Glossary Carbon Credit

Carbon Credits refer to the right that allow developed countries under the Kyoto Protocol to emit additional greenhouse gases in case they install greenhouse gas reduction facilities in developing countries. According to the Kyoto Protocol, obligated countries must reduce their carbon dioxide emissions by an average of 5% from the 1990 emission levels between 2008 and 2012. Therefore, energy-intensive companies in these countries are subject to emission regulations. Companies with high carbon emissions, such as petrochemical or power plants, must either reduce their emissions or purchase carbon credits from companies that have secured the right to emit more. Carbon credits can be divided into Assigned Amount Units (AAUs), which represent the national allocation of developed countries' greenhouse gas reduction obligations under the Kyoto Protocol, EU Allowances (EUAs), which represent the allocation set by the EU Emissions Trading System (EU ETS), Certified Emission Reductions (CERs), which represent the amount of greenhouse gas reduction through the Clean Development Mechanism (CDM), Emission Reduction Units (ERUs), which represent the amount of greenhouse gas reduction through the Joint Implementation (JI) mechanism, and Removal Units (RMUs), which represent the amount of greenhouse gas absorption through afforestation and reforestation projects in countries with greenhouse gas reduction obligations under the Kyoto Protocol.