Glossary of Carbon Compliance Terms

Additionality

Carbon credits should only be issued for emission reductions that would not have happened without carbon finance. A project is "additional" if it's only viable because of carbon credit revenue.

Afforestation

Planting trees on land that was not previously forested. Generates carbon credits as trees absorb CO₂.

BEE (Bureau of Energy Efficiency)

Government agency under Ministry of Power that administers India's CCTS carbon market.

Baseline

Reference scenario showing what emissions would have been without a carbon project. Used to calculate emission reductions.

BRSR (Business Responsibility & Sustainability Reporting)

India's mandatory ESG reporting framework for top 1,000 listed companies. Covers environmental, social, governance metrics.

Cap-and-Trade

Carbon market system where government sets a total emission cap, allocates allowances, and allows trading. EU ETS is cap-and-trade.

Carbon Credit / Carbon Certificate

Tradeable unit representing 1 tonne CO₂ equivalent reduced or removed from the atmosphere.

Carbon Footprint

Total greenhouse gas emissions caused by a person, organization, event, or product — expressed as CO₂ equivalent (CO₂e).

Carbon Intensity

Emissions per unit of output. Example: tCO₂ per tonne of cement produced, or tCO₂ per crore of revenue.

Carbon Leakage

When emission reductions in one region are offset by increases elsewhere — e.g., industry relocates to avoid carbon costs. CBAM was created to prevent this.

Carbon Neutral

Net-zero carbon emissions, achieved by balancing emissions with equivalent offsets or removals.

CBAM (Carbon Border Adjustment Mechanism)

EU's carbon import tax on steel, cement, aluminum, fertilizers, electricity, and hydrogen. In full effect from January 2026.

CCC (Carbon Credit Certificate)

India-specific term for credits under the CCTS. 1 CCC = 1 tonne CO₂ reduced below target.

CCTS (Carbon Credit Trading Scheme)

India's domestic carbon trading system covering 9 industrial sectors, 490 companies. Trading starts mid-2026 on NSE/BSE.

CO₂e (Carbon Dioxide Equivalent)

Standardized unit converting all greenhouse gases to equivalent CO₂ using Global Warming Potential (GWP). Allows comparison across different gases.

Compliance Market

Carbon market where participation is legally mandatory. Opposite of voluntary market. Examples: India CCTS, EU ETS, China ETS.

DDS (Due Diligence Statement)

Declaration filed with EU authorities by operators, confirming EUDR compliance for a shipment.

Decarbonization

Process of reducing carbon emissions from an economy, industry, or organization — with the goal of reaching net-zero.

Emission Factor

Coefficient quantifying emissions per unit of activity. Example: 2.42 tCO₂ per tonne of coal burned; 0.71 tCO₂ per MWh of grid electricity in Maharashtra.

ESG (Environmental, Social, Governance)

Framework for evaluating a company's sustainability and ethical impact. BRSR is India's ESG reporting standard.

EUDR (EU Deforestation Regulation)

EU law requiring GPS-verified proof that timber, rubber, coffee, cocoa, palm oil, soy, and cattle products are deforestation-free. Large company deadline: Dec 2026.

EU ETS (EU Emissions Trading System)

World's largest and oldest carbon market, covering 11,000+ installations in 30 countries. Price: ~€80–100/tonne.

GHG (Greenhouse Gas)

Gases that trap heat in the atmosphere, causing global warming. Main types: CO₂, methane (CH₄), nitrous oxide (N₂O), fluorinated gases.

GHG Protocol

Globally recognized standard for measuring and reporting greenhouse gas emissions. Defines Scopes 1, 2, and 3.

GWP (Global Warming Potential)

Measure of how much heat a greenhouse gas traps relative to CO₂. Methane GWP = 25 (25× more potent than CO₂ over 100 years).

ICM (Indian Carbon Market)

India's carbon credit registry and trading infrastructure under CCTS. Digital platform for tracking credit ownership.

Intensity Target

Emission limit per unit of output (e.g., tCO₂ per tonne of cement), as opposed to an absolute cap. India's CCTS uses intensity targets.

MRV (Monitoring, Reporting, Verification)

Process of tracking emissions, reporting data, and getting independent third-party verification. Essential for carbon markets.

Net-Zero

Balance between greenhouse gases emitted and removed from atmosphere. Can be achieved via emission reductions + offsets or removals. India's target: 2070.

NSE/BSE

National Stock Exchange / Bombay Stock Exchange. India's CCTS credits will trade on these platforms from mid-2026.

Offset

Emission reduction in one place used to compensate for emissions elsewhere. Example: funding tree planting to neutralize factory emissions.

Operator (EUDR)

First entity to place a product on the EU market. Has the highest responsibility for due diligence under EUDR.

Paris Agreement

The 2015 international climate treaty. Countries committed to limit global warming to <2°C (ideally 1.5°C). India committed to net-zero by 2070.

PAT (Perform, Achieve, Trade)

India's earlier energy efficiency trading scheme (2012–present). CCTS builds on the PAT framework.

REDD+ (Reducing Emissions from Deforestation and Forest Degradation)

UN program incentivizing forest conservation in developing countries. Generates voluntary carbon credits.

Registry

Database tracking ownership and transfer of carbon credits. Prevents double-counting. Examples: ICM (India), EU Registry, Verra (global voluntary market).

Scope 1 Emissions

Direct emissions from sources owned or controlled by a company — fuel combustion in factory, company vehicles, industrial processes.

Scope 2 Emissions

Indirect emissions from purchased electricity, heat, or steam.

Scope 3 Emissions

All other indirect emissions in the value chain — supply chain, employee commuting, business travel, product use, waste disposal.

SEBI (Securities and Exchange Board of India)

India's stock market regulator. Mandates BRSR reporting for top 1,000 listed companies.

tCO₂ (tonnes of CO₂)

Standard unit for measuring carbon emissions. 1 tonne = 1,000 kg.

tCO₂e (tonnes of CO₂ equivalent)

All greenhouse gases converted to equivalent CO₂ using GWP. The standard unit for carbon accounting.

VCM (Voluntary Carbon Market)

Carbon market where participation is optional. Companies buy credits for CSR goals, net-zero commitments, or green branding.

Verification

Independent third-party assessment confirming accuracy of emission data or carbon project claims. Required for all carbon credit issuance.