ERAC Carbon Markets & Emissions Trading 2

Question 1

Which metric is used to convert different greenhouse gases into a common unit for carbon trading purposes?

Accepted Answer

Global Warming Potential (GWP) expressed as CO2-equivalent

Answer

Net Calorific Value (NCV) per unit of fuel combusted

Answer

Energy Intensity Ratio (EIR) per unit of GDP

Answer

Specific Carbon Content (SCC) per cubic meter of gas

Question 2

In the California Cap-and-Trade Program, what is the 'price ceiling' also called?

Accepted Answer

Allowance Price Containment Reserve (APCR)

Answer

Hard Price Cap

Answer

Cost Containment Reserve (CCR)

Answer

Maximum Allowable Permit Price (MAPP)

Question 3

What does 'permanence' mean in the context of carbon offset quality standards?

Accepted Answer

The assurance that emission reductions or removals will be maintained over the long term

Answer

The guarantee that the project developer will remain in business for 100 years

Answer

The requirement that credits cannot be resold once purchased by an end buyer

Answer

The obligation that projects operate continuously without interruption

Question 4

The Social Cost of Carbon (SCC) is primarily used by policymakers to:

Accepted Answer

Estimate the economic damages associated with emitting one additional ton of CO2

Answer

Set compliance penalties for emitters under cap-and-trade programs

Answer

Determine the market clearing price for carbon allowances at auction

Answer

Calculate the tax rate applied to fuel imports at national borders

Question 5

What is 'leakage' in the context of carbon market regulations and emission caps?

Accepted Answer

The shift of emissions-intensive activities to regions with less stringent climate policies

Answer

Unauthorized release of data from carbon registry databases

Answer

Physical escape of carbon dioxide from underground geological storage sites

Answer

The transfer of allowances between subsidiary companies within a corporate group

Question 6

Which provision in Article 6 of the Paris Agreement governs internationally transferred mitigation outcomes (ITMOs)?

Accepted Answer

Article 6.2

Answer

Article 6.4

Answer

Article 6.6

Answer

Article 6.8

Question 7

A 'corresponding adjustment' under Article 6 of the Paris Agreement is required to prevent:

Accepted Answer

Double counting of emission reductions toward two countries' NDCs simultaneously

Answer

Excess volatility in carbon allowance auction prices

Answer

Private sector entities from participating in sovereign carbon markets

Answer

The use of pre-2020 Kyoto Protocol credits in post-2020 markets