Linking Across Borders: Opportunities and Obstacles for a Joint Regional Greenhouse Gas Initiative-Western Climate Initiative Market

Despite the strong consensus in the scientific community that anthropogenic climate change requires urgent attention, neither the United States nor Canada has implemented a comprehensive national policy to reduce greenhouse gas emissions.  Into this void have stepped two regional cap-and-trade programs that regulate greenhouse gas emissions in parts of both countries.  One, the Regional Greenhouse Gas Initiative (“RGGI”), is a partnership of nine states in the northeastern and mid-Atlantic U.S.  The other, the Western Climate Initiative (the “WCI”), is a partnership between California and the Provinces of Québec and Ontario.   Both programs have been operating for several years, demonstrating that cap-and-trade programs can achieve cost- effective emissions reductions.   Nonetheless, both markets have faced difficulties at various points, including volatility of allowance prices and the withdrawal of partner jurisdictions.

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