently harvested.
Forward Contract (or Spot Forward)	Purchase or sale of a specific quantity of reductions, offsets, or allowances at the current or spot price, with delivery and settlement scheduled for a specified future date. Since most CO₂ trades include a stream of reductions occurring during the Kyoto Commitment Period (2008-2012), forward settlement is more common than immediate settlement
Forward Market	A forward market deals in forward contracts which are agreements to buy or sell an asset at a certain time in the future for a certain price. They generally constitute a private agreement between two entities including a mutually agreed delivery date.
Forward Settlement	Purchase or sale of a specific quantity of reductions, offsets or allowances at the current or spot price, with delivery and settlement scheduled for a specified future date.
Fossil Fuels	Carbon-based fuels that include coal, petroleum, natural gas and oil.
Fossil Fuel Reserves	The quantity of a fossil fuel that is known to exist, based on geological and engineering evidence, and that can be recovered under current economic conditions and operating capabilities.
Fossil Fuel Resources	The quantity of fossil fuel that is thought to exist and that may be recoverable based on an explicit scenario for future economic conditions and operating capabilities.
Framework Convention	See United Nations Framework Convention on Climate Change.
Framework Convention on Climate Change (FCCC)	The landmark international treaty unveiled at the United Nations Conference on Environment and Development (UNCED, also known as the "Rio Summit"), in June 1992. The FCCC commits signatory countries to stabilize anthropogenic (i.e. human-induced) greenhouse gas emissions to 'levels that would prevent dangerous anthropogenic interference with the climate system'. The FCCC also requires that all signatory parties develop and update national inventories of anthropogenic emissions of all greenhouse gases not otherwise controlled by the Montreal Protocol. Out of 155 countries that have ratified this accord, the U.S. was the first industrialized nation to do so.
Full-cost Pricing	The pricing of commercial goods – such as electric power — that would include in the final price faced by the end user not only the private cost of inputs, but also the cost of externalities created by their production and use.
Fuel Cell	An electrochemical device that converts chemical energy directly into electricity.
Fuel Cycle	Refers to the total life of a fuel in all of its uses and forms. The stages of a fuel cycle may include extraction or generation, transportation, combustion, air emissions, by-product removal, further transportation and/or disposal.
Fuel Switching	Fuel switching is the substitution of conventional and existing technologies for more efficient and less carbon-intensive fuel technologies including repowering, upgrading instrumentation, controls, and/or equipment, more efficient utilisation of fuel and fuel switching.
Fugitive Emissions	Unintended gas leaks from the processing, transmission and/or transportation of fossil fuels.
Futures Contract	Futures Contract is technically and functionally different from a Forward Contract. It is an agreement to buy or sell a specific amount of a commodity or financial instrument at a certain time in the future for a particular price. The price is established between the buyer and seller on a commodity exchange via a standardised contract defined by the exchange. Futures Contracts typically have a range of delivery dates and are marked to market daily. Most Futures Contracts close out their position before maturity, either through an offsetting transaction or by selling the futures contract ie. a Futures Contract is tradable in its own right. Futures Contracts are highly defined instruments usually based upon a strong cash market for the underlying commodity. At this stage, a greenhouse gas emissions futures market does not exist, most transactions are forward contracts.

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GCMs	See "General Circulation Models"
GDP	See Gross Domestic Product
General Circulation Models (GCMs)	Computer programmes that attempt to mathematically simulate global climate. The complex and large computer programs are based on mathematical equations derived from knowledge of the physics and chemistry that govern the earth-atmosphere system.
Geographic Information Systems (GIS)	A GIS is a research tool that allows analysts to view geographically referenced information (maps, charts and diagrams) to perform trend and spatial analyses with indicators.
Geosphere	The soils, sediments and rock layers of Earth's crust, both continental and beneath the ocean floors.
Geothermal energy	Energy derived from heat transferred from the earth's molten core to underground deposits of dry steam (steam with no water droplets), wet steam (a mixture of steam and water droplets), hot water or rocks lying fairly close to the earth's surface.
GHG	See "greenhouse gas"
GHG protocols	Generally accepted sets of rules for measuring greenhouse gas emissions.
Global Warming	The continuous gradual rise of the earth's surface temperature thought to be caused by the greenhouse effect and responsible for changes in global climate patterns (see also Climate Change).
Global Warming Potential (GWP)	The GWP is an index that compares the relative potential of the 7 greenhouse gases to contribute to global warming i.e. the additional heat/energy which is retained in the Earth's ecosystem through the release of this gas into the atmosphere. The additional heat/energy impact of all other greenhouse gases are compared with the impacts of carbon dioxide (CO₂) and referred to in terms of a CO₂ equivalent (CO₂e) i.e. Carbon dioxide has been designated a GWP of 1, Methane has a GWP of 21.
Grandfathering	Method for issuing emission permits to emitters and firms in a domestic emission trading scheme according to their historical emissions. This method of allocation may be combined with Auctioning.
Graph	Is a function available on the Forward Trading Board to graphically represent the price per tonne over time of a selected forward stream of emissions.
Greenhouse Effect	The impact of human activities that cause certain gases to be released and trapped in to the Earth's atmosphere. They then absorb the sun's energy and cause the earth to warm at a faster rate than usual. It is named after the phenomena of glass trapping heat in a greenhouse.
Greenhouse Gas (GHG)	The greenhouse gases in most contexts are the seven gases regulated under the Kyoto Protocol, determined to be the main contributors to the Greenhouse Effect: carbon dioxide [CO₂], water vapour, methane [CH₄], chlorofluorocarbons (CFCs), nitrous oxide [N2O], hydrofluorocarbons [HFCs], perfluorocarbons [PFCs], and sulphur hexafluoride [SF₆].
Greenhouse Gas Reduction or Emission Reduction	A reduction in emissions recognised to contribute to climate change. Greenhouse Gas reductions are often measured in tonnes of carbon-dioxide-equivalent, which is calculated according to the GWP of a gas.
Green power	A popular term for energy produced from renewable energy resources that are commonly considered environmentally preferable.
Green tags	A kind of currency used in the energy trade to represent the environmental and social benefits of renewable energy. Also called renewable energy credits.
Gross Domestic Product	The value of all goods and services produced or consumed within a nation's borders.
Group of 77 and Others	This group of developing countries is a major force in Kyoto Protocol negotiations. It has increased from the original 77 countries to more than 130.

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Halocarbons	Chemicals consisting of carbon, sometimes hydrogen, and either chlorine, fluorine bromine or iodine.
Halons	These man-made substances (also known as bromofluorocarbons) are chlorofluorocarbons that contain bromine. See also Chlorofluorocarbons and Related Compounds.
Host Country	The country where an emissions reduction project is physically located.
Hot Air	Reductions of greenhouse gases that have occurred due to economic collapse or declined production for reasons not directly related to intentional efforts to curb emissions.
Hydrocarbons	Substances containing only hydrogen and carbon. Fossil fuels are made up of hydrocarbons. Some hydrocarbon compounds are major air pollutants.
Hydrofluorocarbons (HFCs)	These chemicals (along with perfluorocarbons) were introduced as alternatives to ozone depleting substances in serving many industrial, commercial, and personal needs. HFCs are emitted as by-products of industrial processes and are also used in manufacturing. They do not significantly deplete the stratospheric ozone layer, but they are powerful greenhouse gases with global warming potentials ranging from 140 (HFC-152a) to 12,100 (HFC-23).
Hydrosphere	The part of the Earth composed of water including clouds, oceans, seas, ice caps, glaciers, lakes, rivers, underground water supplies and atmospheric water vapour.

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Immediate Settlement	Immediate Settlement of Spot trades are trades where the settlement date (delivery of the commodity) occurs at a specified time shortly after the trade date. Payment terms and quantity are fixed at trade date. Immediate settlement trades are infrequent in today's greenhouse gas emissions market.
Incentive-Based Regulation	Government regulations that induce changes in behaviour of individuals and firms to produce environmental, social or economic benefits that would otherwise be prescribed by legislation. Tradable emission allowances is an example of incentive-based regulation that replaces traditional types of regulations such as technology mandates or inflexible caps on individual sources of emissions.
Indirect Emissions	Emissions that result from a company activity, but are produced by a source external to the company. One common example is use of electricity provided by a commercial utility. The company uses the electricity to run lights or office equipment, but the electric utility is producing the power and the emissions.
Integrated Assessment	A method of analysis that combines results and models from the physical, biological, economic and social sciences, and the interactions between these components, in a consistent framework, to project the consequences of climate change and the policy responses to it.
Intergovernmental Panel on Climate Change (IPCC)	The IPCC neither conducts original research nor monitors climate-related data, but its periodic assessment reports and technical papers play a very important role in the creation of climate change policies worldwide. The IPCC was instrumental in establishing the Intergovernmental Negotiating Committee for the United Nations Framework Convention on Climate Change (UNFCCC or the Convention) in 1992.
Internal Trading	An intra-company emissions trading system allowing the trade of emission permits among a firm's own business units with the objective of maximising cost effective internal emission abatement opportunities
International Emissions Trading (IET)	IET is a flexibility mechanism of the Kyoto Protocol which allows the trade of Assigned Amount Units (AAUs) among Annex B countries. It is expected that this activity will be delegated by national governments to entities within their jurisdictions so that international trading between entities will occur. This will adjust each nations 'pool' of AAUs.
International Energy Agency (IEA)	An organisation formed in 1973 by major oil-consuming nations to manage future oil supply shortfalls.
IPIECA	International Petroleum Industry Environmental Conservation Association

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Joint Implementation (JI)	Joint Implementation refers to emission reduction projects jointly implemented by entities within different industrial nations JI is an extension of the concept developed in the Activities Implemented Jointly pilot that ends in 2000.
JUSSCANNZ	The JUSSCANNZ is a group of non-European Union industrialised nations in the Kyoto Protocol negotiations including Japan, United States, Switzerland, Canada, Australia, Norway and New Zealand. Iceland, Mexico and the Republic of Korea.

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Kyoto Commitment Period (or Compliance Period)	The Kyoto commitment period is the period in which Annex B countries have committed to reduce their collective emissions of greenhouse gases by an average of 5.2%. There are currently no emissions targets after the commitment period specified in the Kyoto Protocol from 2008 to 2012. These targets, if the United Nations Framework Convention on Climate Change (UNFCCC or the Convention) process continues in its present form, will be negotiated closer to the expiration of the first commitment period. It is expected that the current model of five-year periods of commitment will be maintained. Major questions regarding future commitment periods include the level of allowed emissions among capped (Annex I) countries and the extent to which additional countries take on caps (that is, developing country participation).
Kyoto Forests	A Kyoto forest is a forest planted after January 1, 1990. Article 3 of the Kyoto Protocol states that only carbon sequestered from these forests during the commitment period of 2008-2012 will gain credit
Kyoto Lands	Land areas covered by activities of Article 3.3. of the Kyoto Protocol as well as any additional activities agreed under Article 3.4.
Kyoto Mechanisms (or Flexibility Mechanisms)	The Kyoto Mechanisms (commonly referred to as Emissions Trading) allow for the creation and transfer of emissions permits between countries. Based on economic market principals, they are designed to minimise the cost of reducing global greenhouse emissions and include: Joint Implementation (Article 6), the Clean Development Mechanisms (Article 12), and International Emissions Trading (Article 17).
Kyoto Protocol	The Kyoto Protocol originated at the 3^rd COP to the United Nations Convention on Climate Change held in Kyoto, Japan in December 1997. It specifies the level of emission reductions, the deadlines and methodologies that signatory countries (i.e. countries who have signed the Kyoto Protocol) are to achieve.

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Land Conservation	Land conservation prevents the release of carbon into the atmosphere, which occurs when lands come into production, by preventing production (eg. agriculture) from occurring.
Landfill/Biomass Capture	Fugitive methane (CH₄) produced from landfill decomposition normally migrates into the atmosphere. Installing a CH₄ recovery system and combusting the CH₄ reduces the Global Warming Potential (GWP) of the landfill CH₄.
Lease	An instrument conveying property to another person or entity for a definite period, usually in consideration of rent or other periodical compensation.
Lifetime (Atmospheric)	The lifetime of a greenhouse gas refers to the approximate amount of time it would take for the anthropogenic increment to an atmospheric pollutant concentration to return to its natural level (assuming emissions cease) as a result of either being converted to another chemical compound or being taken out of the atmosphere via a sink. This time depends on the pollutant's sources and sinks as well as its reactivity. The lifetime of a pollutant is often considered in conjunction with the mixing of pollutants in the atmosphere; a long lifetime will allow the pollutant to mix throughout the atmosphere. Average lifetimes can vary from about a week (sulphate aerosols) to more than a century (CFCs, carbon dioxide).

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Marginal Abatement Cost (MAC)	The cost of reducing emissions by one tonne of CO₂e. An aggregation of these costs against total tonnes abated creates a firm's marginal abatement cost curve. The lower the MAC curve, the more effective the firm's emission reduction strategies
Market-based Incentives	Measures intended to directly change relative prices of energy services and overcome market barriers.
Mechanism	JI/IET - Joint Implementation and International Emission Trading. CDM - Clean Development Mechanism
Megawatt (MW)	A standard measure of electric power plant generating capacity; a megawatt equals one thousand kilowatts or 1 million watts.
Methane (CH₄)	Greenhouse gas with a Global Warming Potential of 21. The primary sources of methane are landfills, coal mines, paddy fields, natural gas systems and livestock (e.g. cows and sheep).
Methane Recovery	Is the capture and re-use of methane emissions either through cost-effective management methods or through power generations. Methane Recovery projects include: > Animal Waste Methane > Coal Bed Methane > Deep Methane Injection > Landfill/Biomass Capture
Metric Tonne	Common international measurement for the quantity of greenhouse gas emissions. A metric ton is equal to 2205 lbs or 1.1 short tons.
Monitoring	Monitoring relates to the regular measurement, assessment and recording of emissions and emission reductions by an emitting firm or an emission reduction project. For example, emitting firms may monitor the actual level of emissions reduction achieved as a result of internal abatement programs.

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National self determination	Self determination is the process of a nation (or a firm) deciding their own framework for emission control, measurement and monitoring methodologies, without reference to the wishes of any other nation, firm or agency.
Nitrogen Oxides (NOx)	Gases consisting of one molecule of nitrogen and varying numbers of oxygen molecules. Nitrogen oxides are produced in the emissions of vehicle exhausts and from power stations. In the atmosphere, nitrogen oxides can contribute to formation of photochemical ozone (smog), can impair visibility, and have health consequences; they are thus considered pollutants.
Nitrous Oxide (N₂O)	Greenhouse gas with a Global Warming Potential of 310. Results from the burning fossil fuels and the manufacture of fertiliser.
Non-Annex B Countries	Countries not included in Annex B of the Kyoto Protocol. Non-Annex B countries do not currently have binding emission reduction targets.
Non-Annex I Countries	Countries not included in Annex I of the United Nations Framework Convention on Climate Change UNFCCC. Non-Annex I countries do not currently have binding emission reduction targets.
Non-Governmental Organisations (NGO)	Registered non-profit organisations and associations from business and industry, environmental groups, cities and municipalities, academics, social and activist organisations, etc.
No Regrets Mitigation Options	Those whose benefits, such as reduced energy costs and reduced emissions of local/regional pollutants, equal or exceed their cost to society, excluding the benefits of climate change mitigation. They are sometimes known as "measures worth doing anyway."
NZ ETS	New Zealand Emissions Trading Scheme
NZU	New Zealand Unit - Domestic emission unit traded in New Zealand Emissions Trading Scheme (NZ ETS).

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'offering a call'	See Options.
'offering a put'	See Options.
OECD	Organisation for Economic Co-operation and Development which includes the following countries: Australia, Austria, Belgium, Canada, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Korea, Japan, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States.
Offer	Price at which the owner of an emission reduction, credit, or allowance is willing to sell (a.k.a. Ask)
Official Development Assistance (ODA)	Official Development Assistance is funding provided by governments of developed countries to developing countries to assist in various community, health and commercial projects.
Offset Ratio	The amount of emissions that must be secured relative to the on-site emission increase. In US domestic emission trading programs, new sources must offset their emissions at a greater than 1:1 ratio, especially if the offsetting emission reductions are derived from an off-site source.
Offsets	One Offset is an emissions reduction that a pollution source has achieved in excess of permitted levels and or required reductions. The excess amount is the credit and can be sold on the market.
Opportunity Cost	The cost of an economic activity foregone by the choice of another activity.
Options	Options are contracts that give the option buyer the right but not the obligation to enter into a specific transaction purchase (a Call) or sale (Put) up to a certain date. The price (Strike Price), quantity and terms of delivery are locked in at the trade date. The expiration or exercise date (Strike Dates) is also locked in at that time, that is the date after which the option buyer's rights to enter into the transaction terminate. The option seller must live by the decision of the buyer, and is paid a premium for selling the optionality or flexibility to the buyer. Option buyers may be either the buyers or seller of the underlying commodity. If they wish to buy the commodity they purchase a Call option ie. that is the right but not the obligation to purchase the commodity at the specified terms. If they wish to guarantee the sale of the commodity they purchase a put option ie. right but not the obligation to enter into a sale of the commodity at specified terms.
Ozone (O₃)	Ozone consists of three atoms of oxygen bonded together in contrast to normal atmospheric oxygen which consists of two atoms of oxygen. Ozone is an important greenhouse gas found in both the stratosphere (about 90% of the total atmospheric loading) and the troposphere (about 10%). Ozone has other effects beyond acting as a greenhouse gas. In the stratosphere, ozone provides a protective layer shielding the Earth from ultraviolet radiation and subsequent harmful health effect on humans and the environment. In the troposphere, oxygen molecules in ozone combine with other chemicals and gases (oxidization) to cause smog.

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Particular Matter (PM)	This type of air pollution includes soot, dust, dirt and aerosols. It causes apparent effects on visible and exposed surfaces, which can create or intensify breathing and heart problems and result to cancer and premature death.
Particulates	Tiny pieces of solid or liquid matter, such as soot, dust, fumes or mist.
Perfluorocarbons (PFCs)	A group of human-made chemicals composed of carbon and fluorine only: CF₄ and C₂F₆. These chemicals, specifically CF₄ and C₂F₆, (along with hydrofluorocarbons) were introduced as alternatives to the ozone depleting substances. In addition, they are emitted as by-products of industrial processes and are also used in manufacturing. PFCs do not harm the stratospheric ozone layer, but they are powerful greenhouse gases: CF₄ has a global warming potential (GWP) of 6,300 and C₂F₆ has a GWP of 12,500.
Permit	Permits are certificates of operation that allow the holder to operate a facility provided they do not exceed a specified rate (eg. kilograms/tonnes per day). Permits are often designated as an upper limit. Because few systems operate at 100% of capacity at all times actual emissions are usually a fraction of the theoretical upper limit of allowed emissions. However, as new permits become harder to obtain, existing operations are motivated to increase their level of operations under their existing permits (eg. adding a second shift thereby legally increasing the overall quantity of emissions).
Phase	Many new regulatory programs, especially those imposing considerable restrictions are implemented in phases. For example, Title IV of the US Clear Air Act Amendments of 1990 (the US Acid Rain Program) had three phases. Phase 1a, from 1995 – 1999, was a training program based upon the 110 largest emitters of sulphur dioxide (SO₂). Phase 2 began on 1 January 2000 and expanded the program to include all power stations that emit SO₂ with a capacity > 25 MW
Photosynthesis	The process by which green plants use light to synthesize organic compounds from carbon dioxide and water. In the process oxygen and water are released. Increased levels of carbon dioxide can increase net photosynthesis in some plants. Plants create a very important reservoir for carbon dioxide.
Polluter Pays	Principle that pollution (specifically greenhouse gas emissions) creating entities should pay compensation to third parties for pollution damages. This equates to polluters paying for the environmental externalities created by pollution.
Precautionary Approach	The approach promoted under the Framework Convention of Climate Change to help achieve stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous interference with the climate system.
Precautionary Principal	In reference to the Kyoto Protocol, the idea that action to forestall large-scale, irreversible damage from climate change is warranted even though the risks of climate change are not yet fully understood.
Precession	The tendency of the Earth's axis to wobble in space over a period of 23,000 years. The Earth's precession is one of the factors that results in the planet receiving different amounts of solar energy over extended periods of time.
Pre-commitment Period	Is the period prior to the first Kyoto Commitment Period. This is an important time for the development of the Kyoto Protocol operational framework and to determine the involvement of signatories to the Kyoto Protocol.
Premium	A put or call buyer who is purchasing an option must pay to a put or call seller a premium for an option contract. This premium is determined by market supply and demand forces.
Primary Energy	Energy embodied in natural resources (e.g. coal, crude oil, sunlight, uranium) that has not undergone any anthropogenic conversions or transformations.
Primary Market	The exchange of emission reductions, offsets or allowances between buyer and seller where the seller is the originator of the supply. The exchange of greenhouse gas emission reductions is currently conducted only in the primary market (vs. the secondary market).
Process Change	Is an improvement of the emissions associated directly with a manufacturing process. For example, improving the composition of clinker to reduce emissions of CO₂e in cement manufacture or improving the recycled content in the aluminium smelting process.
Project Scenario	Project Scenario is an emission reduction project's emission forecast. In some cases the project scenario may be nil but its operations may reduce emissions in the existing operations of the business. The Project Scenario is compared with the existing operations Business as Usual (or baseline) scenario to determine the emission reductions achieved by the emission reduction project.
Protocol	A protocol is linked to an existing convention. It is a separate, additional agreement that must be signed and ratified by the Parties to the convention. Protocols are a way of strengthening a convention by adding new, more detailed commitments. See Kyoto Protocol
Purchase	A complete bid.

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Radiation	Energy emitted in the form of electromagnetic waves. Radiation has differing characteristics depending upon the wavelength. Because the radiation from the sun is relatively energetic, it has a short wavelength (ultra-violet, visible and near infra-red) while energy re-radiated from the Earth's surface and the atmosphere has a longer wavelength (infra-red radiation) because the Earth is cooler than the Sun.
Radiative Damping	An imposed positive radiative forcing (q.v.) on the Earth-atmosphere system (e.g. through the addition of greenhouse gases) that represents an energy surplus. The temperature of the surface and lower atmosphere will then increase and in turn increase the amount of infrared radiation being emitted into space, thus establishing a new energy balance. The amount that emissions of infrared radiation to space increases for a given increase in temperature is known as the rediative damping.
Radiative Forcing	A change in the balance between incoming solar radiation and outgoing infra-red radiation. Without any radiative forcing, solar radiation coming to the Earth would continue to be approximately equal to the infra-red radiation emitted from the Earth. The addition of greenhouse gases traps and increased fraction of the infra-red radiation, reradiating it back toward the surface and creating a warming influence (i.e. positive radiative forcing because incoming solar radiation will exceed outgoing infra-red radiation).
Reference Year	The reference year is the benchmark year on which emission reduction targets are established. The Kyoto protocol uses 1990 as the reference year against which Annex I nations are required to control their emissions.
Reforestation	The Revised 1996 IPCC Inventory Guidelines defines reforestation as the planting of forests on land which has historically contained forest but which has been used for another purpose since last being covered by forest.
Regeneration	Renewal of forest or tree crop by natural or artificial means.
Registration	Process of registering emission reduction data with a third party registry.
Renewable Energy	Renewable Energy is electricity that is generated using renewable energy sources (solar, photovoltaic, wind, geothermal, biomass and hydroelectric technologies) and which adhere to sustainable development practices.
Reservoir	Reservoirs are greenhouse gas storage locations within the biosphere such as oceans, soils and forests. The reaction of these reservoirs to global climate change is difficult to predict.

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SBI	Subsidiary Body for Implementation.
Secretariat (UNFCCC)	Staffed by international civil servants and responsible for servicing the COP and ensuring its smooth operation, the secretariat makes arrangements for meetings, compiles and prepares reports, and co-ordinates with other relevant international bodies. The Climate Change secretariat is institutionally linked to the United Nations. (source: UNFCCC)
Secondary Market	The exchange of emission reductions, offsets or allowances between buyer and seller where the seller is not the originator of the supply. The exchange of greenhouse gas emission reductions currently involves only the primary market.
Seller	A legally recognised entity (individual, corporation, not-for-profit organisation, government, etc.) who sells reductions, credits or allowances to another legally recognised entity through a sale, lease, trade or other means of transfer.
Sequestration	See Carbon Sequestration.
Sink	A reservoir that uptakes a pollutant from another part of its cycle. Soil and trees tend to act as natural sinks for carbon. See also Carbon Sinks
Soil Conservation & Land Management	Current farming practices incorporate the tillage of land in preparation for planting. Soil has organic carbon stored below its surface, and tilling the soil exposes the carbon to microbial breakdown that releases CO₂ into the atmosphere. Instituting a no till/low till land management program can result in a net sequestration of soil carbon. Additional GHG reductions occur due to decreased fertiliser and on-the-farm energy use.
Source	Any process or activity which releases a greenhouse gas, an aerosol or a precursor of a greenhouse gas into the atmosphere (source: UNFCCC)
Splits	Standing bids or offers that have been divided into two or more different bids or offers, new bids and offers may be included in a final deal or re-positioned for sale.
Spot	See Immediate Settlement.
Starting Delivery Date	This date is the first specified future date when the Forward Contract emission reductions will be delivered.
Starting Price	Is the price of the emission reductions (measured in US$/tCO₂e) at the Starting Delivery Date in bid/offer for a Forward Contract. The input engine allows you to use this as the base price to which the Escalation Rate is applied for the selected Tendor.
Static Baseline	A static baseline assumes that business conditions are to remain constant and apply throughout the lifetime of the project.
Stratosphere	The part of the atmosphere directly above the troposphere. See atmosphere.
Strike Date	See Options.
Strike Price	Price at which the stock or commodity underlying a put or call option can be purchased (call) or sold (put) over the specified period
Subsidiary Body for Implementation (SBI)	The role of the SBI is to develop recommendations to assist the Conference of Parties in assessing and reviewing the implementation of the Climate Convention.
Subsidiary Body for Scientific and Technology Advice (SBSTA)	SBSTA is a link between the policy-orientated needs of the COP and the scientific, technical and technological assessments and information provided by various external groups, like the Intergovernmental Panel on Climate Change (IPCC).
Sulphate Aerosol	Particulate matter that consists of compounds of sulphur formed by the interaction of sulphur dioxide and sulphur trioxide with other compounds in the atmosphere. Sulphate aerosols are injected into the atmosphere from the combustion of fossil fuels and the eruption of volcanoes like Mt. Pinatubo. Recent theory suggests that sulphate aerosols may lower the earth's temperature by reflecting away solar radiation (negative radiative forcing). Global Climate Models which incorporate the effects of sulphate aerosols more accurately predict global temperature variations.
Sulphur Dioxide (SO₂)	A compound composed of one sulphur and two oxygen molecules. Sulphur dioxide emitted into the atmosphere through natural and anthropogenic processes is changed in a complex series of chemical reactions in the atmosphere to sulphate aerosols. These aerosols result in negative radiative forcing (i.e. tending to cool the Earth's surface).
Sulphur Hexafluoride (SF₆)	Very powerful greenhouse gas used primarily in electrical transmission and distribution systems. SF₆ has a global warming potential of 24,900.
Supplementarity	A Kyoto Protocol requirement that adequate domestic energy and other policies exist to ensure the achievement of long-term emission reduction goals. The supplementary rule is still open to interpretation however it reflects the request of the European Union to limit the use of the Kyoto Protocol flexibility mechanisms.
Sustainable Development	Sustainable Development has numerous definitions depending on the context in which it is used. Using a broad definition, the 1987 UN World Commission on Environment and Development (the "Brundtland Commission") defined it as "sustainable development...meets the needs of the present without compromising the ability of future generations to meet their needs".
Sustainable Yield	In relation to wood products, the sustainable yield of a forest is the maximum level of harvest of commercial timber or project mix that can be maintained for a given area in perpetuity under a given management regime. The forested area must be sufficiently large to support a large number of stands at different stages in the projection cycle. The average yield over time must be equal to the average growth increment, in terms of product, of the area as a whole.

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Technology Transfer	The process by which energy-efficient or low emission intensive technologies developed by industrialised nations are made available to less industrialised nations. Technology transfer may occur through the sale of technology by private entities, through government programs, non-profit arrangements or other means.
Term/tenor	Period of time (measured in years) during which the conditions of a contract will be carried out.
Terrestrial Biosphere	A collective term for all living organisms on land.
Thermocline	The region of the world's ocean, typically at a depth of 1 km, where temperature decreases rapidly with depth and which marks the boundary between the surface and Deep Ocean.
Thermohaline Circulation	Large-scale density-driven circulation in the oceans, driven by differences in temperature and salinity.
Trace Gas	Any one of the less common gases found in the Earth's atmosphere. Nitrogen, oxygen and argon make up more than 99 percent of the Earth's atmosphere. Other gases, such as carbon dioxide, water vapour, methane, oxides of nitrogen, ozone and ammonia, are considered trace gases. Although relatively unimportant in terms of their absolute volume, they have significant effects on the Earth's weather and climate.
Tradable Emission Permits	A permit is an authorisation allowing an emitter to emit a specified number of tonnes of emission. Once those tonnes have been emitted, the permit expires. The total number of permits in any tradable market equals the desired level of emissions sought by the regulating authorities. Tradable permits allow emitters to determine the most economic manner to cover their emissions—by buying permits to cover emissions, taking actions to reduce emissions and selling excess permits or a combination of those activities.
Trade	A transaction where a buyer and seller exchange a recognised commodity.
Trade Request	A Trade Request is a simple step-by-step guide to assist you in completing an offer to sell or a bid to buy emission reductions. The Trade Request also assists you in structuring the bid/offer through the use of a variety of tools, including a graphing function. Trade Requests may also be saved, for completion at a later date, prior to submission to a broker.
Transient Climate Response	The time-dependent response of the climate system or model to a time-varying change of forcing.
Transportation	Transportation consists of private and public passenger and freight transports.
Tropopause	The boundary between the troposphere (q.v.) and the stratosphere (q.v.)
Troposphere	The lowest layer of the atmosphere. The troposphere extends from the Earth's surface up to about 10-15 km. See also Atmosphere.
Tropospheric Ozone (O₃)	Ozone that is located in the troposphere and plays a significant role in the greenhouse gas effect and urban smog. See Ozone for more details.
Tropospheric Ozone Precursor	Gases that influence the rate at which ozone is created and destroyed in the atmosphere. Such gases include: carbon monoxide (CO), nitrogen oxides (NOx), and non-methane volatile organic compounds (NMVOCs).
Turn-over time	The ratio between the mass of a reservoir (e.g. mass of N₂O in the atmosphere) and the rate of removal from the reservoir (e.g. for N₂O, the rate of destruction by sunlight in the stratosphere (q.v.)).

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US Call Option	See Options
United Nations Framework Convention on Climate Change (UNFCCC)	The UNFCCC was established in June 1992 at the Rio Earth Summit. Its primary objective is the "stabilisation of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic (man-made) interference with the climate system. Such a level should be achieved within a time-frame sufficient to allow ecosystems to adapt naturally to climate change, to ensure that food production is not threatened, and to enable economic development to proceed in a sustainable manner." The UNFCCC is the governing body for international negotiations.
US Put Option	See Options

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Verification	Verification is often undertaken during a due diligence process in a buy/sell transaction. It provides independent assurance that actual or expected emission reductions have been/will be achieved from an emission reduction project during a specified period. The level of assurance provided will depend on the procedures undertaken by the independent verifier, the scope of which is usually agreed by the transacting parties and may include: assurance as to compliance with Kyoto/national regime requirements (however this will only be possible when such requirements are clearly defined), adequacy of measuring and monitoring systems for emission reduction credits, reviewing the operations of the underlying emission reductions project etc.
Volatile Organic Compounds (VOC)	Any one of several organic compounds which are released to the atmosphere by plants or through vaporization of oil products, and which are chemically reactive and are involved in the chemistry of tropospheric ozone production. Methane, while strictly falling within the definition of a VOC, is usually considered separately.
Voluntary Commitment	Actions taken by an entity that reduce emissions outside of regulatory requirements. During the Kyoto Protocol negotiations, a draft article on voluntary commitments would have permitted developing countries to take on voluntary, legally binding emission reduction targets, but was dropped from the final Protocol text.

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Waste CO₂ Recovery & Deep Injection	CO₂ from an industrial source is normally vented into the atmosphere. This project captures the vented CO₂ and utilises it to enhance an oil recovery operation. The CO₂ is sequestered in underlying bedrock that formerly held the oil.
Water Vapour	The most abundant greenhouse gas, it is the water present in the atmosphere in gaseous form. Water vapour is an important part of the natural greenhouse effect. While humans are not significantly increasing its concentration, it contributes to the enhanced greenhouse effect because the warming influence of greenhouse gases leads to a positive water vapour feedback. In addition to its role as a natural greenhouse gas, water vapour plays an important role in regulating the temperature of the planet because clouds form when excess water vapour in the atmosphere condenses to form ice and water droplets and precipitation.
Weather	Weather is the specific condition of the atmosphere at a particular place and time. It is measured in terms of such things as wind, temperature, humidity, atmospheric pressure, cloudiness and precipitation. In most places, weather can change from hour-to-hour, day-to-day and season-to-season. Climate is the average of weather over time and space. A simple way of remembering the difference is that 'climate' is what you expect (e.g. cold winters) and 'weather' is what you get (e.g. a blizzard).
Wet/Dry Deposition	The removal of a substance from the atmosphere either through being washed out as rain (wet deposition) or through deposition on a dry surface (dry deposition).

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