Overview of Certificate Types
Source: FutureCamp GmbH, July 2007

Certificates generated from emission reduction projects, Clean Development Mechanism (CDM) and Joint Implementation (JI) - which are the mechanisms introduced within the Kyoto Protocol under the supervision of UNFCCC - are called Certified Emission Reductions (CERs) and Emission Reduction Units (ERUs) respectively.

The JI projects are implemented in industrialized countries with an emission target, whereas CDM projects are conducted in developing countries, which do not have any emission reduction obligations. Marrakesh Accords, which act as an amendment to the Kyoto Protocol, regulate processes of those project-based mechanisms.

For projects, which cannot be implemented as JI or CDM, but still fulfil the required standards, other certificates types can be generated, namely Voluntary Emission Reductions (VERs). As VERs are not accredited by UNFCCC, they cannot be used for compliance purposes under the Kyoto Protocol. However VER units can apply for voluntary compensation purposes.

Both CERs and VERs can currently be generated, whereas ERUs are available from 2008 onwards. Nevertheless JI projects are already implemented, although without generating any credits.

EU-Allowances (EUAs) are credits issued within the European Union for the installations underlying the Emission Trading Scheme. By their retirement the emission rights will be withdrawn from the market to avoid emissions in the accordant amount. Apart from EUAs, the installation operators can use CERs and ERUs for compliance with their emission targets.

Assigned Amount Units (AAUs) are credits available for the countries, which are the parties of the Kyoto Protocol (Annex B). The credit amount is assigned according to their national emission caps, therefore they are also available for trading. In contrast to EUAs, these certificates are traded only on the national level from 2008 onwards.

The following figure shows the most important certificates types on the European and worldwide market:

Figure 1: Main types of emission certificate (source: FutureCamp GmbH, 2007)

In order to assure the highest quality certificate quality, various additional standards can be applied. Currently one of the most well-known and strict standards for implementation of JI, CDM and VER projects is the "Gold Standard" (www.cdmgoldstandard.org), which was launched by the World Wide Fund for Nature (WWF) in 2003.

The table below presents price ranges for various certificates, along with the Gold Standard (June 2007):

Over allocation of EUAs in the first EU crediting period 2005-2007 is responsible for the current market situation – high EUAs availability at very low prices.