Emissions Trading
Overview
"Cap and trade" emissions-trading systems are used around the world to reduce greenhouse gas emissions. British Columbia is the first province to introduce legislation authorizing hard limits ("caps") on greenhouse gas emissions through the Greenhouse Gas Reduction (Cap and Trade) Act. This legislation enables BC’s participation in the GHG-emission-trading system being developed with other jurisdictions, through the Western Climate Initiative.
Cap and trade systems set an absolute limit on the quantity of GHG emissions a jurisdiction can be responsible for on an annual basis. They promote the trading of emissions allowances (i.e. permits to emit one tonne of carbon dioxide equivalent) between emitters who can meet the cap efficiently and those who face more of a challenge in reducing emissions.
Through this system, emission allowances will be distributed to individual emitters through free allocation or auction. The total number of those emission allowances will add up to the cap or target limit of GHG emissions. Emitters who can reduce emissions at a lower cost will be able to sell emission allowances they do not use to other emitters. While the overall target will be clearly established, market forces will determine the distribution of reductions among emitters.
New July 23, 2008 WCI announces:
Background Information on Emissions Trading
Carbon Emission Trading (Legislative Library of B.C., Background Brief) - June 2007 (PDF/86KB/6 pages)
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