The Western Climate Initiative (WCI) recently released its
comprehensive strategy to address climate change and spur a clean
energy economy. WCI Partners predict that their strategy will not
only reduce greenhouse gas (GHG) emissions, but also foster
development of clean technologies, create new green jobs, increase
energy security, protect public health, and realize a cost savings
of approximately $100 billion US by 2020.
The primary goal of the WCI strategy is to reduce regional GHG
emissions to 15 per cent below 2005 levels by 2020. This strategy
is based on the implementation of regional GHG emissions
cap-and-trade programs that will be flexible, market-based, and
economy-wide. WCI partner jurisdictions currently include seven US
states (Arizona, California, Montana, New Mexico, Oregon, Utah and
Washington) and four Canadian provinces (British Columbia,
Manitoba, Ontario and Québec).
Upon implementation in 2012, the WCI's cap-and-trade program
will apply to utilities and large industrial sectors. In 2015, the
regime will expand to include transportation, commercial and
residential fuels. Once fully implemented by all WCI partners, the
WCI program will encompass nearly 90 per cent of economy-wide
emissions, making it one of the most comprehensive carbon-reduction
Rather than strictly dictate the program each WCI Partner must
implement, the WCI strategy provides a broad framework under which
individual provinces and states will enact their own cap-and-trade
legislation. As such, each jurisdiction will adopt its own
emissions allowance budget and determine how to allocate budgeted
allowances to emitters — be it through allocations,
direct sales or auctions. This flexibility is critical, as it
allows each WCI partner to tailor its program to account for its
unique mix of emissions sources and local economic realities.
Conversely, the WCI program will permit the trading of allowances
among regulated entities and third parties throughout the WCI
region. This region-wide trading will help push down compliance
costs by providing flexibility in how, when and where GHG emissions
reductions are made.
The WCI program will also allow the use of offset certificates,
in an effort to further reduce compliance costs. Offset
certificates represent measurable GHG reductions in areas of the
economy not covered by the cap-and-trade program or other emission
reduction policies. For an offset certificate to qualify under the
WCI, it must meet all recommended offset criteria and result from a
project located in Canada, the US or Mexico. The WCI is
recommending that the use of offsets be restricted to 49 per cent
of aggregate emissions reductions to ensure that the remaining
emissions reductions result from change within regulated
Because of its market-driven and flexible approach, the WCI
predicts that fuel savings spurred by the implementation of the WCI
program would offset the cost of investing in new, more
energy-efficient equipment to meet limits on carbon emissions.
Although compliance costs may be shouldered by certain industries
more than others, the WCI's economic analysis underscores the
fact that mitigation of GHG emissions and the transition to a
clean-energy economy is possible without significant negative
But because WCI partners have yet to develop the details of
their individual cap-and-trade systems, it remains unclear what
opportunities (or burdens) the WCI regime will provide to specific
regulated entities. Similarly, it is uncertain whether emissions
allowances will be distributed via auction, direct sales, or
allocations (or by a combination of these methods).
All uncertainty aside, region-wide implementation of the WCI
strategy could encourage large-scale investment in clean energy and
clean technology, fostering local cleantech innovation and green
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