Practice Test Geeks(ERAC) Energy Risk Auditor Certification Practice Test
← All ERAC Flashcard Decks

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

  1. What is the primary purpose of a 'buffer pool' in voluntary carbon forestry projects?

    Answer: To hold a reserve of credits that can replace those lost due to project reversal risks

    A buffer pool is a reserve of carbon credits set aside to cover potential reversals (e.g., wildfire, disease) in forestry projects, ensuring buyers are compensated if stored carbon is lost.

  2. Under the Verra Verified Carbon Standard (VCS), what does 'VCU' stand for?

    Answer: Verified Carbon Unit

    A Verified Carbon Unit (VCU) is the tradable credit issued by Verra under the VCS program, representing one metric ton of CO2-equivalent emission reduction or removal verified by an accredited third-party auditor.

  3. Which of the following best describes a 'carbon forward contract' used by energy companies?

    Answer: An agreement to buy or sell a specified quantity of carbon allowances at a set price on a future date

    A carbon forward contract locks in a price for the purchase or sale of carbon allowances at a future date, allowing energy companies to hedge against carbon price volatility and plan budgets with greater certainty.

  4. The CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation) is administered by which international body?

    Answer: International Civil Aviation Organization (ICAO)

    CORSIA is the global carbon offsetting scheme for international aviation developed and administered by the International Civil Aviation Organization (ICAO), aiming to cap net CO2 emissions from international flights at 2019 levels.

  5. What is meant by 'carbon neutrality' in corporate sustainability reporting?

    Answer: A company's net greenhouse gas emissions equal zero after accounting for offsets and reductions

    Carbon neutrality means a company's residual GHG emissions are balanced by an equivalent amount of carbon offsets or removals, resulting in net-zero emissions on a gross basis for a defined boundary and time period.

  6. Which registry system is used in the United States Regional Greenhouse Gas Initiative (RGGI) to track allowance transactions and prevent double-counting?

    Answer: RGGI CO2 Allowance Tracking System (COATS)

    The RGGI CO2 Allowance Tracking System (COATS) is the official electronic registry used by RGGI to record issuance, holding, transfer, and retirement of allowances across all participating states.

  7. An energy risk auditor reviewing a company's carbon market exposure should prioritize assessing which of the following risks?

    Answer: Regulatory compliance risk from allowance shortfalls, price risk from allowance value volatility, and counterparty risk in offset contracts

    An energy risk auditor must comprehensively assess compliance risk (whether the entity holds sufficient allowances), market/price risk (carbon price movements affecting hedging strategies), and counterparty risk (default by offset sellers or trading partners).