Offsetting in Cap & Trade Systems
Mandatory cap and trade systems require entities in sectors regulated under the cap to account for their emissions, and then to achieve compliance with emission cap requirements through a combination of mechanisms including internal emission reductions, trade and purchase of emission allowances and/or purchase of offsets.
Cap and trade systems are typically implemented as government-regulated, mandatory compliance systems. An exception to this is the Chicago Climate Exchange (CCX), which is a voluntary cap and trade system. A voluntary cap and trade system can play a pioneering role in developing market rules and structures, and providing ‘early movers’ with the opportunity to gain experience with emission commitments and trading.
Below are links to more detailed descriptions of the offset features of five mandatory and one voluntary cap and trade systems.
Mandatory Systems
European Trading System (EU-ETS)
Australian Carbon Pollution Reduction Scheme
Canada’s Offset System for Greenhouse Gases
New South Wales Greenhouse Gas Reduction Scheme ( NSW GGAS)
Regional Greenhouse Gas Initiative (RGGI)
Western Climate Initiative (WCI)
Voluntary Systems
Chicago Climate Exchange (CCX)