FAQs on Certified Emission Reductions (CER’s)

What are CERs?
Each Certified Emission Reduction (CER) represents the abatement of one tonne of carbon dioxide equivalent, and can only be issued once estimated abatement volumes have been validated and verified under strict regulations under the Clean Development Mechanism (CDM). The CDM Executive Board supervises the Kyoto Protocol’s CDM under the authority and guidance of the UN.

Trading in CERs
Once certified, these CERs are credited into the holding account of the one who generates them — i.e. the CDM project participant who will have a holding account opened in their name by the UNFCCC. From there the owner of the CERs (i.e. the CDM project participant) can transfer their CERs to anyone else who has a holding account or who has an account in a linked Directory. This can be done through one of the Annex I countries' trading systems or, more likely, in a cross-country trading system like the European Union CO2 Emission Trading System (ETS).

Who buys CERs?

Assigned Amount Units (AAUs) are issued by the Annex 1 Parties (i.e. industrialised countries who have signed the Kyoto Protocol) to their installations (i.e. factories, power utilities, transport industry, etc.) under their respective annual National Allocation Plans. Each installation is not allowed to emit Greenhouse Gases (GHGs) over and above its AAUs. Installations have to report to their respective emissions to their national agencies every year, and any GHGs emitted over and above their AAUs will incur a fine.
Emission Reductions Units (ERUs) are emission reductions generated by Joint Implementation projects in other Annex 1 countries or in countries in transition.
Removal Units (RMUs) are emission reductions generated through sink activities within Annex 1 countries.

These three types of emission reduction requirements plus CERs have created a market for trading emission reductions under the Kyoto Protocol.

Why invest in CERs?
CERs have become one of the carbon market’s most actively traded products. By purchasing CERs you become part of a market that has generated a significant amount of much-needed investment in poorer nations. You are also enabling these countries to adopt cleaner energy sources or more efficient industrial processes that benefit the planet.

For further information please call one of our specialists today on 0207 718 0127.