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Accounting Mechanism for Compliance Instruments Traded among WCI Linked Jurisdictions

The California and Québec Cap-and-Trade System have been linked since January 2014. Linking enables compliance instruments to be traded and used interchangeably across the linked programs.

Quebec and California have worked together to develop an accounting mechanism developed pursuant to their market linkage agreement. This mechanism identifies and accounts for compliance instruments traded between jurisdictions and retired in the WCI linked carbon market.

Thus, for a government, net trade flow is calculated as follows:

  • The total number of compliance instruments this government has issued that have been received and retired by another jurisdiction; minus
  • The total number of compliance instruments issued by another jurisdiction that were retired domestically that this government has received and retired.

Example

Government A retires 30 compliance instruments that were issued by government B.

Government B retires 24 compliance instruments that were issued by government A.

The net flow is negative (-6) for government A, which means it is a net acquirer of compliance instruments.

The document Accounting Mechanism for Compliance Instruments Traded (PDF, 393 KB) details the accounting methodology.

The accounting method developed respects the following principles:

  • Transparency
  • Secure management of confidential and market-sensitive information
  • Environmental integrity and robust accounting
  • Avoidance of double counting and double claiming
  • Building on international principles and criteria

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