Box 51 Carbon Carbon Dioxide And Carbon Markets

Under Kyoto Protocol definitions, carbon bio-sequestration is by afforestation (A) on land that was not previously forested, or by reforestation (R) of land previously forested. In A/R projects carbon is incorporated or sequestered in the trees of the A/R plantations that replace other land uses. The net gain is the carbon accumulated with project less the carbon accumulated without project. Depending on Annex B countries' greenhouse gas emissions policy frameworks, forestry projects may generate income directly by achieving measured emission reductions, and/or firms may be able to offset their emissions against the emissions reductions of forestry projects.

Annex B countries have established registries that account for and record the greenhouse gas abatement by firms, and by forestry projects. Emission allowances and offsets are both expressed in terms of a common unit of one tonne of carbon dioxide equivalent (CO2e), where CO2e is the expression of the global warming potential of the major greenhouse gases in terms of their equivalence with CO2 (IPCC, 2007: Table 2.14, p. 212). Units of one tonne of CO2e are abated, or its equivalent in carbon (C) is sequestered: 1 tonne of C = 3.67 tonnes of CO2e (this ratio being derived from the ratio of the molecular weights of CO2 (44) and C (12)). The adoption of CO2e as the common unit of measurement and trade is an essential prerequisite for the harmonization of global and in-country markets.

There is another market for carbon dioxide equivalent (CO2e) outside the markets that are initiated by emission caps or taxes. These are the voluntary markets, where businesses, institutions or individuals are motivated by altruism, reduction of guilt or image considerations, or all three, to offset their emissions as part of a carbon-neutral strategy; they typically abate part of their emissions and offset the remainder that cannot be technically or economically abated.

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