Cap and Trade
Cap and Trade | Western Climate Initiative | WCI's Cap and Trade Proposal
A cap and trade system uses market principles reduce greenhouse gas (GHG) emissions. The system works by setting an overall cap on the total amount of emissions that are allowed, and then lowering the cap over time to reduce overall emissions.
GHG emitters in the system are issued emission allowances that add up to the total allowable emissions for the province under the cap.
When emitters have excess allowances, they will be able to sell them to those that produce more emissions than they’re allotted. In this way, the cap and trade system uses the marketplace to reward efficiency and innovation; those that are most efficient will profit from reducing their GHG emissions.
Emissions trading systems have already been successful in the United States, Europe and New Zealand. As governments, industries and businesses worldwide move to reduce their emissions, trading will spur companies and industry to invest in or develop their own innovative clean energy technologies to stay competitive.
B.C.’s early participation and leadership role in the Western Climate Initiative puts the Province in a strong position to influence any emerging North American cap and trade system – and open up green job opportunities for British Columbians.
Western Climate Initiative
The Western Climate Initiative (WCI) was created in February 2007 by the governors of Arizona, California, New Mexico, Oregon and Washington with the long-term commitment to reduce regional GHGs and fight climate change by focusing on a market-based cap and trade system.
In April 2007, British Columbia was the first Canadian province to join the WCI. Since that time, Ontario, Quebec and Manitoba have joined, along with Utah and Montana.
The WCI is now the largest climate collaboration in North America, representing approximately 20 per cent of the U.S. economy, 73 per cent of Canada’s economy, and 50 per cent of all GHG emissions in Canada.
WCI partners represent a combined population of close to 85 million people, and if you include the observer jurisdictions, the number jumps to 115 million.
WCI’s Cap and Trade Proposal
In September 2008, the WCI released its proposed design for a comprehensive regional cap and trade program to reduce GHG emissions by 15 percent below 2005 levels.
Key elements include:
- A start date of January 1, 2012
- Coverage of all GHGs from sources over 25,000 tonnes per year including:
- fossil fuel combustion from electricity generation
- imported electricity
- fossil fuel combustion from industry (large final emitters)
- industrial process emissions (not currently covered by the carbon tax)
- Limited ability for offsets
On February 19, 2009, the WCI posted its 2009 Work Plan, which describes the series of draft documents for stakeholder review that move forward on the next stage of design. As the WCI finalizes its cap and trade design, B.C. continues to seek stakeholder input on the regulations involved, based on its work as a partner in the WCI. The cap and trade program will work in harmony with B.C.’s tax regime to slash greenhouse gas emissions, spur growth in new green technologies and help build a strong clean-energy economy.
To view the proposed design and the 2009 Work Plan, please visit the Western Climate Initiative.
