REFERENCE

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

A

Abatement: The reduction in the quantity of intensity of greenhouse gas emissions

Acid Rain Program: A program in the United States established under the Clean Air Act Amendments of 1990 which employs a cap and trade system for reducing SO₂ emissions from power plants.

Account: The place where allowance or credits are held and transactions recorded.

Account Officer: A person recognized by the agency administering the program who is authorized to transact credits or allowances for the company of concern.

Additionality: Under the US greenhouse gas program, reductions are considered to be additional if they represent reductions that would not have occurred without the credit-producing project.

Afforestation: The process of establishing and growing forests on bare or cultivated land which has not been forested in recent history.

Alliance of Small Island States (AOSIS): 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: The number of credits or allowances that an affected source holds for a specific compliance year.

Allotment Trading Units: In the Illinois ERMs program, an ATU is the tradeable unit issued by the Illinois Environmental Protection Agency. An ATU represents 200 pounds of volatile organic material emissions and is a limited authorization to emit 200 pounds of volatile organic material emissions during the seasonal allotment period under the ERMS program.

Animal Waste Methane Recovery: Part of the project >Class included under the Methane Recovery Category on the BGC Environmental Brokerage Services Trading Floor (Abb: Animal)

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 the fertiliser is spread on the field. Recovery technologies include installing an anaerobic digester (microbial breakdown in a controlled covered environment capturing the Methane) and utilising the Methane to produce energy - technology that involves the injection of the waste under the soil.

GHG Reduction & Quantification:
Global Warming Potential (GWP) of Methane (CH₄) = 21, GWP of Carbon Dioxide (CO₂) = 1. Combustion of one tonne of CH₄ produces 2.75 tonnes of CO₂; therefore the capture and combustion one tonne of otherwise fugitive CH₄ emissions yields a GWP benefit of at least 18.25 tonnes CO₂ equivalent. If the captured CH₄ is used as an energy source (on-site or delivered into a pipeline) the full 21 tonnes of emission reductions can be claimed.

Additionality:
Any animal waste CH₄ recovery system is voluntary. There are no mandates requiring farmers to capture CH₄ emissions from lagoons and as such, very few lagoons have recovery systems (significantly less than 1%). Costs of CH₄ recovery are generally more than savings/revenues from electricity generation/sales. Revenues from the sale of reductions may create a favourable economic atmosphere, making this project occur.

Verification:
CH₄ recovery systems can incorporate meters to accurately measure the amount of CH₄ captured. Meter records, pipeline records, electricity production records, and/or gas sales receipts can be used for verification and auditing purposes.

Ancillary Benefits:
a) Odour, an intense offender to local communities, is greatly reduced by CH₄ recovery systems
b) CH₄ recovery systems use lined lagoons (most existing lagoons are unlined), reducing leakage into water tables and nutrient run off from surface spreading on fields, a major source of rural water pollution, and
c) promotion of animal waste CH₄ as sustainable/renewable energy source that is no longer wasted.

Annex B Countries: 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: 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 Belarussia 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.

Ask: see Offer

Assigned Amount (AA) (Assigned Amount Units (AAUs)): 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 (AAUs).

Auctioning: A method for issuing emission 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.

Avoided Emissions: Emissions that would have been emitted under a business as usual scenario but were avoided due to the implementation of an emission reduction project

B

Banking: An administrative mechanism that facilitates the recognition of emission reduction credits or emission allowances. Banking also allows for the use of ERCs or EAs in a time that is later than when they were created. 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 Period: In relation to the quantification of ERCs, the Baseline Period is a time period prior to the reduction of emissions.

Baseline Scenario: In the context of greenhouse gas emissions the Baseline Scenario is 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

Bid: The price a prospective buyer is willing to pay. Bidding on forwards indicates the buyers willingness to obligate himself to the purchase of the emission reductions at an agreed upon time in the future. Bidding on a call means that the buyer is willing to purchase a call option. Bidding on a put means that the buyer is willing to purchase a put option.

Bilateral Transaction (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-diesel: Diesel equivalent, processed fuel derived from biological sources (such as vegetable oils), which can be used in unmodified diesel-engines

Bio-ethanol: Ethanol (C2H5OH), also known as ethyl alcohol, alcohol, or grain spirit derived from biological sources. A clear, colorless, flammable oxygenated hydrocarbon with a boiling point of 78.5 degrees Celsius in the anhydrous state. In transportation, ethanol is used as a vehicle fuel by itself (E100), blended with gasoline (E85), or as a gasoline octane enhancer and oxygenate (10 percent concentration).

Biomass Energy: Biomass energy generated from organic waste matter e.g. sawmill wood waste, bagasse, crop waste.

Biomass Generation: Biomass generation is a biomass fuel gasification plant that produces electricity.

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.

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.

C

Cap and Trade:A system involving 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 referred to as 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. Cap and Trade programmes are closed systems, but can be modified to allow the creations of new permits by non-capped sources in the manner of credit-based systems.

Carbon Dioxide Equivalent (CO₂eq): The universal unit of measurement used to indicate the global warming potential (GWP) of each of the 6 greenhouse gases. It is used to evaluate the impacts of releasing (or avoiding the release of) different greenhouse gases.

Carbon Dioxide or CO_2: 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 Monoxide: A pollutant governed by New Source Review Programs.

Carbon Sequestration:

Carbon Sequestration is a Category on the BGC Environmental Brokerage Services Trading Floor (Abbreviation: Sequestn). 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 (Forest
• Land Conservation (Land)
• Soil Conservation & Land Use (Soil)
• Waste CO2 Recovery/Deep Injection (Wast/Inj)

Carbon Sink: A reservoir that can absorb or “sequester” carbon dioxide from the atmosphere. Forests are the most common form of sink, as well as soils, peat, permafrost, ocean water and carbonate deposits in the deep ocean.

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

Category/Class: Fields on the BGC Environmental Brokerage Services Trading Floor that provide a basic description of the type of project underlying the emission reduction stream bid or offer. Please select a category or class from the list below for further information.

• Carbon Sequestration (Sequestn)
• Forest Sequestration (Forest)
• Land Conservation (Land)
• Soil Conservation & Land Use (Soil)
• Waste CO2 Recovery / Deep Injection (Waste/Inj)
• Any/other means any of the above or other not listed above

• Energy Use (Energy)
• Building Efficiency (Build)
• Commercial/Industrial Efficiency (Comm)
• Fuel Switching (Switch)
• Renewable Energy (Renew)
• Transportation (Transp)
• Any/other means any of the above or other not listed above
•  Methane Recovery (Methane)

• Animal Waste Methane Recovery (Animal)
• Coal Bed Methane (Coal)
• Landfill/Biomass Capture (Landfill)
• Any/other means any of the above or other not listed above

 Process Change (Non_Energy) (Process)

• Process Change (non-energy) (Any)

CDM Executive Board: The CDM Executive Board was finalised at COP7 in 2001, its aim being to supervise the Clean Development Mechanism, under the authority and guidance of the COP/MOP. The COP named 10 members and 10 alternates to the CDM Executive board, with John Ashe of Antigua and Barbuda as chair and Sozaburo Okamatsu (Japan) as Vice Chair. The CDM Executive Board is authorized to approve methodologies for baselines, monitoring plans and project boundaries; accredit operational entities; and develop and maintain the CDM registry.

Certification: Emission reductions need to be certified by independent third parties through a verification process. Certification is endorses 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 (CFCs): CFCs are organic compounds that contain carbon, chlorine, and fluorine atoms. They are widely used as coolants in refrigeration and air conditioners, as solvents in cleaners, and as propellants in aerosols. CFCs are the main cause of stratospheric ozone depletion. One kilogram of the most commonly used CFCs may have a direct effect on climate thousands of times greater than that of one kilogram of CO₂. However, because CFCs also destroy ozone - itself a greenhouse gas - the actual effect on the climate is unclear.

Clean Development Mechanism (CDM): 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.

Clearing Group Account: Cantor Fitzgerald’s NOx or SO2 Allowance Tracking System account or RTC account where NOx or SO2 Allowances or RTCs are transferred from Seller prior to delivery to Buyer, or where NOx or SO2 Allowances or RTCs are held per instructions of seller or buyer.

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)

Coal Bed Methane Recovery: Coal Bed Methane Recovery is included in the project Class under the Energy Use Category on the BGC Environmental Brokerage Services Trading Floor (Abb: Coal)

A Coal Bed Methane emission reduction project captures methane released from coal bed seams during the mining process for flaring or energy use.

Cogeneration: A process involving the use of waste heat from electric generation, such as exhaust from gas turbines, for industrial purposes or district heating.

Commercial/Industrial Efficiency: Commercial/Industrial Efficiency is a Class under the Energy Use Category on the BGC Environmental Brokerage Services Trading Floor (Abb: Comm)
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.

GHG Reduction & Quantification: Projects offset power from fossil fuel sources through reduced consumption. Energy is reduced by the installation of efficient technologies, changes in operational procedures, and changes in management practices. Energy consumption is based on historical measurement and projections of business as usual future use and measurement of project-based improvements. Emissions factors are used to calculate the corresponding emission reductions.

Additionality: Energy efficiency improvements are generally considered to be above what is required by codes and efficiency standards.

Verification: Electricity production and consumption is metered and verified by independent third parties utilising electricity bills and meter readings.

Commitment Period: The five year Kyoto Protocol Commitment Period is scheduled to run from calendar year 2008 to calendar year 2012 inclusive.

Commitment Period Reserve (CPR): The minimum number of Kyoto Units as calculated and required to be held in a Registry pursuant to the Kyoto Protocol

Community Independent Transaction Log: The transaction log which will be established under the EU Emissions Trading Scheme, through which all Transactions will be communicated and recorded, checked, and completed or rejected as appropriate.

Competent Authority: The authority designated by a MemberState or the Commission to preside over the running of the EU ETS Registry.

Compliance: A state whereby a sources is acheiving all that is required of it by the applicable rules.

Compliance Account: The place in the NOx or SO2 Allowance Tracking System where Allowances are recorded and held by a NOx affected source or an SO2 source.

Compliance Period or Year: In states with RPS requirements, facilities subject to the requirement have to ensure that they have sufficient certificates in their account for each compliance period. For example, in Texas by March 31, each competitive retailer must submit credits to the program administrator from its account equivalent to its REC requirement for the previous compliance period (calendar year).

Compliance Year: In the RECLAIM program, the 12 month period beginning on January 1 and ending on December 31 for cycle 1 facilities, and beginning on July 1 and ending on June 30 for cycle 2 facilities.

Conference of Parties: 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. In the greenhouse gas markets "credit" is commonly used 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 cannot 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.

Cycle: In the RECLAIM program, Cycle 1 commences on January 1 and ends on December 31. Cycle 2 commences on July 1 and ends on the following June 30.

D

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.

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: Differing national circumstances that might require differing emission reduction obligations in the Kyoto Protocol,

Discrete Emission Reduction Credits: DERs, DERCs, or open market credits, are reductions in emissions that occur over a specified time period and do not continue on into the future. Generally, unlike ERCs, DERs are not evaluated and verified by the relevant local or state government air agency. Mass-based ERCs are one type of DER.

Draft Deal: Bids/offers that are currently under negotiation between a buyer and seller and facilitated by a broker in order to reach mutually acceptable terms (price, volume, etc). The end-point of a draft deal is a final deal that is posted on either the forward board or the options board

Draft Trades: 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 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.

E

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. Emissions Excursion: In the Illinois ERMS program, an event that occurs when a Participating Source does not hold sufficient ATUs at the end of the Reconciliation Period to account for its volatile organic material emissions from the preceding Seasonal Allotment Period.

Early Crediting: Crediting for Clean Development Mechanism projects undertaken prior to 2008 under Article 12 of the Kyoto Protocol as opposed to credit for other emission reductions which will begin in 2008. (This is distinct from "Credit for Early Action" programs).

Economies in transition (EITs): As defined by the Annex I Expert Group on the UNFCCC, EITs are countries which are undergoing the process of transition to a Market Economy:

Belarus
Bulgaria
Croatia
Czech Republic
Estonia
Hungary
Latvia
Lithuania
Poland
Romania
Russian Federation
SlovakRepublic
Slovenia
Ukraine

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.

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 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: Pollutant gases emitted from industrial processes and the engine exhausts of transport vehicles that can have an undesired effect (such as contributing to the greenhouse effect).

Emission Offset: The use of an ERC to offset, or mitigate, an emission increase governed by New Source Review Rules.

Emission Reduction Credit: ERCs are reductions in emissions that have been recognized by the relevant local or state government air agency as being real, permanent, surplus, and enforceable. ERCs are usually measured as a weight over time (e.g., pounds per day or tons per year). Such rate-based ERCs can be used to satisfy emission offset requirements of new major sources and new major modifications of existing major sources. Mass-based ERCs, more akin to DERs, are issued with the weight and without reference to time.

Emissions Excursion: In the Illinois ERMS program, an event that occurs when a Participating Source does not hold sufficient ATUs at the end of the Reconciliation Period to account for its volatile organic material emissions from the preceding Seasonal Allotment Period.

Emission 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.

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 Credit: ERCs are reductions in emissions that have been recognized by the relevant local or state government air agency as being real, permanent, surplus, and enforceable. ERCs are usually measured as a weight over time (e.g., pounds per day or tons per year). Such rate-based ERCs can be used to satisfy emission offset requirements of new major sources and new major modifications of existing major sources. Mass-based ERCs, more akin to DERs, are issued with the weight and without reference to time.

Emissions Reduction Market System: The ERMS is a cap and trade regulatory program for stationary sources emitting volatile organic material in the ozone nonattainment area located in Northeastern Illinois. For more information on the ERMS program, go to the Illinois ERMS Program Summary.

Electric Reliability Council of Texas, or ERCOT: The Electric Reliability Council of Texas, Inc. is the corporation that administers the Texas's power grid. ERCOT serves approximately 85 percent of Texas’s electric load and oversees the operation of approximately 70,000 megawatts of generation and over 37,000 miles of transmission lines.

Emission Reduction Unit (ERU): A specified amount of greenhouse gas emissions reductions achieved through a Joint Implementation project under the Kyoto Protocol,

Emission Reporting Boundaries (or 'System Boundaries'): 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 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 Trading: Emissions trading is a regulatory program that allows firms the flexibility to select cost-effective solutions to achieve established environmental goals. With emissions trading, firms can meet established emissions goals by: (a) reducing emissions from a discrete emissions unit; (b) reducing emissions from another place within the facility; or (c) securing emission reductions from another facility. Emissions trading encourages compliance and financial managers to pursue cost-effective emission reduction strategies and incentivizes emitting entrepreneurs to develop the means by which emissions can inexpensively be reduced.

Energy Use: A Category on the BGC Environmental Brokerage Services Trading Floor (Abb: Energy).
It refers to energy improved utilisation of energy sources that reduces the emissions intensity of energy-based systems. Energy Use projects include:

• Buildings (Build)
• Commercial/Industrial Efficiency (Comm)
• Fuel Switching (Switch)
• Renewable Energy (Renew)
• Transportation (Transp)

Environmental Additionality: See Additionality.

Environmental Protection Agency: See US Environmental Protection Agency.

Escalation Rate: Calculation that factors in cost increases to a bid or offer on a stream of reductions

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.

F

Final Deal: Fully matched and negotiated bids/offers that are under contract for delivery.

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.

ForestSequestration: Forest Sequestration is a Class under the Carbon Sequestration Category on the BGC Environmental Brokerage Services Trading Floor (Abb: Forest)
Sequestration includes Afforestation and Reforestation.

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. The seller of a forward stream of emission reductions must make physical delivery and the buyer must pay for contracted reductions. This ownership is not unilaterally transferable in a forward contract. Since most CO₂e trades include a stream of reductions (reductions over multiple years) particularly reductions occurring during the Kyoto Commitment Period (2008-2012), forward settlement is more common than immediate settlement

Forward Market: A market dealing 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 contracts are not marked to market daily like futures contacts. As a comparison, most futures contracts are marked to market daily on an exchange and typically have a range of delivery dates. Where as most futures contracts are closed out prior to delivery, most forward contracts do lead to delivery of the physical asset or to final settlement in cash. Entities can reverse their forward position by entering into an offsetting transaction however forward contracts generally cannot be onsold.

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.

Framework Convention: See United Nations Framework Convention on Climate Change.

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 included in the project Class under the Energy Use Category on the BGC Environmental Brokerage Services Trading Floor (Abb: Switch)
Fuel switching is the substitution of conventional and existing technologies for more efficient and less carbon-intensive fuel technologies including re-powering, upgrading instrumentation, controls, and/or equipment, more efficient utilisation of fuel and fuel switching.

GHG Reduction & Quantification:
Projects offset power from fossil fuel sources by converting supply to cleaner sources and improving the efficiency of distribution. Energy use is measured before and after converting the fuel supply. Emissions are calculated using emissions factors and the difference between the emissions before the conversion and after the conversion is the quantified reduction.

Additionality:
Improvements are outside of regulatory requirements.

Verification:
Electricity production and consumption is metered and verified by independent third parties utilising electricity bills and meter readings.

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.

G

General Account: An account in the NATS or the SO2 Allowace Tracking System that is not a compliance account.

Generation Attribute: A non-price characteristic of electrical energy output of a Generation Unit including, but not limited to, the Unit’s fuel type, emissions, vintage and RPS eligibility.

General Circulation Models (GCMs): Computer programmes that attempt to mathematically simulate the 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.

Generation Unit: A facility that converts a fuel or an energy resource into electrical energy.

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 6 greenhouse gases to contribute to global warming ie. 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 (CO₂eq) i.e. Carbon dioxide has been designated a GWP of 1, Methane has a GWP of 23.

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.

Green-e: A voluntary certification program for renewable energy. The Green-e logo indicates energy options that meet strict standards set through a collaborative process with environmentalists, consumer advocates, and energy experts. The Green-e Program verifies that participating suppliers are purchasing enough renewable electricity or certificates to meet their customers’ needs.

Green Tags: See Renewable Energy Certificate or Credit.

Greenhouse Gas Effect: In the greenhouse gas program, a concept that refers to the effect that releasing greenhouse gas emissions has on the relative warming of the earth’s atmosphere. The release of too much greenhouse gas over a period of time results in a gradual warming of the atmosphere.

Greenhouse Gas Reduction: A greenhouse gas reduction is a reduction in emissions that is recognized to contribute to climate change – e.g. carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexofluoride. Greenhouse gas reductions are often measured in tons of carbon dioxide-equivalent. For example, 1 ton of methane has the same global warming potential as 20.9 tons of carbon dioxide.

Greenhouse Gases (GHGs): The greenhouse gases in most contexts are the six gases regulated under the Kyoto Protocol, determined to be the main contributors to the Greenhouse Effect. The three principle gases are

carbon dioxide (CO₂),
methane (CH₄),
nitrous oxide(N₂O),

In addition to these three GHG's, there are other gases that are engineered chemicals which occur on a very limited basis in nature.

Hydrofluorocarbons (HFC's)
Perfluorocarbons (PFC's)
Sulphur Hexofluoride (SF₆)

Although they are more potent greenhouse gases and tend to have comparatively high GWPs, they are emitted in such small quantities that their overall impact is currently small.

In the US, Sulpher Dioxide (SO₂) is also classified as a greenhouse gas and is regulated under the domestic greenhouse gas program.

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.

Generation Unit: A facility that converts a fuel or an energy resource into electrical energy.

Global Warming Potential: An index found in the Kyoto Protocol that allows for the comparison of greenhouse gases with each other in the context of their relative potential to contribute to global warming.

Greenhouse Gas Effect: The concept that refers to the effect that releasing greenhouse gas emissions has on the relative warming of the earth’s atmosphere. The release of too much greenhouse gas over a period of time results in a gradual warming of the atmosphere.

Greenhouse Gas Reduction: A greenhouse gas reduction is a reduction in emissions that is recognized to contribute to climate change – e.g. carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexofluoride. Greenhouse gas reductions are often measured in tons of carbon dioxide-equivalent. For example, 1 ton of methane has the same global warming potential as 20.9 tons of carbon dioxide

H

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.

Hydrofluorocarbons: Hydrofluorocarbons (HFCs) are being developed to replace Chlorofluorocarbons (CFCs) and Hydrochlorofluorocarbons (HCFCs) for use primarily in refrigeration and air conditioning equipment. These gases also are inadvertently emitted during some manufacturing processes.

I

Illinois Environmental Protection Agency: The agency that governs air pollution emitting sources in the State of Illinois and administers the ERMs program.

Immediate Settlement of Spot Trades: 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.

Independent System Operator for New England, or ISO-NE: ISO-NE is responsible for dispatch of Generation Units and management of transmission of electrical energy at wholesale for NEPOOL.

Insurance (Ins): This term is used on the Trading Floor to identify those emission reduction offers whose underlying emission reduction projects have obtained at least one of the following types of insurance coverage:

• Political
• Business Interruption
• Constructors all risks
• Operators all risks
• Advance loss of revenue or profits
• Emission Reduction Generator Performance Guarantee (likely only to relate to projects which are either fully developed or well advanced in development).

This insurance indicator is most useful when interpreted in conjunction with the BGC Environmental Brokerage Services Project Index which indicates the stage of development of the emission reduction project. However not all offerors may elect to have their underlying project assessed (represented by index 7) or insured.

Note: CO2e has not verified the insurance coverage information provided by the offerors of the emission reductions, nor has it obtained the specific details of the insurance coverage obtained.

Intergovernmental Panel on Climate Change (IPCC): The World Meteorological Organisation (WMO) and the United Nations Environment Programme (UNEP) formed the Intergovernmental Panel on Climate Change (IPCC) in 1988. The IPCC represents the collective work of over 2,000 scientists, principally in the atmospheric sciences, but also comprising social, economic and other environmental components potentially impacted by climate change. Between its three Working Groups, the IPCC assesses the scientific and socio-economic aspects of human-induced climate change, as well as options for greenhouse gas reduction and other forms of climate change mitigation. Its Task Force on National Greenhouse Gas Inventories is responsible for overseeing the National Greenhouse Gas Inventories Programme (NGGIP).

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): 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.

Interpollutant Trading: The use of reductions of one type of pollutant to offset the increases of another. In new source review programs, ERCs of pollutants considered to be precursors to a second pollutant can be used to offset the increases of the second pollutant. For example, SOx is often considered to be a precursor to PM. As such, in some areas SOx reductions can be used to offset PM emission increases (though perhaps at a ratio of greater than 1:1).

IPIECA: International Petroleum Industry Environmental Conservation Association

J

Joint Implementation (JI): A project-based mechanism developed under the Kyoto Protocol (KP), designed to assist Annex 1 countries in meeting their emission reduction targets through joint projects with other Annex 1 countries, meaning that JI projects can only be implemented between capped industrialised countries. One or more investors (Governments, companies, funds etc) will agree with partners in a host country to participate in project activities which generate Emission Reduction Units (ERUs) , in order to use them for compliance with targets under the Kyoto Protocol.

Emissions from the host country are limited under the Kyoto Protocol; JI projects reduce emissions in the host country and free up part of their total amount (Assigned Amount) which can then be transfered to the investor country in the form of ERUs, which are subtracted from the host country's allowed emissions and are added to the total allowable emissions of the investor country. ERUs can only be used for compliance from 2008, even in the EU ETS.

There are two procedures by which to implement JI projects:

Track 1
When an Annex 1 country meets all the eligibility and reporting requirements under the KP, it can issue ERUs to a project, which can then transfer them to the investing entity.

Track 2
When an Annex 1 country is not in compliance with all the requirements, ERUs generated by a project must be verified by an external body under a procedure similar to that of the CDM. The host party must meet several requirements relating to the establishment of its Assigned Amount and national registry before it can issue and transfer ERUs.

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.

K

Kyoto Commitment Period (or Compliance Period): The period specified in the Kyoto Protocol from 2008 to 2012 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. 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 KyotoForest 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 Mechanisms (or Flexibility Mechanisms): Mechanisms commonly referred to as Emissions Trading that 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.

The Kyoto Protocol specifies the deadlines and specific levels of greenhouse gas reductions that signatory countries are to achieve. Overall, developed countries are to reduce greenhouse gas emissions by 5.2% between 2008 and 2012 as measured against 1990 emission levels.

L

Land Conservation: Land Conservation is included in the project Class under the Carbon Sequestration Category on the BGC Environmental Brokerage Services Trading Floor (Abb: Land)
Land conservation prevents the release of carbon into the atmosphere, which occurs when lands come into production, by preventing production (eg. agriculture) from occurring.

GHG Sequestration & Quantification: Farmers and/or landowners enter into conservation agreements that restrict the activities implemented on contracted lands. Keeping the lands out of production maintains the carbon currently stored in the plant matter and soils of the conserved land, and the conserved vegetation continues to increase carbon sequestration. Such actions can be scientifically quantified through periodic soil/plant samples that measure the carbon levels in the soil and any increases in sequestration.
Additionality: Entering into conservation agreements is a voluntary action by the landowner.
Verification: Land conservation/reforestation can be verified by independent third parties to confirm that these lands are held out of production and that the scientific measurement is consistent.
Ancillary Benefits: a) Protection of local ecosystem that is easy to publicly identify, b) Positive public relations with involved farmers and landowners.

Landfill/Biomass Capture: Landfill/Biomass Capture is included in the project Class under the Methane Recovery Category on the BGC Environmental Brokerage Services Trading Floor (Abb: Landfill)
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.

GHG Reduction & Quantification: Global Warming Potential (GWP) of methane (CH₄) = 21, GWP of CO₂ = 1. Combustion of one tonne of CH₄ produces 2.75 tonnes of CO₂; therefore the capture and combustion of one tonne of otherwise fugitive CH₄ emissions yields a GWP benefit of at least 18.25 tonnes of CO₂ equivalent. If the captured CH₄ is used as an energy source (on-site or delivered into a pipeline) the full 21 tons of GHG reductions can be claimed.
Additionality: Represented landfill gas projects are done in addition to exsiting regulations. Projects either voluntarily collect CH₄ when not mandated or extract additional amounts of CH₄ than required (done by creating extra collection wells). Also, the Seller has established an emissions baseline from which GHG reductions sold will be surplus.
Verification: CH₄ recovery systems can incorporate meters to accurately measure the amount of CH₄ captured. Meter records, pipeline records, electricity production records and/or gas sales receipts can be used for verification and auditing purposes.
Ancillary Benefits: a) CH₄ that migrates from a landfill can become explosive, landfill gas capture reduces this threat to surrounding communities, b) Promotion of the landfill gas as sustainable/renewable energy source that is no longer wasted, c) Odour reduction, and d) Potential to enter into a gas purchase agreement with Seller.

Lease: An instrument conveying property to another person or entity for a definite period, usually in consideration of rent or other periodical compensation.

Levy Exemption Certificate (LEC): LECs are certificates used by electricity suppliers against their Climate Chancge Levy (CCL)

Load Serving Entity (LSE): A retail electricity provider.

Location: :T here are eight Trading Board Definitions for locations of emission reduction projects as listed below:

Sth Am (South America):
Argentina, Bolivia, Brazil, Chile, Colombia, Peru, Venezuela and Othr Sth Am (Other South American)

Africa:
South Africa and all other African Nations

Mid East (Middle East):
Bangladesh, Egypt, Israel and Other Mid East

Cen Asia (Central Asia):
Belarus, India, Pakistan, Uzbekistan and Other Cen Asia

E AsPac (East Asia & Pacific):
China, Indonesia, Malaysia and Philippines

AnB OECD (Annex B OECD):
countries in both the Annex B and OECD groups including:
Australia, Austra, Belgium, Canada, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea (Sth), Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Spain, Sweden, Switzerland, Turkey, United Kingdom, United States of America

AnB Othr (Annex B Other)
Annex B Countries, which are not in the OECD group including:
Bulgaria, Croatia, Estonia, Latvia, Liechtenstein, Lithuania, Monaco, Romania, Russia, Slovenia, Ukraine

Cen Am (Central America)
El Salvador, Jamaica and Other Cen Am

M

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

Mechanism: Definitions per the Trading Board:
JI/IET - Joint Implementation, and International Emission Trading.
CDM - Clean Development Mechanism

Methane (CH4): Greenhouse gas with a Global Warming Potential of 23. The primary sources of methane are landfills, coal mines, paddy fields, natural gas systems and livestock (e.g. cows and sheep).

Methane Recovery: Methane Recovery is a Category on the BGC Environmental Brokerage Services Trading Floor (Abb: Methane)
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 (Animal)
• Coal Bed Methane (Coal)
• Deep Methane Injection (Inject)
• Landfill/Biomass Capture (Landfill)

MobileSource Emissions Reduction Credits: MSERCs are ERCs approved by the governing agency that are derived from measures that reduce emissions from mobile sources (e.g., converting buses to clean fuels, scrapping cars, etc.).

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.

Montreal Protocol: The Montreal Protocol on Substances that Deplete the Ozone Layer was adopted in Montreal on 16 September 1987 as an international treaty to eliminate the production and consumption of ozone-depleting chemicals.

N

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.

NEPOOL Generation Information System, or NEPOOL GIS: An accounting system for certificates. For each megawatt hour of power, the system creates an electronic certificate, which may be sold or otherwise transferred off line. Certificates for generation are created on a monthly basis and put into the system on a quarterly basis. The certificate describes: when, where, and who produced the power; the type of fuel source used; renewable portfolio standard eligibility (MA, CT, ME); the amount and type of certain pollutant emissions released; and other characteristics (vintage and green-e eligibility). Retail electric suppliers use the information to report compliance with requirements set by certain New England states, such as: minimum renewable power purchase levels; disclosure of fuel source and other characteristics of the power that they sell; and maximum levels of certain emissions.

Netting: Netting regulations allow an entity to use emissions reductions achieved at a permitted facility to avoid some of the pre-construction review requirements that would normally apply to a proposed major modification at that same facility. Under netting provisions, emission reductions created over a specified time at a particular source can be balanced against emissions increases expected from the modification at the same source. If the net emissions increase is below the regulatory threshold level, the modification can be exempted from certain new source review requirements.

New England Power Pool, or NEPOOL: Formed in 1971, the New England Power Pool is a voluntary association of entities engaged in the electric power business in New England. NEPOOL members include investor-owned utility systems, municipal and consumer-owned systems, joint marketing agencies, power marketers, load aggregators, generation owners and end users.

New Source Review: NSR rules are administered by the controlling federal, state, or local entity and govern the construction of new major sources and major modifications of existing major sources. NSR rules often mandate that acquisition of emission offsets.

Nitrous Oxide (N₂O): Greenhouse gas with a Global Warming Potential of 296. 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.

NOx Allowance: An emissions right issued by the governing state participating in the Ozone Transport Commission NOx Budget program that gives authorization to emit one ton of NOx during a specified year pursuant to the rules of the State's NOx Budget program. These Allowances may sometimes be banked into later years.

NOx Allowance Tracking System: In the OTC NOx Budget program, the NATS is the computerized system used to track the number of OTC NOx allowances held and used by any person.

NOx Emissions: The sum of nitric oxides and nitrogen dioxides emitted, calculated as nitrogen dioxide.

NOx Emissions Tracking System: In the OTC Budget program, the NETS is the computerized system used to track NOx emissions from NOx affected sources.

NOx Affected Source: In the OTC NOx Budget program, a fossil fuel fired, indirect heat exchange combustion unit[s] with a maximum rated heat input capacity of 250 MMBtu/hour or more, and all fossil fuel fired electric generating facilities rated at 15 megawatts or greater, or any other source that voluntarily opts to become a NOx affected source.

NOx Allocation: In the OTC NOx Budget program, assignment of NOx Allowances to a NOx affected source and recorded by the NOx budget administrator to a NOx Allowance Tracking System account. In the RECLAIM program, NOx sources have NOx RTC allocations issued by the SCAQMD.

NOx Allowanc Transfer: In the OTC NOx Budget program, the conveyance to another NATS account of one or more NOx Allowances from one person to another by whatever means, including, but not limited to, purchase, trade, auction or gift.

NOx Allowance Transfer Deadline: In the OTC NOx Budget program, the deadline by which NOx Allowances may be submitted for recording in a NOx affected source's compliance account for purposes of meeting NOx Allowance requirements.

NOx Budget: In the OTC NOx Budget program, the total tons of NOx emissions that may be released from NOx affected sources.

NOx Budget Administrator: In the OTC NOx Budget program, the person or agency designated as the NOx budget administrator of the NATS and the NETS.

O

'offering a call' :

'offering a put' :

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 governments of developed countries to developing countries to assist in various community, health and commercial projects.

Offset Ratio: The amount of pollutant that must be secured relative to the on-site emission increase. Often, 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.

Operational Entity: An entity authorised by the CDM Executive Board to be able to approve output from CDM projects.

Options: 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

OTC NOx Budget Program: The cap and trade program administered by the OTC MOU signing states.

Ozone Transport Commission Memorandum of Understanding (OTC MOU): The memorandum of understanding (MOU) signed by representatives of ten states and the District of Columbia as members of the Ozone Transport Commission (OTC) on September 27, 1994.

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

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 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.

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 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: Process Change is a Category and project Class on the BGC Environmental Brokerage Services Trading Board (Abb: Process). Is an improvement of the emissions associated directly with a manufacturing process. For example, improving the composition of klinker to reduce emissions of CO₂e in cement manufacture or improving the recycled content in the aluminium smelting process.

Project Scenario: 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 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.

Reference Year: 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: A process that increases the capacity of the land to sequester carbon by replanting forest biomass in areas where forests were recently harvested.

Registration: Process of registering emission reduction data with a third party registry.

Registry: Term used on the Trading Floor to indicate which emission reductions on offer have been registered with an independent emission reduction registry. Each registry applies its own criteria to determine what emissions merit registering. The registration process can vary widely from verification against rigorous measurement protocol to simply dating the registrant’s, as yet, unverified claims.

Note: BGC Environmental Brokerage Services has not verified the emission reduction registration information provided by the offerors of the emission reductions, nor has it obtained the specific details of the process required for registration.

Registry Manager: The person designated by a Competent Authority under the EU Emissions Trading Directive to Manage the each Member State Registry.

Removal Units (RMUs): RMUs are a new unit created at COP7, representing sinks credits generated in Annex 1 countries, including through Joint Implementation. RMUs can only be used to meet emissions targets in the commitment period in which they were generated, and cannot be banked for future use.

Renewable Energy: Energy derived from non-fossil fuel resources (ie. Wind, solar, hydro, biofuels)

Renewable Energy Guarentee of Origin (REGO)

A guarantee of origin issued in respect of each kilowatt hour produced from renewable energy sources in the UK.

Regulation XIII

The new source review and offset program administered by the SCAQMD.

Renewable Energy Certificate or Credit (REC): The term “REC” is generally synonymous with Green Tags and Transferable Renewable Energy Credits (TRECs). A REC is not electricity. It represents the renewable or “green” aspect of electric power generated through the use of renewable fuels, such as wind, hydro, solar, and biomass that produce one MWh or KWh of electricity from a certified renewable generator. Depending on the program under which they are generated, RECs can be bought and sold separate from the power from which they are derived. REC buyers include power generators and users that are required, or elect, to provide or use a certain percentage of green power. REC sellers include power generators and traders that hold more RECs than they require.

Renewable Energy Resource (Renewable Resource): A resource or fuel that produces energy derived from renewable energy technologies.

Renewable Energy Technology: A technology that exclusively relies on an energy source that is naturally regenerated over a short time and derived directly from the sun, indirectly from the sun, or from moving water or other natural movements and mechanisms of the environment. Renewable energy technologies include those that rely on energy derived directly from the sun, on wind, geothrmal, hydroelectric, wave, or tidal energy, or on biomass or biomass-based waste products, including landfill gas. A renewable energy technology does not rely on energy resources derived from fossil fuels, or waste products from inorganic sources.

Renewable Portfolio Standard (RPS): Requirement for electricity retailers to purchase a specific % of sales from renewable energy generators.

Renewable Obligation: The Renewable Obligation requires generators in the UK to produce a fixed percentage per year of electricity from renewable fuel sources. Certificates are issued under the scheme to renewable generators which can be negotiated and traded to allow generators to hit their targets.

Renewable Obligation Certificates (ROCs): ROCs are certificate issued for eligible renewable electricity generated and supplied to customers in the United Kingdom by a licensed supplier, which are sbject to the Renewable Obligation.

Renewable Transport Fuel Obligation (RTFO): A mandate in the United Kingdom that will require 5% of all road vehicle fuel to be supplied from sustainable renewable sources by 2010.

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.

RMUs: See Removal Units

ROCs: See Renewable Obligation Certificates

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.

Sequestration: see Carbon Sequestration

Sinks: see Carbon Sinks

Soil Conservation & Land Management: Soil Conservation & Land Management is included in the project Class under the Carbon Sequestration Category on the BGC Environmental Brokerage Services Trading Floor (Abb: Soil) 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.

GHG Sequestration & Quantification:
Alternative land management practices incorporate soil conservation practices that increase the carbon content of the soil. Such actions can be scientifically quantified through periodic soil samples that measure the carbon levels in the soil and any increases in carbon sequestration.

Additionality:
There is no mandate requiring farmers to incorporate any such soil conservation practices. To the contrary, short-term business pressures make it economically difficult for farmers to transfer to these practices.

Verification:
Such soil conservation/land management practices can be verified by independent third parties to confirm that these lands are held out of production and that the scientific measurement is consistent. An independent third party can implement a baseline study to determine the net sequestration derived from soil conservation/land management activities; other estimation techniques are also available.

Ancillary Benefits:
a) Protection of nutrient value of conserved lands
b) Positive public relations with involved farmers and land-owners
c) secondary environmental benefits due to decreased fertiliser usage/run off.

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: 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 Tenor

Static Baseline: A baseline assuming that business conditions are to remain constant and apply throughout the lifetime of the project.

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).

Sulphur hexofluoride (SF₆): Sulfur hexafluoride is an extremely potent greenhouse gas with a global warming potential (GWP) of 22,200. SF6 is has long-lasting effects, with an atmospheric lifetime of 3,200 years. A relatively small amount of SF6 can have a significant impact on global climate change.

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".

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

Total Tonnage: Please enter the total tonnage in ‘000s Tonnes CO₂e that you wish to purchase on the Trading Floor.

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 a 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 the BGC Environmental Brokerage Services brokers.

Transportation: Transportation is included in the project Class under the Energy Use Category on the BGC Environmental Brokerage Services Trading Floor(Abb: Transp)
Transportation consists of private and public passenger and freight transports.

GHG Reduction and Calculation: GHG reductions occur when fossil-based fules in vehicles, fleets or other transports are switched to less intensive fossil fuels or converting to non-fossil based transportation systems. The reductions occur in the displacement of fossil fuels.
Additionality: Transportation concessions are implemented in addition to exsiting regulations on a voluntary basis or exceed minimum standards set for transportation sources.
Verification: Fuel records and performance standards are evaluated and audited by a third party.
Ancillary Benefits: Reduced local air pollution, reduced traffic congestion.

Transaction Account: In the Illinois ERMs program, an account authorized by the IEPA that allows an Account Officer to buy or sell ATUs.

Transferable Renewable Energy Credits (TRECs): See Renewable Energy Certificate or Credit.

Type: Type is found on the Trading Floor, which refers to type of trade. This includes, with abbreviations in brackets as displayed on the Forward/Options Market:

User may lodge:

• Bid/Buy
• Offer/Sell

Types of instruments:

• Forward
• American Call Option (Am Call)
• American Put Option (Am Put)
• European Call Option (Eu Call)
• European Put Option (Eu Put)

US Call Option: see Options

Unilateral CDM Projects: Unilateral CDM projects are projects which do not have a project investor from abroad. The decision was taken at COP7 to allow developing countries to undertake CDM projects without an Annex I partner, and market the resulting emissions credits.

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

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.

Verified Emissions Reductions (VERs): Emission reductions that are not covered by a regulatory scheme but are verified by an independent third party.

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.

Waste CO2 Recovery & Deep Injection: Waste CO2 Recovery & Deep Injection is included in the project Class under the Carbon Sequestration Category on the BGC Environmental Brokerage Services Trading Floor (Abb: Waste/Inj)
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.

GHG Reduction & Quantification: CO₂ is an industrial by-product that is normally vented into the atmosphere. Instead this waste CO₂ is captured and transported by pipeline to a producing oil field. The CO₂ is injected into oil wells to enhance oil recovery, ultimately being sequestered in the bedrock, as it displaces oil. The waste CO₂ that would normally be vented displaces CO₂ that would have been created in or extracted from wells in the oil field specifically for this purpose. The reduction can be quantified on a 1-for-1 basis i.e., 1 tonne CO₂ captured and injected results in 1 tonne of reduced CO₂.
Additionality: CO₂ is not a regulated emission and as such, any CO₂ captured/sequestered is voluntary. This process also displaces CO₂ that would normally be manufactured or extracted for enhanced oil recovery. Any CO₂ capture and injection is in addition to existing regulations.
Verification: The waste CO₂ is captured and then transported from the industrial facility to the oil field by pipeline. This pipeline system incorporates meters to accurately measure the amount of CO₂ captured, transported, and injected. CO₂ production records, meter records, pipeline records, and/or CO₂ sales receipts can be used for verification and auditing purposes.