Why Should Companies Voluntarily Participate in Carbon Cap and Trade?

Voluntary participation in carbon cap and trade is one of those things that is worthwhile to do even though not everyone is doing it, and it does require some effort. There are direct and indirect financial rewards for companies that do so. Ontario’s cap and trade program was implemented July 1, 2016. 

Companies that emit between 10,000 and 25,000 tonnes of greenhouse gas (GHG) emissions per year from all sources that voluntarily register with the province were required to do so before November 1, 2016. Small companies can join an association to meet this threshold.

When a company registers, it does so as a “capped participant” with a compliance instrument tracking system service (CITSS). The CITSS tracks the ownership, sale, transfer, and retirement of allowances, and offsets credits between entities. For Ontario, the CITSS is the Western Climate Initiative, Inc. (WCI Inc.), which also includes the province of Quebec, and the state of California. Registration is done by the company or an agent.

When a company opts in to the cap and trade program, the company benefits:

1) You are eligible for free allowances.
The company can apply for free allowances to be applied to specified GHG activities engaged at the facility. You are then notified when the allowance is given free of charge. The free allowance can actually reduce your costs, thereby giving you an advantage over your competitors.

2) You can participate in carbon auctions.
You can participate in the auction platform operated by WCI, Inc. to buy or sell carbon credits. Compliance is monitored by a third party. Keeping track on an Excel document is not good enough.

You can only take advantage of these cap and trade features if you registered voluntarily before November 1, 2016. The sooner you start the process, the better.

There are several indirect financial benefits of significant value when a company voluntarily registers in the carbon cap and trade program that add a significant value to the company itself.  Following are a few:

Just like climate change itself, the shift towards carbon cap and trade is happening, and it is happening rapidly. The sooner the transition to carbon track and trade takes place, the easier the transition will be.

ADEC helps you get beyond simple spreadsheet-based tools to help you accurately inventory and manage your carbon intensity for greater profitability and sustainability. Our expertise and tools help professionals manage operations efficiently and strategically while more easily meeting requests for data. For more information on understanding your GHG emissions, download our white paper, ‘Carbon Accounting Methods for Estimating Scope 3 Emissions.’