Carbon Market Glossary

Every term used across this site, defined in one place. Jump to a letter or scroll straight through.

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Additionality: The principle that a project's emissions benefit must be beyond what would have happened anyway without carbon finance. The most disputed concept in the market.
Afforestation / Reforestation (ARR): Planting trees on land that was not recently forested (afforestation) or restoring forest on recently deforested land (reforestation).
Allowance: A government-issued permit to emit one tonne of CO₂e under a compliance cap-and-trade scheme, distinct from a voluntary offset credit.

Baseline: The projected level of emissions or carbon stock that would have occurred without the project — the counterfactual a project's impact is measured against.
Biochar: A stable, charcoal-like carbon material made by heating biomass without oxygen (pyrolysis); used in soil to lock away carbon for 100+ years.
Blue carbon: Carbon stored in coastal and marine ecosystems such as mangroves, seagrass meadows, and tidal marshes.
Buffer pool: A shared reserve of credits set aside (and never sold) by a registry to cover losses if a project's stored carbon is later released — e.g., a forest that burns.

Cap-and-trade: A regulatory system that sets a shrinking emissions "cap" for covered industries and lets them trade allowances to meet it cost-effectively.
Carbon credit: A tradable certificate representing one tonne of CO₂e avoided, reduced, or removed by a specific verified project.
Carbon neutral: A claim that an entity's emissions have been fully counterbalanced by an equivalent volume of credits (or removals); a widely criticized and increasingly regulated term.
Carbon removal: Credits representing carbon actively extracted from the atmosphere and durably stored, as opposed to emissions merely avoided.
Carbon sink: Any natural or engineered system (a forest, soil, the ocean, geological storage) that absorbs more carbon than it releases.
CCP (Core Carbon Principles): A global quality threshold created by the ICVCM; methodologies that pass assessment can carry the "CCP-Approved" label.
Co-benefits: Additional positive outcomes of a carbon project beyond emissions impact — biodiversity, jobs, clean water, health — often mapped to the UN Sustainable Development Goals.
Compliance market: A carbon market created and mandated by regulation (e.g., EU ETS, California Cap-and-Trade), as opposed to the voluntary market.
CORSIA: The Carbon Offsetting and Reduction Scheme for International Aviation — a global compliance scheme requiring airlines to offset growth in emissions above 2019 levels.

Direct air capture (DAC): Technology that chemically extracts CO₂ directly from ambient air for storage or use; currently the most expensive but among the most durable and measurable removal types.
Double counting: When the same tonne of emissions reduction is claimed by more than one party — for example, both the host country toward its national climate target and a private buyer toward its corporate target.

ESG: Environmental, Social, and Governance — the broader corporate reporting framework that carbon accounting and credit purchases usually sit inside.
ETS (Emissions Trading System): A cap-and-trade compliance market; the EU ETS is the largest in the world.

Forest carbon: Carbon stored in living trees, understory, and forest soil; the basis for REDD+, afforestation, and improved forest management credits.

GHG Protocol: The most widely used corporate accounting standard for measuring greenhouse gas emissions, dividing them into Scope 1, 2, and 3.

ICVCM: The Integrity Council for the Voluntary Carbon Market — an independent governance body that assesses carbon-credit methodologies against its Core Carbon Principles.
Improved Forest Management (IFM): A project type that changes logging or management practices in an existing working forest to increase the carbon it stores.
Insetting: Reducing or removing emissions within a company's own supply chain, rather than purchasing credits from an unrelated external project.
Issuance: The formal creation of carbon credits in a registry's ledger after a project's emissions benefit has been verified.
ISO 14064: An international standard series for quantifying and verifying greenhouse gas emissions and removals at the organizational (14064-1) and project (14064-2) level.

Leakage: Emissions that shift elsewhere rather than disappear because of a project — e.g., logging displaced from a protected forest to an unprotected one nearby.

Methodology: The detailed technical rulebook a registry publishes for a specific project type, defining how baselines, additionality, and monitoring must be calculated.
MRV (Measurement, Reporting, and Verification): The combined process of measuring a project's emissions impact, reporting it, and having it independently verified.

Nature-based solutions: Actions that protect, restore, or sustainably manage ecosystems to deliver climate benefits — forestry, wetlands, soil, and blue carbon projects collectively.
Net zero: A state where any remaining greenhouse gas emissions are balanced by an equivalent amount of removals, typically after aggressive direct emissions reduction.

Offset: Common shorthand for a carbon credit purchased and retired to counterbalance an entity's own emissions.

Permanence: How long carbon stored by a project is expected to remain out of the atmosphere; ranges from decades (some forestry) to millennia (geological storage).
Project developer: The entity that designs, implements, and typically owns the carbon credits generated by a specific carbon project.

Rating agency: An independent firm (e.g., BeZero Carbon, Sylvera, Calyx Global) that scores the credibility and quality of specific carbon credits after issuance, separate from the registry that issued them.
REDD+: Reducing Emissions from Deforestation and forest Degradation, plus conservation and sustainable management — a UN-originated framework and one of the largest project categories by volume.
Registry: An organization (Verra, Gold Standard, ACR, CAR, Puro.earth) that publishes methodologies, approves projects, and issues and tracks carbon credits in a public ledger.
Retirement: The permanent removal of a credit from a registry so it can never be resold or claimed again — the moment a credit is actually "used."

SBTi (Science Based Targets initiative): An organization that validates corporate emissions-reduction targets against climate science, and increasingly sets rules for how (and whether) credits can count toward them.
Scope 1, 2, 3 emissions: Scope 1 is direct emissions from owned sources; Scope 2 is emissions from purchased energy; Scope 3 covers the entire value chain (suppliers, product use, etc.) and is usually the largest and hardest to measure.
Soil carbon: Carbon stored in agricultural or grassland soils, increased through practices like no-till farming, cover cropping, and rotational grazing.

Tonne CO₂e (carbon dioxide equivalent): The standard unit of one carbon credit; other greenhouse gases (methane, nitrous oxide, etc.) are converted to their CO₂-equivalent warming impact.

VCM (Voluntary Carbon Market): The market in which credits are bought and retired by choice rather than legal mandate.
Verification: Independent, third-party confirmation that a project's monitored results match its claims before credits are issued.
Vintage: The calendar year in which the underlying emissions reduction or removal actually took place, as distinct from the year a credit is sold.

Wetland restoration: Restoring drained or degraded wetlands (including former peat fields, as in Carboreal's Trammell S. Crow Forest project) to re-establish their function as long-term carbon sinks.