Special Series
Inside WCI
In a Series
Inside WCI: Thresholds
This is the third in a short series of posts that explain some important but often overlooked policy issues in the Western Climate Initiative--the West's regional cap-and-trade system.
One of the core questions in cap and trade -- really, for any regulatory system -- is who, exactly, participates. Ideally, the program would include as many sources of climate pollution as possible without creating an administrative nightmare. (In fact, administrative simplicity is one of the main reasons why an "upstream" approach to regulation works best.) So we want to include refineries and coal plants, but not necessarily the neighborhood propane dealer. This is a good deal for both the regulators, who can work with a manageable system, as well as for businesses. An oil importer is sophisticated enough to account for emissions and hold tradeable carbon permits, while a smaller business can't do so as easily.
So to balance comprehensiveness with parsimony, WCI needs to establish an emissions "threshold" for regulation: facilities that generate more than the threshold participate in cap and trade, but smaller facilities don't have to. Luckily, the lion's share of emissions come from fairly large sources, so the trade-off isn't too severe in most cases. Still, there is a trade-off and it's important to get the balance right.
In it's latest draft, WCI suggested a threshold of 25,000 metric tons of carbon-dioxide-equivalent (often expressed as 25,000 metric tons CO2e or 25,000 MTCO2e). That was at the very the high end of what they had been considering. In previous drafts they had said they would set the threshold "within the range of 10,000 to 25,000 metric tons of CO2e per year per facility." The vast majority of public interest groups -- Sightline included -- have argued that the threshold should be set no higher than 10,000 tons.
