Kyoto credits: CER (Certified Emission Reduction) & ERU (Emission Reduction Unit)

CERs and ERUs are emission reductions achieved within the scope of the flexibility mechanisms established by the Kyoto Protocol (Clean Development Mechanism –CDM- for CERs; Joint Implementation –JI- for ERUs).

Once an emission reduction project (energy efficiency, reforestation, renewable energy, methane capture, etc.) has been registered by the proper international authorities and verified by an independent third party, it can generate carbon credits. The amount of allocated credits will depend on the observed emission reduction level (one credit per ton of avoided CO2 eq.).

The credits are sold to governments that must comply with Kyoto Protocol targets or to businesses under domestic cap-and-trade schemes.

CO2 Allowances: EUA (European Union Allowance)

More than 11,500 industrial sites have been assigned a cap on their emissions by their respective governments within the scope of the European Union Emissions Trading Scheme (Directive 2003/87/CE).

Every year, independent entities verify the actual emissions of each site. When an industrial site has exceeded its allocated greenhouse gas (GHG) emissions level, it must buy the missing allowances to avoid penalties (€100/ton as of 2008).

Conversely, when an operator's emissions are below the allocated amount, it can sell the surplus in the market or save it for the following year.

Similar cap-and-trade schemes are gradually being introduced on a worldwide scale (California, RGGI, Oregon, CCX, Australia, Japan, Canada), thereby contributing to the emergence of a global carbon market.

Voluntary credits: VER (Verified Emission Reduction)

VERs (Verified Emission Reductions) are emission reductions carried out independently of the procedures set up by the Kyoto Protocol.

The actual amount of reductions is assessed using the methodology chosen by the project developer (Voluntary Carbon Standard, Gold Standard, VER+, etc.). An independent third party verifies the emission reductions in accordance with the selected methodological standard to ensure that additional reductions indeed take place.

These credits are mainly used by companies or individuals who wish to offset their emissions voluntarily in order to become carbon neutral.