Carbon Markets & Emissions Trading Flashcards
7 cards from real ERAC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Carbon Markets & Emissions Trading flashcards as text
Which mechanism under the Kyoto Protocol allows developed countries to earn emission reduction credits by funding clean energy projects in developing nations?
Answer: Clean Development Mechanism (CDM)
The Clean Development Mechanism (CDM) allows industrialized countries to invest in emission-reduction projects in developing countries and receive Certified Emission Reduction (CER) credits in return.
In a cap-and-trade system, what happens when a regulated entity's actual emissions fall below its allocated allowances?
Answer: The entity can sell or bank the surplus allowances
In a cap-and-trade system, entities with emissions below their cap can sell surplus allowances to other entities or bank them for future compliance periods, creating a financial incentive for over-performance.
What is a 'carbon offset' in the context of voluntary carbon markets?
Answer: A credit representing the reduction or removal of one metric ton of CO2-equivalent
A carbon offset represents a verified reduction or removal of one metric ton of CO2-equivalent greenhouse gas, which can be purchased voluntarily by organizations seeking to neutralize their emissions.
Which organization administers the Gold Standard certification for high-quality carbon offsets in voluntary markets?
Answer: Gold Standard Foundation
The Gold Standard Foundation administers the Gold Standard certification, which requires carbon projects to demonstrate measurable sustainable development co-benefits in addition to verified emission reductions.
What is the primary function of a 'vintage' year in carbon credit markets?
Answer: It specifies the year in which the emission reduction or removal occurred
The vintage year identifies when the underlying emission reduction or removal actually occurred, which is important for buyers who wish to claim reductions in specific compliance or reporting years.
Under the EU Emissions Trading System (EU ETS), what is 'Phase 4' primarily focused on?
Answer: Increasing the annual linear reduction factor to align with the EU Green Deal 2030 targets
EU ETS Phase 4 (2021–2030) increased the annual linear reduction factor from 1.74% to 2.2% (and later 4.3% under Fit for 55) to achieve at least a 55% net reduction in GHG emissions by 2030.
What is 'additionality' as it applies to carbon offset project validation?
Answer: The principle that emission reductions would not have occurred without the carbon finance incentive
Additionality requires that the emission reductions generated by a carbon project would not have happened in the absence of the carbon market incentive, ensuring credits represent genuine climate benefit.