Net Flow of Compliance Instruments
- Cap-and-Trade Program
- Allowance Allocation
- Auction Information
- CITSS Home Page
- CITSS Registration and Guidance
- Compliance Offset Program
- Cost Containment Information
- Guidance & Forms
- Market Monitoring
- Meetings & Workshops
- Program Data
- Program Linkage
- Voluntary Renewable Electricity Program
The California Cap-and-Trade Program and Québec Cap-and-Trade System have been linked since January 2014. Linking enables registered entities to trade and use compliance instruments, allowances and offset credits, interchangeably across the linked programs.
Linking allows for a shift in GHG emissions between jurisdictions as compared to a hypothetical scenario in which the jurisdictions’ cap-and-trade programs are not linked. Linking thus enables GHG emissions to be reduced wherever it is most cost efficient by broadening the options for least cost reductions opportunities.
A jurisdiction whose entities have purchased and retired compliance instruments issued by another jurisdiction gains the possibility for emissions from its covered sectors to potentially exceed its cap. Entities from a jurisdiction with a net outflow of compliance instruments effectively forego the right to emit the corresponding GHG emissions. While linking helps to achieve aggregate mitigation targets at lowest cost, linked jurisdictions should identify and account for any shift in emissions so that each jurisdiction can account for any net transfer of compliance instruments and implications for meeting its own GHG emission targets.
In recognition of this dynamic, Article 8 of the Agreement on the Harmonization and Integration of Cap-and-Trade Programs for Reducing Greenhouse Gas Emissions (Linkage Agreement) states that the jurisdictions will develop an accounting mechanism to calculate the net flow of compliance instruments and will implement corresponding adjustments in their respective GHG emissions accounting frameworks based on these net flows.
Net Flow of Compliance Instruments Documents
- Accounting Mechanism for Article 8 of the 2017 Linkage Agreement
- Report on the Net Flow of Compliance Instruments between Québec and California for the Period 2013-2020
- Corresponding Adjustments Pursuant to Article 8 of the 2017 Linkage Agreement