Commonly used voluntary carbon market terminology

  • Bundling

    The act of retiring carbon credits from a non-endorsed carbon crediting programme with carbon credits from an endorsed crediting programme, on a one-to-one ratio. In a bundling scenario, compensation is achieved only through the endorsed carbon credits. ICROA considers bundling as an exception, and a maximum of 10% of an Accredited Organisation’s annual volume of carbon credits transacted is permissible.

  • Cancellation

    The permanent removal of a carbon credit in an electronic registry without claiming the associated emission reductions or removals towards any voluntary or compliance targets or other purposes. Cancellation may include the following purposes: compensating for reversals; compensation for any previous excess issuance; administrative cancellation for the purpose of re-issuing carbon credits for the same emission reductions or removals under a different carbon crediting program. Only one single use should be associated with each cancellation and the use should be clearly specified.

  • Carbon credit

    A tradable instrument that is issued by a carbon crediting programme. A carbon credit represents a greenhouse gas emission reduction to, or removal from, the atmosphere equivalent to one metric tonne of carbon dioxide equivalent (CO2e), calculated as the difference in emissions from a baseline scenario to a project scenario. Carbon credits are uniquely serialised, issued, tracked and retired or administratively cancelled by means of an electronic registry operated by an administrative body, such as a carbon-crediting programme. A carbon credit can be used for compliance purposes, for example against a country’s climate goal or as part of a regulated carbon market, or for voluntary purposes where a company, organisation or person wants to compensate for a footprint or contribute towards a climate goal.

  • Carbon crediting programme

    A standard setting programme that registers mitigation activities (see below definition) and issues carbon credits.

  • Claim

    A message used to describe or promote a product, process, business, or service with respect to its sustainability attributes or credentials (e.g. compensation claim, contribution claim, net zero claim, carbon neutrality claim).

  • Compensation

    Offsetting an entity’s greenhouse gas emissions within its scope by achieving an equivalent amount of emission reductions or removals outside the boundary or value chain of that entity.

  • Conflict of interest

    A conflict of interest is a situation in which a person or organisation is involved in multiple interests, financial or otherwise, and where serving one interest could involve working against – or in favour of – another.

  • Emission reduction

    A net reduction in anthropogenic greenhouse gas emissions by sources.

  • Government scheme

    A carbon crediting programme developed for or by a national or subnational government, and regulated and administered by the government. It does not include independent carbon crediting programmes eligible for use in regulations such as the South Africa tax scheme, the Colombian tax scheme, or any other comparable regulation.

  • Greenhouse gas (GHG)

    Any gas that absorbs infrared radiation in the atmosphere. Greenhouse gases include, but are not limited to, water vapor, carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrochlorofluorocarbons (HCFCs), ozone (O3), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulphur hexafluoride (SF6).

  • ICROA Accreditation

    Annual certification delivered upon successful completion of an annual third-party verification audit against the requirements of the ICROA Code of Best Practice.

    See here for more information on the ICROA Code of Best Practice.

  • ICROA Code of Best Practice

    Reference document that contains guidance, criteria and requirements against which organisations applying for the ICROA Accreditation are audited annually.

    See here for more information on the ICROA Code of Best Practice.

  • ICROA Conditional Endorsement

    A conditional Endorsement is attributed to carbon crediting programmes that meet ICROA’s criteria for Endorsement and are pending the achievement of set threshold values in order to validate the full operationalisation of the programme. These threshold values are defined as at least 10 projects registered and 100,000 carbon credits issued.

  • ICROA Endorsement

    A carbon crediting programme is considered Endorsed by ICROA if it meets criteria and passes a third-party assessment from a designated entity appointed by ICROA. ICROA-Accredited organisations shall only transact or retire carbon credits from Endorsed carbon crediting programmes. This includes buying carbon credits from a project developer, buying or selling carbon credits from or to another market participant, or selling carbon credits directly to an end user.

    See here for more information on the ICROA Carbon Crediting Endorsement criteria and procedure.

  • Methodology

    Methodologies provide requirements and procedures to determine project boundaries, identify the baseline, assess additionality, monitor the relevant parameters, and ultimately quantify the GHG emission reductions or removals. Methodologies may refer to modules or tools, which include specific methodological tasks and analyses that are used in conjunction with the methodology.

  • Mitigation activity

    An activity that reduces anthropogenic emissions of a greenhouse gas or enhances removals by sinks relative to emissions in the activity’s baseline scenario and seeks registration and issuance of unitised and serialised carbon credits under a carbon crediting programme, which can then be traded, cancelled, or retired. The term refers to activities that may be implemented at different scales, including projects, programmatic approaches, policies or jurisdictional REDD+ activities. They may also be implemented at one or more sites.

  • Mitigation hierarchy

    The mitigation hierarchy is a framework that provides a systematic approach to addressing and reducing environmental impacts, particularly related to greenhouse gas emissions. It consists of the following key components: measure, avoid, reduce, and compensate or contribute.

  • Project developer

    A project developer is the organisation requesting the registration of an emission reduction or removal project and issuance of carbon credits under a carbon crediting programme. They may be the project owner, partner or a consultant. The project developer is responsible for collecting project data and quantifying the volume of emission reductions or removals.

  • Protocol

    See “Methodology”

  • Removal

    A net enhancement of anthropogenic greenhouse gas removals by sinks.

  • Retirement

    The permanent removal of a carbon credit in a registry for the purpose of claiming the associated emission reductions or removals towards compliance requirements or voluntary goals. The term is distinct from cancellations (see “Cancellation” above)

  • Validation and Verification Body (VVB)

    Qualified, independent third-party auditor of a mitigation activity. VVBs are experts in the programme and sectoral scope or technical area they audit.

  • Voluntary Carbon Market (VCM)

    A marketplace that encompasses transactions of carbon credits that are not purchased with the intention to surrender into an active regulated, compliance carbon market. In the voluntary carbon market, carbon credits are transacted with the intent to resell or retire to achieve an environmental claim.

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