Emissions Reduction Purchase Agreement - ERPA

DEFINITION of 'Emissions Reduction Purchase Agreement - ERPA'

A transaction that transfers carbon credits between two parties under the Kyoto Protocol. The buyer pays the seller cash in exchange for carbon credits, thereby allowing the purchaser to emit more carbon dioxide into the atmosphere. The standards for this agreements are outlined by the International Emissions Trading Association.

BREAKING DOWN 'Emissions Reduction Purchase Agreement - ERPA'

This agreement usually involves two countries; however, it may occur between a country and a large corporation. Buyers expect their carbon emissions to be above the level allocated to them by the Kyoto Protocol, while the seller expects to produce less. Often, the seller has implemented new technology or is developing a new project that is expected to lower its greenhouse gas emissions.

RELATED TERMS
  1. Kyoto Protocol

    An international agreement that aims to reduce carbon dioxide ...
  2. Carbon Credit

    A permit that allows the holder to emit one ton of carbon dioxide. ...
  3. Carbon Trade

    An exchange of credits between nations designed to reduce emissions ...
  4. Carbon Dioxide Tax

    A tax on businesses and industries that produce carbon dioxide ...
  5. Carbon Disclosure Rating

    A numerical score that indicates the level of reporting of a ...
  6. International Petroleum Exchange ...

    A London-based futures and option exchange, dealing predominantly ...
Related Articles
  1. Stock Analysis

    The Basics of FuelCell's Cost Share Carbon Reduction Project (FCEL)

    Discover how FuelCell Energy's carbon capture project with the Department of Energy works and how it could lead to cleaner air and huge profits.
  2. Options & Futures

    The Largest Oil Companies Make a Pledge to Climate Change

    Here is how ten of the world's largest oil companies prepared for the UN climate change summit happening in Paris this month.
  3. Economics

    The 5 Countries That Produce the Most Carbon Dioxide (CO2)

    Learn about the top five countries, China, the United States, India, Russia and Japan, that are the largest contributors to carbon dioxide emissions.
  4. Stock Analysis

    How Does the Volkswagen Scandal Affect GM? (GM, VOW.DE)

    Monitor the reaction of Chinese consumers to the Volkswagen emissions scandal. It could significantly boost the market share of General Motors in that nation.
  5. Investing

    How Investors are Thinking about Climate Risk

    Learn about the four macroeconomic trends focusing on climate risk and sustainability discussed in the most recent Paris summit.
  6. Economics

    4 Things to Know About the Future of US Energy

    The fracking revolution has underpinned the U.S. energy industry in recent years, with positive trends likely to continue into the next decade.
  7. Investing News

    Neverending Lawsuits Line up in VW Emissions Case (VLKAY)

    The EPA is seeking billions in fines from VW for breaking emissions standards. Now, institutional investors are lining up to recoup lost VW stock value.
  8. Investing News

    A Carbon Capture And Storage Breakthrough

    Carbon capture and storage (CCS) has been weighed down by exorbitant costs, making it an industry that’s been stuck on the launch pad for over a decade.
  9. Investing

    AirBnB Home-sharing is Good for the Planet

    New Airbnb study claims home-sharing is greener travel and can contribute to COP21 commitments for reduced GHG emissions in the United Stated and Europe.
  10. Home & Auto

    Ins And Outs Of Seller-Financed Real Estate Deals

    Seller financing works like this: Instead of a buyer receiving a loan from a bank, the person selling the house lends the buyer the money for the purchase.
RELATED FAQS
  1. What is the carbon trade?

    The carbon trade came about in response to the Kyoto Protocol. Signed in Kyoto, Japan, by some 180 countries in December ... Read Answer >>
  2. What's the difference between a letter of credit and a bank guarantee?

    Learn how letters of credit and bank guarantees differ, how they are used by banks and companies, and how buyers apply to ... Read Answer >>
  3. What are the differences between Ex Works (EXW) and Free On Board (FOB)?

    Learn about Ex Works and Free on Board, the main difference between these Incoterms, and the responsibilities of buyers and ... Read Answer >>
  4. What is the difference between a bill of exchange and a promissory note?

    Learn what bills of exchange and promissory notes are, along with notation of the primary differences between these two documents. Read Answer >>
  5. What does 'Incoterms' mean in relation to Ex Works (EXW) trades?

    Learn about Incoterms rules and ex works trade agreements and the obligations of buyers and sellers under the Incoterms rules ... Read Answer >>
  6. What is a bank's legal liability when issuing a letter of credit?

    Learn the responsibility of banks that issue letters of credit Letters of credits ensure payment on transactions between ... Read Answer >>
Hot Definitions
  1. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  2. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  3. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  4. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  5. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  6. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
Trading Center