The LibraryGlossary
Glossary
The terms of carbon removal and project finance, each in a sentence or two.
- Additionality
- The test of whether a carbon benefit would have happened without the money from selling it. Only additional tonnes add anything for the climate.
- Advance market commitment
- A pledge by offtakers to purchase a product in future, made to show builders that demand will be there. Frontier is the best-known one in carbon removal.
- Avoidance credit
- A credit for emissions that did not happen, such as a forest left standing. Avoidance does not lower the carbon dioxide already in the air.
- BECCS
- Bioenergy with carbon capture and storage: plants absorb carbon as they grow, and when they are used for energy the carbon is captured and stored.
- Biochar
- Charcoal made by heating plant waste without oxygen. Added to soil, biochar holds its carbon for centuries.
- Carbon credit
- A tradeable certificate for one tonne of carbon dioxide, or its equivalent, removed or avoided.
- Carbon removal (CDR)
- Taking carbon dioxide that is already in the atmosphere and storing it durably in rock, soil, the ocean or long-lived materials.
- Counterparty
- The other party to a contract. In an offtake agreement, the offtaker is the project's counterparty.
- Covenant
- A promise a borrower keeps for the life of a loan, such as maintaining enough income to cover each repayment.
- Credit committee
- The group inside a bank that decides whether to approve a loan, on the strength of a written case and its evidence.
- Direct air capture (DAC)
- Machines that draw carbon dioxide directly from the air, usually for storage deep underground.
- Durability
- How long removed carbon stays out of the atmosphere. Also called permanence.
- Enhanced rock weathering
- Spreading crushed rock on land so it reacts with carbon dioxide and locks it into stable minerals.
- MRV
- Measurement, reporting and verification: how a tonne of removal is measured, reported against a method and independently checked.
- Net zero
- The point at which greenhouse gases released are balanced by the same amount removed.
- Offtake agreement
- A contract to buy a project's future output at an agreed price, often over several years. In carbon removal, the output is verified tonnes removed.
- Pre-purchase
- A purchase where the offtaker pays some or all of the price before the tonnes are delivered.
- Project finance
- Lending to a single project, repaid from that project's own income rather than from its owner's other businesses.
- Registry
- The system that issues carbon credits with serial numbers and records when each is retired, so that no tonne is counted twice.
- Residual emissions
- Emissions that remain hard to stop even after every practical cut, such as some from aviation, steel and farming.
- Retirement
- Using a credit to make a claim, after which it can never be sold or used again.
- Revenue-based financing
- Borrowing against contracted future income, so that the payments, when they come, repay the loan.
- Tenor
- The length of a loan, from first advance to final repayment.
- Verification
- The independent check of a project's claimed removals before credits are issued.