Options for Addressing Early Action Greenhouse Gas Reductions and Offsets in U.S. Federal Cap-and-Trade Policy

This research paper by the World Resources Institute examines policy options for rewarding 'early action' greenhouse gas (GHG) reductions within a proposed U.S. federal cap-and-trade system. It analyzes the environmental and economic implications of awarding credits 'under the cap' versus 'above the cap' and provides guidance on transitioning existing regional programs into a federal framework.

• Awarding early action credits from a finite pool of allowances taken from 'under the cap' allows policymakers to reward early actors without compromising the overall emission reduction goals of the cap-and-trade program.
• To maintain environmental integrity, early action credits should be limited to projects that are voluntary, real, permanent, quantifiable, and verifiable. If allowances are awarded 'above the cap' (increasing the total permissible emissions), additionality must also be considered.
• The document identifies four categories of early actors: Voluntary Direct Reducers (Scope 1), Voluntary Indirect Reducers and Purchasers of Renewable Electricity (Scope 2 and 3), Voluntary Purchasers of Offsets, and Mandated Reducers under other regulatory programs.
• The paper argues that Scope 3 indirect emission reductions should not be rewarded for early action due to the high risk of double counting, as these are likely already classified as another company's Scope 1 voluntary direct reductions.
• To prevent 'leakage'—where reductions at one facility cause emissions increases elsewhere—a robust early action program requires both sound emissions data and facility-level output data. The Regional Greenhouse Gas Initiative (RGGI) addressed this by excluding unit shut-downs from early action rewards.
• When transitioning regional cap-and-trade programs to a federal system, the author suggests exchanging regional allowances for federal ones on a dollar-for-dollar basis rather than ton-for-ton to avoid price spikes and speculative hoarding.
• The document distinguishes between three time periods for crediting: the pre-legislative phase, the pre-regulatory phase (between legislation and launch), and the regulatory phase. Reductions in the pre-regulatory phase are considered more likely to be 'additional' due to the certainty provided by legislation.

APA

Kelly, A., Bianco, N., & Larsen, J. (2009). Options for Addressing Early Action Greenhouse Gas Reductions and Offsets in U.S. Federal Cap-and-Trade Policy. World Resources Institute. http://wriorg.s3.amazonaws.com/s3fs-public/options_for_early_action_greenhouse_gas_reductions.pdf

Chicago

Kelly, Alexia, Nicholas Bianco, and John Larsen. Options for Addressing Early Action Greenhouse Gas Reductions and Offsets in U.S. Federal Cap-and-Trade Policy. World Resources Institute, 2009. http://wriorg.s3.amazonaws.com/s3fs-public/options_for_early_action_greenhouse_gas_reductions.pdf.

Wikipedia

{{cite report |last1=Kelly |first1=Alexia |last2=Bianco |first2=Nicholas |last3=Larsen |first3=John |title=Options for Addressing Early Action Greenhouse Gas Reductions and Offsets in U.S. Federal Cap-and-Trade Policy |publisher=World Resources Institute |date=August 2009 |url=http://wriorg.s3.amazonaws.com/s3fs-public/options_for_early_action_greenhouse_gas_reductions.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{kelly2009options, author = {Kelly, Alexia and Bianco, Nicholas and Larsen, John}, title = {{Options for Addressing Early Action Greenhouse Gas Reductions and Offsets in U.S. Federal Cap-and-Trade Policy}}, institution = {World Resources Institute}, year = {2009}, month = aug, url = {http://wriorg.s3.amazonaws.com/s3fs-public/options_for_early_action_greenhouse_gas_reductions.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }