On September 23, 2008, the Western Climate Initiative (WCI) released its Design Recommendations for a regional multi-sector cap-and-trade program. Seven U.S. governors and four Canadian premiers have joined the WCI as part of an effort to reduce greenhouse gas (GHG) emissions; the WCI has a goal of reducing GHG emissions to 15 percent below 2005 levels by 2020. Six GHGs are targeted: carbon dioxide, methane, nitrous oxide, hydroflourocarbons, perflourocarbons, and sulfur hexafluoride.
The WCI cap-and-trade program will be implemented in two phases. Beginning January 1, 2012, emissions from electricity generation and large industrial and commercial sources will be covered under the program. In the second phase, beginning January 1, 2015, the program will expand to cover emissions from transportation and residential, commercial, and industrial fuel use not otherwise covered. Mandatory reporting of GHG emissions will begin prior to the cap-and-trade program, with 2010 emissions reported in early 2011. To encourage emissions reductions prior to the official beginning of the program, certain reductions will be awarded Early Reductions Allowances.
The cap-and-trade program also incorporates various flexibility mechanisms to reduce compliance costs. Specifically, the program includes three-year compliance periods, the banking of allowances, and the limited use of offsets.
The WCI Partners outline two broad categories they will support with a portion of the value of their allowances. The first focuses on public benefits across the WCI region, e.g., energy efficiency and renewable energy. The second category provides for jurisdiction-specific objectives, e.g., reducing consumer impacts and enabling worker transition.
The Design Recommendations were developed after 18 months of gathering stakeholder input, analysis, and planning. They provide the blueprint for the Partner-by-Partner implementation of the program.