Technical guidance on carbon credits, EU ETS, voluntary carbon markets, and blockchain carbon market innovation for Ireland and the EU.
Compiled by Michael English, Co-Founder & CTO of IMPT.io
Reference Guide for Irish and EU Carbon Market Participants
Meta Description: Comprehensive carbon credits glossary by Michael English (IMPT.io). 65+ terms covering EU ETS, voluntary carbon markets, MRV, blockchain carbon, Article 6, and Irish carbon policy.
Target Keywords: carbon credits glossary Ireland, carbon market terminology EU, EU ETS terms explained, voluntary carbon market glossary, carbon credit definitions Ireland, Michael English carbon glossary
Additionality: The principle that a carbon credit should only be issued for emission reductions or removals that would NOT have occurred in the absence of the carbon credit incentive. One of the core integrity criteria for voluntary carbon markets. Difficult to prove; relies on counterfactual analysis.
AER (Annual Emissions Report): The report EU ETS operators must submit by 28 February each year to their national competent authority, documenting verified GHG emissions from the previous calendar year.
Afforestation: Planting trees on land that was not previously forested. Generates carbon removal credits as trees sequester CO₂ through photosynthesis and biomass growth.
Article 6 (Paris Agreement): The article of the Paris Agreement (2015) establishing international carbon market mechanisms. Article 6.2 governs bilateral ITMO trading; Article 6.4 establishes the UN-supervised carbon crediting mechanism; Article 6.8 covers non-market approaches.
Avoided Deforestation: See REDD+. Carbon projects that prevent planned deforestation, generating avoidance credits.
Baseline: The reference scenario used to quantify how much a carbon project reduces emissions compared to "business as usual." Accurate baseline setting is critical; over-stated baselines lead to over-crediting.
BECCS (Bioenergy with Carbon Capture and Storage): A negative emissions technology that combines bioenergy production (burning biomass for electricity or heat) with carbon capture and permanent geological storage. Net carbon negative because plants absorbed CO₂ during growth, which is then permanently stored.
Blue Carbon: Carbon sequestered in coastal and marine ecosystems — mangroves, seagrass meadows, tidal marshes, kelp forests. Ireland's extensive EEZ contains significant blue carbon potential.
Buffer Pool: A reserve of carbon credits held back from issuance to cover future reversal risks (fire, deforestation, permafrost thaw). Typically 10-30% of total project credits. Insufficient if correlated risks affect multiple projects simultaneously.
Cap-and-Trade: A market mechanism where a regulator sets a maximum (cap) on total emissions, issues permits up to the cap, and allows trading of those permits. The EU ETS is the world's largest cap-and-trade system.
Carbon Budget: A cumulative limit on total GHG emissions over a defined period. Ireland has legally binding carbon budgets under the Climate Action and Low Carbon Development (Amendment) Act 2021.
Carbon Farming: Agricultural practices that increase carbon sequestration in soils and vegetation or reduce agricultural GHG emissions. In Ireland, examples include reduced tillage, cover crops, and agroforestry.
Carbon Leakage: The risk that emissions reductions in one jurisdiction are offset by emissions increases in another, as industries move to less-regulated jurisdictions. CBAM is the EU's primary tool to prevent carbon leakage.
Carbon Neutral: A claim that an entity has balanced its GHG emissions with equivalent carbon removals or offsets. Subject to increasing scrutiny of offset quality.
Carbon Price: The monetary value assigned to GHG emissions, expressed in €/tCO₂e. In the EU ETS, determined by market. Ireland's domestic carbon tax set by government at €56/tCO₂e (2024).
Carbon Removal: Physical removal of CO₂ from the atmosphere and long-term storage. Distinct from emission avoidance. Includes afforestation, BECCS, DAC, enhanced weathering, and soil carbon sequestration.
Carbon Sink: A natural or engineered system that absorbs more CO₂ from the atmosphere than it releases. Forests, soils, and oceans are natural sinks.
Carbon Tax (Ireland): A tax on fossil fuel combustion proportional to CO₂ content. Ireland's carbon tax reached €56/tCO₂e in 2024, scheduled to rise to €100/tCO₂e by 2030.
CBAM (Carbon Border Adjustment Mechanism): EU mechanism requiring importers of certain products (cement, steel, aluminium, fertilisers, hydrogen, electricity) to purchase CBAM certificates equal to the carbon content of imports from non-EU countries without equivalent carbon pricing.
CCAC (Climate Change Advisory Council): Ireland's independent scientific body advising on climate policy; proposes carbon budgets to the Oireachtas.
CDM (Clean Development Mechanism): The Kyoto Protocol-era carbon crediting mechanism allowing developed countries to earn credits from projects in developing countries. Replaced by Article 6.4 under the Paris Agreement.
CER (Certified Emission Reduction): The carbon credit unit generated by CDM projects under the Kyoto Protocol. Has largely been superseded by Paris Agreement mechanisms.
CEMS (Continuous Emissions Monitoring System): Instruments that continuously measure GHG concentration and flow rate at emission sources. Required for large EU ETS installations; highest accuracy MRV method.
Compliance Carbon Market: A carbon market created by mandatory regulatory requirements — primarily the EU ETS and Effort Sharing Regulation. Participation mandatory; penalties for non-compliance.
Corresponding Adjustment: A national accounting adjustment made when an emission reduction is transferred internationally under Article 6.2. The selling country increases its reported emissions; the buying country decreases. Prevents double counting between national NDCs.
CRCF (Carbon Removal Certification Framework): EU Regulation adopted in 2024 creating the first EU-level quality framework for voluntary carbon removals, establishing QU.A.L.ITY criteria and an accredited certification system.
CORSIA: Carbon Offsetting and Reduction Scheme for International Aviation. ICAO's global market-based mechanism requiring airlines to offset growth in international aviation emissions above 2019 levels.
DAC (Direct Air Capture): Technology that chemically removes CO₂ directly from ambient air. Energy-intensive but highly scalable (not land-limited like nature-based solutions). Climeworks (Switzerland) and Carbon Engineering/Oxy are leading commercial developers.
DORA (Digital Operational Resilience Act): EU financial services regulation. Less directly relevant to carbon markets, but indirectly affects how financial entities manage carbon market exposure and reporting.
Effort Sharing Regulation (ESR): EU regulation setting binding national targets for non-ETS sectors (transport, buildings, agriculture, waste). Ireland's 2030 target is 42% reduction vs 2005.
Emission Factor: A coefficient used to calculate GHG emissions from activity data. Examples: 2.68 kgCO₂/litre diesel; 0.432 tCO₂e/tonne ammonium nitrate fertiliser.
ERC-1155: Ethereum token standard for semi-fungible tokens. Used by IMPT.io to represent carbon credits — multiple credits from the same project/vintage share a token type ID, enabling efficient batch transfer.
ETS (Emissions Trading System): A cap-and-trade system for GHG emissions. The EU ETS is the world's largest; the UK has its own post-Brexit ETS; several other countries operate linked or separate ETSs.
EU Allowance (EUA): The compliance unit of the EU ETS. One EUA = right to emit one tCO₂e. Traded on ICE Futures Europe and EEX; price reached €100/tonne in 2023 before settling in the €55-75 range in 2024.
EU ETS (European Union Emissions Trading System): The EU's primary GHG mitigation policy instrument. Cap-and-trade covering power, industry, aviation, and (from 2024) shipping. Phase 4 runs 2021-2030 with significantly tightened parameters under Fit for 55.
Fit for 55: The European Commission's legislative package updating EU climate law to align with the 55% emissions reduction target by 2030. Includes EU ETS reform (higher LRF), CBAM, ReFuelEU Aviation, and ETS 2 for buildings and transport.
Free Allocation: EU ETS allowances distributed to regulated entities at no cost, primarily to prevent carbon leakage. Being phased out 2024-2034 as CBAM takes over carbon leakage protection.
Gold Standard: A Swiss-based voluntary carbon market standard emphasising sustainable development co-benefits. Higher integrity reputation than Verra VCS; smaller project portfolio.
Greenhouse Gas (GHG): Gases that trap heat in the Earth's atmosphere. The six Kyoto gases: CO₂, CH₄, N₂O, HFCs, PFCs, SF₆. Carbon markets typically express all gases in CO₂ equivalent (CO₂e).
GWP (Global Warming Potential): A factor expressing the relative warming impact of a GHG compared to CO₂ over a time horizon (typically 100 years). Methane GWP100 = 29.8 (IPCC AR6); N₂O GWP100 = 273.
HEFA (Hydroprocessed Esters and Fatty Acids): The most common Sustainable Aviation Fuel (SAF) pathway, produced from used cooking oil, tallow, and other bio-feedstocks. 60-80% lower lifecycle CO₂ than conventional jet fuel.
Hoover Dam Problem: Informal term for the challenge of counting the same carbon reduction multiple times in different accounting systems — see Double Counting.
ICAO (International Civil Aviation Organization): UN agency governing international aviation. Administers CORSIA.
ICVCM (Integrity Council for Voluntary Carbon Markets): An independent governance body that published Core Carbon Principles (CCPs) for voluntary carbon credit quality in 2023. The CCP label is becoming a de facto quality standard.
INAB (Irish National Accreditation Board): Ireland's national accreditation body, accrediting EU ETS verifiers in Ireland under EN ISO 14065.
IPCC (Intergovernmental Panel on Climate Change): The UN body providing scientific assessments of climate change. The AR6 (Sixth Assessment Report, 2021-2023) provides the scientific foundation for current carbon budget policies.
ITMO (Internationally Transferred Mitigation Outcome): The unit of account for Article 6.2 bilateral carbon trading between Paris Agreement parties.
Just Transition: The principle that the shift to a low-carbon economy must be fair and equitable, particularly for workers and communities dependent on fossil fuel industries. Statutory requirement under Ireland's Climate Action Act 2021.
Land Use Change: Conversion of land from one use to another (forest to agriculture, peatland to farmland) that releases stored carbon. Typically an emission source in GHG accounting.
LRF (Linear Reduction Factor): The annual percentage by which the EU ETS emissions cap decreases. Increased from 2.2% to 4.3% per year for 2024-2027 under Fit for 55.
MRV (Monitoring, Reporting, Verification): The three-stage process by which GHG emission reductions are measured (monitoring), documented (reporting), and independently confirmed (verification) to generate carbon credits.
Market Stability Reserve (MSR): EU ETS mechanism that automatically adjusts the supply of EUAs based on the total number of allowances in circulation, stabilising the carbon price. From 2023, excess allowances cancelled rather than stored.
Methane: The second most important GHG (GWP100 = 29.8 per IPCC AR6). Major source in Irish agriculture (bovine enteric fermentation). The EU Methane Regulation (2024) sets mandatory methane measurement requirements for the energy sector.
NDC (Nationally Determined Contribution): Each Paris Agreement party's self-determined climate target. Ireland's NDC is expressed through EU-level targets (EU ETS and Effort Sharing Regulation).
Net Zero: A state in which an entity's total GHG emissions equal its total GHG removals. The Paris Agreement's long-term goal is global net zero by 2050. Ireland's target: carbon neutral by 2050.
Paris Agreement: The international climate agreement adopted at COP21 (Paris, 2015). Sets a target of limiting global warming to 1.5-2°C above pre-industrial levels. Article 6 establishes international carbon market mechanisms.
Permanence: The long-term durability of carbon stored through a carbon project. A key quality criterion — credits representing storage that could be reversed (e.g., forest fire) are of lower quality than permanent geological storage (e.g., mineralisation).
Project Design Document (PDD): The documentation submitted to a carbon standard registry before project implementation, describing the project activities, baseline scenario, monitoring methodology, and expected emission reductions.
Puro.earth: EU-based carbon removal registry focusing on engineered and nature-based permanent removals. Strong alignment with forthcoming EU CRCF framework.
QU.A.L.ITY Criteria (CRCF): The EU Carbon Removal Certification Framework's quality criteria: Quantification, Additionality, Long-term storage, and Sustainability. The four pillars that certified EU carbon removal credits must meet.
REDD+: Reducing Emissions from Deforestation and Forest Degradation + sustainable forest management, conservation, and enhancement of carbon stocks. A major voluntary carbon credit category; credibility damaged by 2023 baseline scandals.
ReFuelEU Aviation: EU Regulation 2023/2405 mandating minimum SAF blending at EU airports: 2% from 2025, rising to 70% by 2050.
Registry (Carbon): An administrative system tracking the issuance, transfer, and retirement of carbon credits. Major registries: Verra Registry, Gold Standard Registry, ACR Registry, EU Union Registry (for EUAs). IMPT.io operates a blockchain-based registry layer on top of major standard registries.
Retirement: The permanent cancellation of a carbon credit, indicating it has been used to offset emissions. Retired credits cannot be resold or reused.
Reversal Risk: The risk that stored carbon is re-released into the atmosphere. Addressed through buffer pools, insurance, and long-term monitoring obligations.
SAF (Sustainable Aviation Fuel): Aviation fuel produced from renewable or waste feedstocks, reducing lifecycle GHG emissions. HEFA (used cooking oil), AtJ (alcohol-to-jet), and Power-to-Liquid (e-kerosene) are major pathways.
SBTI (Science Based Targets initiative): An NGO initiative that validates corporate net-zero commitments against Paris Agreement science. SBTi has restricted the use of offsets for near-term Scope 1/2 emission reductions.
SEC (Sectoral Emissions Ceiling): Ireland's sector-specific emission limits within each carbon budget period. Set by Cabinet; creates ministerial accountability for sectoral performance.
Sequestration: The process of capturing and storing atmospheric CO₂. Biological sequestration: photosynthesis in forests, soils, wetlands. Geological sequestration: injection of CO₂ into deep geological formations.
Soil Carbon: Carbon stored in soil organic matter. Significant potential for sequestration through regenerative agriculture, cover crops, and reduced tillage. Methodologies for accurate soil carbon MRV remain challenging.
Swap Mechanism: In carbon markets, the exchange of one type of credit for another (e.g., avoidance for removal credits) as buyers upgrade their portfolio quality.
Tokenisation: The representation of real-world assets (including carbon credits) as digital tokens on a blockchain. Enables fractional ownership, 24/7 trading, programmable logic, and immutable provenance records.
tCO₂e (tonnes CO₂ equivalent): The standard unit of carbon accounting, converting all GHGs to their CO₂ warming equivalent over 100 years using GWP factors.
UNFCCC (United Nations Framework Convention on Climate Change): The international treaty body governing global climate negotiations. Hosts CORSIA negotiations (through ICAO), Article 6 implementation, and the Paris Agreement.
Union Registry: The EU's central registry for EU ETS allowances (EUAs). Managed by the European Commission; national registries maintain sub-accounts. Irish accounts managed by the EPA.
VCS (Verified Carbon Standard): Verra's flagship voluntary carbon standard — the world's largest VCM programme by credit issuance. Significant credibility challenges following 2023 REDD+ scandal; undergoing reform.
VCU (Verified Carbon Unit): The carbon credit unit issued by Verra under the VCS programme. Each VCU = 1 tCO₂e of verified emission reduction or removal.
Verra: The non-profit organisation operating the Verified Carbon Standard (VCS), Plastic Waste Reduction Standard, and SD VISta standard. Largest voluntary carbon registry globally.
Vintage: The year in which the emission reduction or removal occurred. Buyers and standards have preferences for recent vintages (typically 2016+ for Paris Agreement alignment, 2020+ for market preference).
Voluntary Carbon Market (VCM): Carbon markets where participation is voluntary, typically used by companies to offset emissions beyond mandatory compliance obligations and/or toward net-zero commitments.
Compiled by Michael English, Co-Founder & CTO of IMPT.io. Updated for 2024 EU carbon market reforms and CRCF adoption.
impt.io | Clonmel, Co. Tipperary, Ireland
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