The WCI Cap & Trade Program PDF Print

The WCI Partner jurisdictions have developed a cap-and-trade program to reduce greenhouse gas pollution. This program is an important component of the WCI's comprehensive strategy to reduce GHG emissions by 15 percent below 2005 levels by 2020, spur investment in and development of clean-energy technologies, create green jobs, and protect public health.

This multi-sector program is the most comprehensive carbon-reduction strategy designed to date. When fully implemented in 2015, it will cover nearly 90% of greenhouse gas emissions in WCI Partner states and provinces, including those from electricity generation, industry, transportation, and residential and commercial fuel use.

Based on extensive study of existing emissions control programs, economic analysis, and extensive stakeholder consultation, the WCI cap-and-trade program is designed to lower the cost of achieving emission reductions and mitigate the economic impact on consumers and businesses. Economic analysis by the WCI indicates that its program design can achieve the regional emissions reduction goal without negatively impacting the economy.

The WCI regional cap-and-trade program can stand alone, and it can provide a model for, be integrated into, or be implemented in conjunction with programs that might ultimately emerge from the federal governments of the United States and Canada.

The Program in Brief

On September 23, 2008, the WCI released Design Recommendations for the WCI Regional Cap-and-Trade Program. On July 27, 2010, the WCI released a Design for the WCI Regional Program, which further describes the elements of the program and provides a roadmap for the WCI Partner jurisdictions as they implement their regulations. Each of these documents were developed after months of extensive analysis, stakeholder consultation, and deliberation. The program design:

  • Provides opportunities to obtain low-cost emission reductions through emission trading, allowance banking, and inclusion of an offsets component.
  • Is intended to mitigate economic impacts, including impacts on consumers, income, and employment.
  • Balances all principles adopted by the WCI Partner jurisdictions to maximize total benefits throughout the region, including reducing air pollutants, diversifying energy sources, and advancing economic, environmental, and public health objectives, while also avoiding localized or disproportionate environmental or economic impacts.

  

What Will Be Covered

The WCI cap-and-trade program will cover emissions of seven greenhouse gases (carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride, and nitrogen trifluoride) from the following types of emission sources:
  • Electricity generation, including electricity imported into the WCI region
  • Industrial fuel combustion
  • Industrial processes
  • Transportation fuel use
  • Residential and commercial fuel use

  

A Phased Introduction

The first phase of the cap-and-trade program begins on January 1, 2013, covering emissions from electricity, electricity imports, industrial combustion at large sources, and industrial process emissions for which adequate measurement methods exist. The second phase begins in 2015, when the program expands to include transportation fuels and residential, commercial and industrial fuels not otherwise covered in the first phase.

  

Allowances, Banking, and Offsets

By including features such as allowance banking, offsets, and three-year compliance periods, the WCI cap-and-trade program provides a strong and balanced approach capable of reducing greenhouse gases where they are most cost-effective. The cap will be implemented by issuing a limited number of emission allowances to entities and facilities covered by the program. It is important to note that such allowances are not considered property rights. Rather, they are permits that authorize firms to emit a specified amount of greenhouse gases. Companies covered by cap will be able to purchase allowances at auction, buy and sell them on secondary markets, or bank them for future use. Companies also will be able to purchase a limited number of offset credits, which are generated when carbon emissions are reduced at sources outside the region’s cap.

  

Eye to the Future

The WCI Partners have designed a pioneering stand-alone regional cap-and-trade program that will immediately begin to address climate change in the absence of broader national or international standards.  But the Partners also recognize that long-term compatibility is key.The WCI cap-and-trade program is designed in such a way that it can provide a model for, be integrated into, or work in conjunction with any future U.S. or Canadian emissions-reduction programs. The WCI Partners continue to advocate for national and international greenhouse gas emission reduction programs that are consistent with the WCI cap-and-trade design.