The second key issue and the ignition of the significant tendency is the linking of the California and Quebec cap-and-trade schemes.
Generally, once a linkage is approved, a compliance instrument issued by California may be used to meet a compliance obligation within the approved external GHG ETS and, mutually a compliance instrument issued by the linked jurisdiction may be used to meet a compliance obligation in California.
As regards linking there may occur some ambiguities with respect to place for registration of market participants. In that regard the proposed amendments stipulate that when California links to an external GHG ETS, an entity must register into a jurisdiction based on the location information the entity must provide during registration. Thus:
(1) An entity located in the United States may only register with California.
(2) An entity located in Canada may only register with a GHG ETS operated by a Canadian province to which California has linked.
(3) An entity located outside of the United States and Canada may register with California or any GHG ETS operated by a Canadian province to which California has linked.
(4) California will recognize the registration of an entity that registers into an external GHG ETS operated by a Canadian province to which California has linked.