Linking Regional Cap-and-Trade Programs: Issues and Recommendations

April 29, 2010

The Georgetown Climate Center has released a report exploring the potential to link the cap-and-trade programs of the Western Climate Initiative, the Midwest Greenhouse Gas Reduction Accord, and the Regional Greenhouse Gas Initiative. 

This assessment found that linking offers a variety of benefits to the functioning of a greenhouse gas emissions market, to the states and provinces administering regional cap-and-trade programs, and to regulated entities. At the same time, it raises a variety of challenges to consider.  Some elements of the three regional programs are already compatible and conducive to linking. Other elements in WCI and the Midwest Accord are not yet finalized and could be developed in such a way that they are designed to be compatible with each other and with RGGI.

This analysis suggests that there is not a technical barrier to linking; rather there are potential concerns that would have to be addressed if the programs were to link. Likewise, linking is not an all-or-nothing decision—there are different types and degrees of linking, and the regions could take some of these steps now while reserving other decisions for later. This report suggests that the regions take concrete steps now to move toward harmonizing administrative systems, and jointly engage in an evaluation of the projected impacts of linking the three regional markets. 

GCC Linking Regional Cap and Trade.pdf