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Climate Change : Carbon Markets : Carbon Management : Carbon Finance : Climate Controls
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What is climate change?

Climate change is the long-term change in average weather conditions, including temperature, precipitation and wind.

According to the United Nations Intergovernmental Panel on Climate Change (IPCC), which is comprised of the world’s leading scientific experts in the field of climate change, the global climate is undergoing dramatic changes as the direct result of greenhouse gas emissions from human activity. Climate change is already apparent as evidenced by higher temperatures, rising sea levels, increased ocean acidity and ice melt. Global surface temperatures, alone, have increased by roughly 0.74 °C (1.33 °F) between the start and the end of the 20th century. According to the IPCC these trends are set to continue to accelerate into the 21st century and will be accompanied by new changes such as increases in extreme weather events like hurricanes. In fact, according to the IPCC’s latest findings, global average temperatures will probably rise a further 1.1 to 6.4 ºC (2.0 to 11.5 ºF) this century, depending on the extent of continued greenhouse gas emissions.

What are greenhouse gases (GHGs)?

Greenhouse gases are gases in the atmosphere that act like a blanket or glass roof around the earth, trapping in heat that would otherwise escape to space – this is commonly referred to as the “greenhouse effect”. From the end of the last Ice Age about 10,000 years ago to the end of the 18th century, the levels of greenhouse gases in the atmosphere remained fairly constant and at a level sufficient to sustain life as we know it today. Since the Industrial Revolution 200 years ago, mankind has been releasing unprecedented amounts of greenhouse gases into the atmosphere, which trap more heat, amplifying the natural greenhouse effect.

Carbon dioxide (CO2) is the most significant greenhouse gas released by human activities and is emitted mostly from the burning of fossil fuels like coal, oil and natural gas. Other greenhouse gases include methane and nitrous oxide.


How do we know that climate change is real?

As early as 1995, the IPCC had strong scientific evidence that climate change was occurring and that human activities were a primary cause. Since then, the IPCC has conducted four detailed assessments of climate change which on each occasion has reported greater confidence in the case for human-induced climate change. By 2007, the IPCC concluded that it is ‘‘extremely unlikely that the global climate changes of the past fifty years can be explained without invoking human activities’’. Prominent scientists and major scientific organisations have all ratified the IPCC conclusion. Today, all but a tiny handful of climate scientists are convinced that earth’s climate is heating up and that human activities are a significant cause.

The scientific consensus regarding climate change is based on the work of thousands of experts from hundreds of research institutions located across the globe. Scientists worldwide have considered all the possible natural factors that affect climate on Earth, from the output of the sun to the effects of volcanoes. After analysing the possible impacts on both warming and cooling of each of the factors, along with man-made factors, the IPCC concluded that most of the observed increase in globally averaged temperatures since the 1950s is very likely (more than 90% certainty) due to the observed increase in man-made greenhouse gas concentrations over the same period.


What are the potential consequences of climate change?

Without effective action to halt the rise and then reduce the levels of greenhouse gases released by human activity, countries worldwide and their citizens face a bleak future.

There will be increased disruption to society from extreme weather, with more frequent storms and flooding, more severe droughts and heat waves; rising sea levels and thawing permafrost will put essential infrastructure under pressure; in many regions agriculture will be adversely affected by water shortages and extreme heat; the effects on the natural world will also be severe with the loss of coral reefs as oceans warm and of tropical forests as fires become more frequent.

These impacts will be felt in economic terms and the pressure on already stressed world financial systems could be catastrophic. There will also be social consequences with mass human migrations from lands affected by drought and famine and extreme heat stress in the urban areas of topical and subtropical countries.


Can climate change be reversed?

Some changes to our climate are inevitable given the historic build up of emissions in the atmosphere, but immediate action is needed to avert the worst of these impacts.

According to recent calculations by the IPCC, the level of action required is considerable. It is estimated that greenhouse gas emissions would need to be cut by at least 80% by 2050 in order to avoid the worst impacts of climate change. Some countries, like the UK, have committed to reducing their greenhouse gas emissions in line with this target however most countries still have not. The more action is delayed the more the levels of greenhouse gases will rise before they are brought under control, committing the Earth to greater levels of warming and making the required reductions even greater.

Fortunately, many technological solutions exist for reducing greenhouse gas emissions. While these technologies come with a price, it is far outweighed by the cost of inaction. Financing these technologies, however, remains a challenge. New sources of finance, such as the carbon markets, are required to mobilise the necessary investment and financial flows to address climate change.

To avoid giving credits to projects that would have happened anyway, rules have been specified to ensure additionality of the project i.e. to ensure the project reduces emissions more than would have occurred in the absence of the project. A project is additional if its proponents can document that realistic alternative scenarios to the proposed project would be more economically attractive or that the project faces barriers that carbon finance helps it overcome.
‘Business-as-usual’ scenario
A description of what would most likely have occurred in the absence of a carbon offset project, also referred to as the ‘baseline scenario’.
Carbon dioxide (CO2)
A naturally occurring gas and one of the most abundant greenhouse gases in the atmosphere. Carbon dioxide is also a by-product of industrial processes, burning fossil fuels and land use changes.
Carbon dioxide equivalent (CO2e)
The unit of measurement used to compare the relative climate impact of the different greenhouse gases. The CO2e quantity of any greenhouse gas is the amount of carbon dioxide that would produce the equivalent global warming potential.
Carbon footprint
A carbon footprint is the total set of greenhouse gas (GHG) emissions caused by an organisation, event or product. For simplicity of reporting, it is often expressed in terms of the amount of carbon dioxide, or its equivalent of other GHGs, emitted.
Carbon neutral
Carbon neutrality, or having a net zero carbon footprint, refers to achieving net zero carbon emissions by balancing a measured amount of carbon released with an equivalent amount sequestered, avoided or offset.
Carbon offset
Carbon offsets are the ‘currency’ for offsetting. They are quantified in metric tonnes of CO2e reductions, i.e. one carbon offset equals one tonne of emissions reductions made through selected and verified carbon projects. Carbon offsets can be purchased on a voluntary basis or to meet regulatory requirements.
Carbon offset project
A third party verified project which utilises proven clean technologies including, hydropower, wind power and methane capture, to generate carbon offsets.
Carbon offset standard
A standard that helps to ensure that carbon offset projects meet certain quality requirements, such as additionality and third party verification. Several offset standards exist within the voluntary and compliance carbon markets and each has a different set of requirements depending on its focus and scope.
Certified emission reduction (CER)
Certified Emission Reduction – a carbon credit created by a Clean Development Mechanism (CDM) project. One CER corresponds to one tonne of CO2e emission reductions.
Climate change
A change in global climate attributed directly or indirectly to human activity and in addition to natural climate variability observed over comparable time periods.
Compliance carbon market
The segment of the carbon market for carbon offset transactions which meet regulatory requirements i.e. offsets purchased by governments and organisations to meet Kyoto targets.
Double counting
When two or more individuals or organisations claim ownership of specific emission reductions or carbon offsets.
Global warming
The increase in the average temperature of the Earth’s surface as a result of the accumulation of greenhouse gases in the atmosphere
Global warming potential (GWP)
Global warming potential (GWP) is a measure of how much a given amount of greenhouse gas is estimated to contribute to global warming, relative to the same amount of carbon dioxide. See CO2e.
Greenhouse gas (GHG)
Greenhouse gases are gases in the atmosphere that absorb and emit infrared radiation. This process is the fundamental cause of the greenhouse gas effect. The main greenhouse gases are water vapour, carbon dioxide, methane, nitrous oxide and ozone.
Kyoto Protocol
An international protocol to the United Nations Framework Convention on Climate Change (UNFCCC), that requires industrialised country signatories to meet greenhouse gas emission reduction targets relative to their 1990 levels.
When an emission reduction from a carbon offset project in one area causes an increase in emissions somewhere outside of the project scope i.e. where conserving a forest in one region shifts logging activity to another area of forest.
An offset quality criteria which relates to the robustness and durability of the emission reduction generated by a carbon offset project.
A publicly accessible database that tracks ownership of carbon offsets over their lifetime.
To permanently remove carbon offsets from market to ensure that they are not re-sold. Offsets are usually retired by giving them individual serial numbers and placing them in an official registry.
Unique ownership
The concept of clear ownership rights to the emission reductions that a carbon offset represents, to avoid more than one individual or organisation claiming the benefit of the reduction. See double counting and retire.
An independent assessment of the carbon offset project design and baseline calculations by an accredited third-party auditor that takes place before the project activity is underway.
An independent assessment of quantification of actual emission reductions achieved by a carbon offset project, carried out by an accredited third-party auditor after the project is underway.
Verified emission reduction (VER)
Verified Emission Reductions (VER) – a carbon credit created by a project which has been verified outside of the Kyoto Protocol. One VER corresponds to one tonne of CO2e emission reductions.
The corresponding year in which the emission reductions that a carbon offset represents were created.
Voluntary carbon market
The segment of the carbon market for carbon offset transactions outside of government-related regulatory schemes i.e. offsets purchased by organisations wishing to offset their carbon on a voluntary basis.




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Climate Change : Carbon Markets : Carbon Management : Carbon Finance : Climate Controls