Emissions Reduction Purchase Agreement - ERPA

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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.

INVESTOPEDIA EXPLAINS '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. Cap And Trade

    A regulatory system that is meant to reduce certain kinds of ...
  2. Carbon Trade

    An exchange of credits between nations designed to reduce emissions ...
  3. Green Economics

    A methodology of economics that supports the harmonious interaction ...
  4. Carbon Credit

    A permit that allows the holder to emit one ton of carbon dioxide. ...
  5. Rights

    A security giving stockholders entitlement to purchase new shares ...
  6. Kyoto Protocol

    An international agreement that aims to reduce carbon dioxide ...
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