Clean Development Mechanism, the system created by the Kyoto Protocol that allows countries that were held to greenhouse gas emission standards, also known as "Annex I countries,"to purchase emissions offsets from pollution reducing projects in non-Annex I countries.
Carbon Emissions Reduction, a financial instrument created by a CDM project. A CER corresponds to the reduction of one metric ton of carbon dioxide or its equivalent in other greenhouse gases created by capturing carbon before it enters the atmosphere (from mines, for example), or by replacing a carbon intensive power source with one producing low or no carbon emissions (such as solar, wind or hydropower). CERs are verified by the CDM Executive Board using a principle of "additionality,"meaning that emissions reductions would not have occurred without the CDM incentive system. Once created, CERs can be bought, sold and traded like any other financial instrument. CERs can only be produced by non-Annex I countries.
European Union Emissions Trading Scheme, the system created by the EU to meet its Kyoto emissions target. Each country is issued emission allowances by the European Commission. Countries then issue emission allowances to their companies.
Emission Reduction Units, excess emission allowances from the EU ETS. Companies in Annex I countries that reduce their emissions in excess of their allowances can sell their ERUs to other Annex I companies who couldn’t meet their quota. ERUs are equivalent to CERs in terms of carbon reduction and count toward emissions offsets in same way.
There are two main options for trading carbon credits:
European Climate Exchange, Montreal Climate Exchange, Chicago Climate Exchange, Nord Poll, China Beijing Climate Exchange, Tianjin Climate Exchange, Shanghai Environment Energy Exchange
Over the counter brokerages
Deutsche Bank, Morgan Stanley, Goldman Sachs, Société Générale