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

When implemented properly, an early action component of a cap-and-trade program can reward early actors while preserving or enhancing the environmental outcomes of the cap-and-trade program. If designed and implemented poorly, however, early action credits can infl ate the emissions cap and reduce the overall environmental integrity of the program. This paper presents a range of options for addressing early reductions and discusses their implications.