CAP CAP Carbon Markets & Trading 2

Question 1

What California law established the state's Cap-and-Trade Program?

Accepted Answer

AB 32 (Global Warming Solutions Act of 2006)

Answer

California's Cap-and-Trade Program was established under AB 32, the Global Warming Solutions Act of 2006, which set the state's 2020 GHG reduction target.

Question 2

In carbon markets, what does 'leakage' refer to?

Accepted Answer

The increase in emissions outside a regulated area caused by carbon pricing policies within it

Answer

Carbon market leakage occurs when emission-reduction policies shift production to unregulated regions, potentially offsetting global emission gains.

Question 3

What is a Renewable Energy Certificate (REC)?

Accepted Answer

A tradeable instrument representing the environmental attributes of one MWh of renewable electricity generation

Answer

A REC represents the environmental attributes of one megawatt-hour of renewable electricity and can be sold separately from the physical electricity.

Question 4

Which of the following best describes a 'price floor' in a carbon allowance market?

Accepted Answer

A minimum auction reserve price set to prevent carbon allowance prices from collapsing

Answer

A price floor is a minimum reserve price in cap-and-trade auctions designed to provide market stability and encourage long-term investment in low-carbon technology.

Question 5

What is 'double counting' in carbon markets?

Accepted Answer

When the same emissions reduction is claimed by more than one party toward their climate targets

Answer

Double counting occurs when the same GHG emission reduction is counted toward more than one entity's climate target, undermining the environmental integrity of the market.

(CAP) Certified Carbon Auditing Professional Practice Test

(CAP) Certified Carbon Auditing Professional Practice Test

CAP CAP Carbon Markets & Trading 2