The guidance document for opt-in covered entities outlines the information ARB requests in order to opt in to the program. In the said document ARB also presents its view on the key issue - why would an entity want to opt in to the cap-and-trade program? According to ARB,


‘For entities within sectors receiving free allocation through the product-based allocation methodology, an entity may want to opt in if they are more efficient than other entities in the sector. An entity that purchases steam from another entity may also be eligible to receive allowances to compensate for a portion of the cap-and-trade costs included in purchased steam. Furthermore, beginning in 2015, natural gas providers will be covered in the Cap-and-Trade Program. ARB expects that natural gas providers will pass the cost of cap-and-trade compliance to fuel purchasers. By opting in to the program, an entity will be able to manage its compliance obligation (and associated costs) directly. In this scenario, an entity may also be eligible for free allowances.’


It is clearly visible from the above that providing for opt-in framework is an interesting alternative for designing cap-and-trade scheme. It allows for additional flexibility for market participants  and these more courageous among them may gain some advantage against competitors.