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Some of the definitions have been sourced from the Greenhouse Gas Protocol Initiative’s glossary, which can be found at:

Absolute based obligation
An obligation for a participant in an emissions trading scheme to surrender one emissions unit for every tonne of CO2-e emitted.
Annex I party
A developed country or Economy in Transition listed in Annex I of the United Nations Framework Convention on Climate Change. These parties aim to return their emissions to their 1990 level by 2000.
Annex B party
Annex B of the Kyoto Protocol defines emission objectives (assigned amounts) for most Annex 1 parties. Countries listed in Annex B are allowed to participate in emissions trading under the Kyoto Protocol.
Assigned amount units (AAUs)
The emission units allocated to the Annex B countries under the Kyoto Protocol on the basis of their quantified emission target for the first commitment period, 2008 to 2012. One AAU is equal to one tonne of carbon dioxide equivalent.
Carbon dioxide equivalent (CO2-e)
The quantity of a given greenhouse gas multiplied by its global warming potential, which equates its global warming impact relative to carbon dioxide (CO2). This is the standard unit for comparing the degree of warming that can be caused by emissions of different greenhouse gases.
Carbon market
A shorthand term for an international or domestic market where greenhouse gas emission units are exchanged between buyers and sellers. The terms “carbon market”, “greenhouse gas market” and “emissions market” can be used interchangeably.
Carbon tax
A tax applied to CO2-equivalent emissions. The government’s 2002 climate change policy package included a carbon tax on energy, industrial and transport emissions, capped at $25 per tonne of carbon dioxide equivalent (CO2-e). In December 2005 the government decided not to proceed with the announced carbon tax.
Clean Development Mechanism (CDM)
A Kyoto Protocol mechanism that allows emission reduction and afforestation/reforestation projects with sustainable development benefits to be implemented in developing countries that have ratified the Kyoto Protocol. CDM projects earn particular Kyoto units, which can be used by Annex B parties to help meet their Kyoto commitment.
Commitment Period Reserve
A rule within the Kyoto Protocol that requires each party with binding targets to hold a minimum number of Kyoto units in its national registry. In New Zealand’s case this means that Kyoto units covering 90 per cent of our assigned amount (under the Kyoto Protocol) must be held in the registry at any point in time throughout the first commitment period (2008–2012). If this limit is reached, the registry would effectively close to outgoing international transfers until more Kyoto units (AAUs, CERs, ERUs or RMUs) were transferred into the registry.
Commitment period (CP)
A range of years within which parties to the Kyoto Protocol are required to meet their quantified greenhouse gas emissions limitation or reduction commitment. The first commitment period is 2008 to 2012
Competitiveness at risk (CAR)
Being in the position where bearing a price for greenhouse gas emissions significantly impedes a firm’s ability to compete against international competitors in countries with less stringent climate change policies. Such competition could be on the basis of exports or imports.
de minimis
A threshold under which greenhouse gas emissions associated with an activity are immaterial or insignificant in terms of the objectives of the NZ ETS (for the purposes of this document, also has a meaning in the context of the law).
Economic leakage
Economic activity being displaced from one country to another, with a consequent reduction in economic welfare in the former country.
Emission factor
An intensity factor relating to greenhouse gas emissions per unit of activity (such as tonnes of fuel consumed, tonnes of product produced).
Emission unit
An instrument created under law that can be bought and sold and used to meet an entity’s obligations under an emissions trading scheme. In the New Zealand Emissions Trading Scheme, one emission unit corresponds to one metric tonne of carbon dioxide equivalent emissions.
The release of greenhouse gases into the atmosphere.
Emissions (or environmental) leakage
The shift in emissions (and other environmental impacts) from one country to another associated with economic activity being displaced from one country to another.
A waiver from bearing an obligation under a policy measure. For example, under the former carbon tax and Negotiated Greenhouse Agreement (NGA) regime, NGA firms were to receive a full or partial exemption from the carbon tax that would otherwise have applied to their direct emissions of greenhouse gases.
Fossil fuel
Coal, natural gas, crude oil and fuels derived from crude oil such as petrol and diesel. They are called fossil fuels because they have been formed over long periods of time from ancient organic matter. They are not renewable.
Fugitive emissions
Those emissions that do not come from combustion but arise as a result of processing or transforming fuels. Examples of fugitive emissions include the venting of CO2 at the Kapuni Gas Treatment Plant and the emissions from geothermal fields.
The allocation of emission units or other forms of financial assistance to emitters on the basis of their historical emissions.
Greenhouse gas
Greenhouse gases are constituents of the atmosphere, both natural and anthropogenic, which absorb and re-emit infrared radiation. Greenhouse gas emissions covered by the emissions limitation or reduction commitment for the first commitment period of the Kyoto Protocol are carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride (SF6).
Grey market
In the New Zealand context, a shorthand term for the emissions trading market for units that cannot be used for compliance with the Kyoto Protocol. Grey market units can be generated by projects in Kyoto countries that do not pass through the Kyoto Protocol’s crediting processes, or in countries that have not ratified the Kyoto Protocol.
The Māori word for a meeting, social gathering or assembly.
Intensity based obligation
An obligation for a participant in an emissions trading scheme to surrender units on an intensity basis (ie, one unit for every tonne of CO2-e emitted per unit of activity).
A list of an organisation’s or a country’s greenhouse gas emissions by sources, removals by sinks (eg, growing trees) and stocks (eg, carbon stored in forest biomass and soils).
Joint implementation (JI)
A mechanism that allows emission reduction and removal projects to be implemented in Annex I parties that have ratified the Kyoto Protocol. JI projects earn particular Kyoto compliance units known as emission reduction units, which can be used by an Annex I party to help meet its Kyoto commitment.
The exercise of guardianship by the tangata whenua of an area in accordance with tikanga Māori in relation to natural and physical resources, including the ethic of stewardship.
Kyoto market
The emissions trading market for emission units included under the Kyoto Protocol.
Kyoto Protocol
A protocol to the United Nations Framework Convention on Climate Change that includes emissions limitation or reduction commitments for ratifying countries listed in its Annex B (developed countries and Economies in Transition) (see for further information).
Any action that results, by design, in the reduction of greenhouse gas emissions by sources or enhances removals by sinks. Mitigation and abatement are often considered to be equivalent terms.
National inventory
A quantitative report of anthropogenic emissions by sources, removals by sinks, and stocks of greenhouse gases not controlled by the Montreal Protocol.
Negotiated Greenhouse Agreements (NGAs)
Under the government’s 2002 climate change policy package, NGAs were available to eligible firms whose international competitiveness would be placed at risk by the carbon tax. Eligible firms were to receive full or partial relief from the carbon tax in return for moving toward world’s best practice in greenhouse gas emissions management. In December 2005 the government decided not proceed with the carbon tax/NGA regime.
New Zealand Emission Unit Register
A software system for the accounting of transactions in Kyoto Protocol units, including AAUs, RMUs, ERUs, CERs, tCERs and lCERs. Refer to
New Zealand Emissions Trading Register
A software system for the accounting of transactions required under the NZ ETS. These transactions include holdings, transfers, and surrender of emission units acceptable for compliance under the NZ ETS (including NZUs and certain Kyoto Protocol units) as well as emissions reporting.
The increase in the consumer price of a product resulting from the imposition on the producer or supplier of a price for the product’s greenhouse gas emissions.
Point of Obligation
The point in the supply chain of a market where an obligation is placed on a person to surrender emission units to cover the direct or indirect emissions associated with their products. Participants with these obligations may themselves be referred to as points of obligation.
Price-based measures
Also referred to as “economic instruments” and “market instruments”, price-based measures can be applied to integrate the costs (or opportunity costs) of greenhouse gas emissions into decision-making in the marketplace.
Price of carbon
In the New Zealand context, a shorthand term for the price of greenhouse gas emissions in a trading market, typically calculated in dollars per tonne of carbon dioxide equivalent.
Progressive obligation
An obligation for an ETS participant to surrender units representing some percentage of the full obligation during a transitional period. For example, under a 50 per cent obligation, a participant would surrender one emission unit for every two tonnes of emissions. A progressive obligation could increase over time until it became a full obligation to surrender one unit for each tonne of emissions.
An amount intended to refund the cost of a policy measure. For example, under the former carbon tax/Negotiated Greenhouse Agreements (NGA) regime, rebates were available to NGA firms to compensate them for increased electricity prices resulting from the carbon tax applied to fossil fuels.
Exemptions and rebates designed to offset the cost of a policy measure, such as a tax or other charge.
Retirement (of Kyoto units)
Under the Kyoto Protocol, the transfer of a Kyoto unit from an Annex B Party’s holding account in its national emission unit register into a retirement account for the purpose of compliance with its quantified emission reduction or limitation commitment. Once a Kyoto unit has been retired in a commitment period, it cannot be traded or used in future commitment periods.
Revenue recycling
The return to the economy of revenue derived from a policy measure.
The uptake and storage of carbon. Carbon can be sequestered by plants and soil and in underground/deep sea reservoirs. (Underground storage is also called geological sequestration.)
A sink actively removes a greenhouse gas from the atmosphere, such as a growing forest or soil. A sink is distinct from a reservoir where greenhouse gases can be stored, such as an underground reservoir or a mature forest.
The transfer of a New Zealand unit (NZU), Kyoto unit, or other overseas unit (if applicable) from an individual account to the government’s surrender account in the registry for the purpose of compliance with a unit obligation. Surrendering an NZU will render it incapable of being further transferred, retired or cancelled. Once a Kyoto unit has been transferred to the government’s surrender account, the government may retire it for compliance under the Kyoto Protocol.
Tangata whenua
In relation to a particular area, means the iwi, or hapū, that holds mana whenua over that area (where mana whenua means customary authority exercised by an iwi, or hapū, in an identified area).
Criteria that define which firms, sites or other business units are required to participate in a policy measure.
Tikanga Māori
Māori customary values and practices.
Treaty of Waitangi
A broad statement of principles on which the British Crown and Māori made a political compact to found a nation state and build a government in New Zealand.
True-up Period
A period of 100 days following the completion of the Kyoto Protocol reviews of emissions information relating to the commitment period (2008–2012). Transfers of units may still take place until the end of this period, allowing Annex 1 parties to trade and retire units to comply with their emissions obligations. The true-up period is expected to commence in 2014.
United Nations Framework Convention on Climate Change is an international treaty on climate change that came into force in 1992. It aims to stabilise greenhouse gas concentrations at a level that avoids dangerous human interference with the climate system.