Environmental Credit Service (preview) glossary

Microsoft Cloud for Sustainability Tech Summit November 2024.

Important

Some or all of this functionality is available as part of a preview release. The content and the functionality are subject to change. You can access the Environmental Credit Service (preview) sandbox environment for a 30-day trial. To use Environmental Credit Service (preview) in a production environment, complete the Environmental Credit Service (preview) sign up form.

Buyer

An individual or organization that purchases verified credits issued by an issuing registry. In the voluntary market, these are usually corporate buyers using credits as offsets for unavoidable emissions to meet their stated environmental, social, and governance (ESG) goals, but could evolve into speculative or institutional buyers.

Child credit

A credit is a token that has a divisible behavior and can be split into child tokens. The child tokens are known as child credits.

Claim processing and verification

This is the process that encompasses submission of raw claims by the supplier and verification of the raw claims by the validation and verification body.

Claims

Benefits that the supplier determines and states for the project for a specific period. Claims should be based on a scientific standard established by an issuing registry that matches the activity the project will be conducting.

Classic carbon token

Most of the existing carbon credits don’t follow the CCP token standards defined by InterWork Alliance (IWA). Environmental Credit Service (preview) has created a new token class known as classic carbon token, which accommodates all the properties of existing carbon credits across multiple issuing registries.

Core Carbon Principles (CCP) token

CCP is a token recommended by InterWork Alliance (IWA) standards to cater to the needs of quality carbon credit management and tracking. It follows the TTF framework.

Credit issuance

The process by which credits are issued by a validation and verification body. For the claims verified, the validation and verification body recommends credits to be issued to the respective issuing registry. The issuing registry then reviews the recommendation and issues credits accordingly.

Credit lineage

Because a credit is a token, you can view the credit’s history from current token -> parent token -> transfers -> credit issuance (minting) -> modular benefit project claim -> ecological project, with all the details at each state transition.

Credit listing

The process of enabling credit for trade on a marketplace. Credit delisting: The process of disabling credit for trade on a marketplace.

Credit owner

Any organization that owns the credit. In terms of supporting roles in Environmental Credit Service (preview), it can be a supplier or a buyer.

Credit retirement

The process to retire the credits.

Credits

As defined by InterWork Alliance (IWA), a carbon credit is a permit that allows the company that holds it to emit a certain amount of carbon dioxide or other greenhouse gas (GHG). There are two types of carbon credits: emission allowances and carbon offsets. A carbon offset is an intangible asset that is created by owners of carbon emissions reduction or removal projects, or programs, which must be verified or validated by a third party. An offset credit is minted when it becomes issued in an environmental registry, something that happens upon verification that one ton of CO2e greenhouse gases have either been avoided (for example, clean electricity), reduced (for example, sustainable fuels), or sequestered (for example, avoided deforestation or sustainable farming) by an approved project or activity. Carbon offset credits are in the scope of Environmental Credit Service (preview).

Ecological claim

A collection of the evidence data submitted according to the quality standard being followed by the modular benefit project. An ecological claim is composed of one or more checkpoints.

Ecological claim checkpoint

A collection of the evidence data submitted periodically to an ecological claim.

Ecological project or program

As defined by InterWork Alliance (IWA), an ecological project provides a single source of truth to all participants regarding the identity of a project or program and its ecological benefit claims.

Encumbrance

A claim against a property by a party that is not the owner. An encumbrance can impact the transferability of the property and restrict its free use until the encumbrance is lifted. In the context of Environmental Credit Service (preview), carbon credit tokens are encumbered by the marketplace as part of the listing.

End-use buyer

An individual or organization that purchases verified credits issued by a registry. In the voluntary market these are usually corporate buyers using credits as offsets for unavoidable emissions to meet their stated ESG goals, but could evolve into speculative or institutional buyers.

Goal statement

The description of the long-term pledge that the buyer will commit to while creating the scorecard.

Issuing registry

An issuing registry is an organization that establishes science-based standards for measurement or monitoring, reporting, and verification (MRV) ecological benefit claims and issues value in the form of credit for claims that meet the standard set.

Marketplace

An organization that provides trading infrastructure to match buyers and sellers together and include services like settlement, clearing, and risk management. Suppliers can list their credits on the marketplace and buyers can trade directly or via a broker on the marketplace.

Measurement or monitoring, reporting, and verification (MRV)

As defined by IWA in Voluntary Ecological Markets Overview, measurement or monitoring, reporting, and verification (MRV) is the process of measuring emissions, estimating the impact of climate actions, reporting results, and verifying data.

Milestones

Significant stages to track the progress of the buyer in achieving their emission goals. The buyer can create the milestones for specific reporting periods as needed.

Modular benefit project

As defined by InterWork Alliance (IWA), an ecological project has one or more modular benefit projects based on the type of claim that the project will be making. For example, a project can make both carbon reduction and carbon removal claims and would need a modular benefit project for each type of claim it will make.

Offsetting

As defined by InterWork Alliance (IWA), organizations can purchase carbon offsets and apply them against their reported periods actual emissions to achieve their goal for the period. When an offset is applied to reduce actual emissions, the offset is spent and can’t be reused or sold and generates a lower effective emissions balance.

Processed claim

A collection of checkpoint results that are generated by the validation and verification body by verifying the ecological claim.

Proposal

The carbon ecosystem has various kinds of workflow scenarios where one participant would be the requester, and another would be the approver. For handling such scenarios, Environmental Credit Service (preview) has created an entity called proposal. The requester will create an instance of a proposal while submitting a request and the approver will act on the submitted proposal. For example, suppliers will submit a proposal for listing their carbon credits on the marketplace. The proposal will be reviewed by the marketplace. If the proposal is approved by the marketplace, then the credit is listed on the marketplace.

Supplier

A supplier performs the actions in an ecological project for creating the asset value, such as carbon offsets, for use in the voluntary market and becomes the initial owner of the ecological benefit value generated. There can be multiple parties that are a part of the supplier role:

  • Owner: Organization or individual that owns the assets used in the activity that is the source of the benefit claims. For an ecological project, this might be a farmer.
  • Sponsor: Organization or individual that finances the activities generating the benefit claims, such as a bank or investment fund.
  • Developer: Organization or individual that constructs or develops techniques or technologies used in the activities that generate the benefit claims, such as a direct air capture device manufacturer.

Target emissions

A long-term pledge in terms of quantity of mtCO2e that the buyer commits to achieve creating the emission scorecard.

Trader

Represents the sellers and buyers on a marketplace.

Validation and verification body

A validation and verification body is an organization that is authorized by an issuing registry to validate and verify measurement or monitoring, reporting and verification (MRV) claims issued by a project.

Configure Environmental Credit Service (preview)
Environmental Credit Service (preview) overview
API reference overview for Environmental Credit Service (preview)