Glossary

Carbon Credits - A general term used for an instrument that represents ownership of one metric tonne of carbon dioxide equivalent that can be traded, sold, or retired. Carbon credits come in two varieties - Mandatory Carbon Permits or Voluntary Carbon Offsets. It should be noted that these two products are not interchangeable and merely share some of the same terminologies.

Mandatory Carbon Permit - To incentivize large companies to reduce their carbon emissions, a government sets a cap on the maximum level of emissions and creates tradable permits for each unit of emissions allowed under the cap. Only specific types of large companies are required to comply with these requirements (eg. utilities or large manufacturers).

Voluntary Carbon Offset - A mechanism that allows timberland owners, renewable energy generators, and others to quantify their carbon sequestration activities into tradable certificates. These offsets can be purchased by individuals and corporations looking to offset their own carbon emissions to achieve carbon neutrality. Purchases are done on a strictly voluntary basis.

Additionality - Reductions in emissions directly related to the carbon offset project must be above the business as usual baseline. If the project did not happen, carbon emissions would have been quantifiably worse.

Double-counting - Double-counting situations arise when two parties claim the same carbon removal or emission reduction. For example, a government may claim the emission reduction as part of its national targets and the same forest may issue voluntary offsets. It is important for there to be a clear and public record of all Virtualcarbon issued to address this risk. Blockchain is the perfect solution for this issue.