CCA Carbon Offset & Credit Markets 2 — Questions and Answers
Question 1: What is the primary purpose of a carbon registry in voluntary markets?
- To track issuance, transfer, and retirement of carbon credits (Correct answer)
- To set mandatory emission limits for companies
- To calculate national GHG inventories
- To certify carbon auditors
Correct answer: To track issuance, transfer, and retirement of carbon credits
Carbon registries provide transparent tracking of credit issuance, ownership transfers, and retirement to prevent fraud and double counting.
Question 2: When a carbon credit is 'retired,' what does this signify?
- The credit has been permanently cancelled and cannot be resold (Correct answer)
- The credit has expired and lost its value
- The credit has been transferred to a new owner
- The credit is held in reserve for future use
Correct answer: The credit has been permanently cancelled and cannot be resold
Retiring a carbon credit means it is permanently removed from circulation, indicating that the associated emission reduction has been used to offset a specific emission.
Question 3: The California Cap-and-Trade Program is an example of which type of carbon market?
- Compliance market (Correct answer)
- Voluntary market
- Bilateral offset market
- Unregulated OTC market
Correct answer: Compliance market
California's Cap-and-Trade Program is a mandatory compliance market regulated by the California Air Resources Board (CARB) under AB 32.
Question 4: What does 'permanence' refer to in carbon offset project evaluation?
- The long-term durability of the carbon sequestration or reduction (Correct answer)
- The permanent closure of a carbon registry
- The fixed price of a carbon credit over time
- The lifetime of a carbon auditing certification
Correct answer: The long-term durability of the carbon sequestration or reduction
Permanence ensures that carbon stored or reduced will remain out of the atmosphere for the long term, typically 100 years, without reversal.
Question 5: Which methodology is commonly used to establish a project baseline in carbon offset accounting?
- Business-as-usual (BAU) scenario modeling (Correct answer)
- Scope 3 supply chain mapping
- ISO 14064-3 verification checklist
- GRI materiality assessment
Correct answer: Business-as-usual (BAU) scenario modeling
The business-as-usual (BAU) scenario estimates what emissions would have been without the project, serving as the baseline against which reductions are measured.
Question 6: What is a 'buffer pool' in voluntary carbon markets such as the VCS?
- A reserve of credits set aside to cover potential reversals or project failures (Correct answer)
- A fund used to purchase carbon credits on behalf of small businesses
- A holding account for credits awaiting government approval
- A pool of credits available for free distribution
Correct answer: A reserve of credits set aside to cover potential reversals or project failures
A buffer pool holds a percentage of issued credits in reserve to compensate for unplanned reversals, such as forest fires destroying sequestered carbon.
CCA Carbon Offset & Credit Markets 2
What is the primary purpose of a carbon registry in voluntary markets?