Allowance Price Containment Reserve
Both the California and Québec programs have incorporated the concept of an Allowance Price Containment Reserve (Reserve) which allows regulated entities to purchase allowances at quarterly auctions at set prices.
Start dates for enforcement
Start dates for enforcement are identical for both programs. In Québec‘s program, covered entities will have a compliance obligation for their GHG emissions starting on January 1, 2013. Unlike California‘s program, Québec‘s program only requires a compliance obligation surrender after each compliance period instead of both a partial annual compliance obligation surrender and then a triennial compliance obligation surrender after each compliance period.
Offsets
Every entity that is covered by Québec‘s cap-and-trade program is required to surrender compliance instruments equal to its covered GHG emissions. As with California‘s program, compliance instruments can be either an allowance or an offset credit. As in California‘s program, a covered entity in Québec can only meet eight percent of its compliance obligation surrender using offset credits.
It is anticipated that Québec will issue its own compliance offsets. Under these proposed amendments, Québec issued compliance offsets could be used by California entities to meet their compliance obligation, up to the 8 percent limit.
Requirements for determining the boundaries of reporting entities
Overall, Québec and California have similar requirements for determining the boundaries of their reporting entities.
It follows, both programs are similar taking into account their key features. Establishing further linkages to create a truly global carbon market may, however, require deep cost-benefit analysis to find most efficient design arrangements.