The cap represents the upper limit of GHG emissions allowed in a scheme, or in other words the total number (emissions budget) of allowances that is available to covered entities. When defining a cap, regulators seek to reconcile environmental targets with their economic feasibility. 

Source: ICAP ETS Brief #1 What is Emissions Trading

A fixed sum of emissions or an absolute cap ensures that emissions will not exceed a given limit, and therefore delivers a specific environmental outcome. Allowance price levels are a function of how many allowances are available under the cap, how easy it is for installations to reduce emissions, and other factors such as the weather and economic growth. Together these variables need to be taken into consideration when defining a cap. Though the carbon price also depends on these other factors, a generous emissions budget will tend to lead to the market being long and a low allowance price, making it cheap for covered entities to comply. By contrast, a relatively strict emissions budget or ‘tight cap’ means a more limited supply of allowances, or the market being short, resulting in a higher allowance price and a greater fiscal incentive to reduce emissions.

Setting a cap also implies choosing a baseline against which emissions are to be reduced. The cap is usually set in relation to historical emissions, often referred to as a base year, or projected future emissions (e.g. against a business-as-usual scenario). Clear communication of the trajectory, or the path from the basis to the target, helps capped entities plan investment to reduce emissions. 

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Overall GHG emissions (excluding LULUCF) Cap and trajectory
Canada - Québec Cap-and-Trade System
Emissions: 82.1 MtC02e (2014)

Type of Cap: Absolute

The following caps are given in millions of allowances:

First compliance period (2013-2014): 23.20 each year

Second compliance period (2015-2017): 2015: 65.30; 2016: 63.19; 2017: 61.08

Third compliance period (2018-2020): 2018: 58.96; 2019: 56.85; 2020: 54.74

Fourth compliance period(2021–2023): 2021: 55.26; 2022: 54.02; 2023: 52.79

Fifth copliance period(2024–2026): 2024: 51.55; 2025: 50.31; 2026: 49.08

Sixth compliance period (2027–2029): 2027: 47.84; 2028: 46.61; 2029: 45.37

After a slight increase in the cap in 2021 (due to an adjustment of the global warming potential of different GHGs), the cap will reduce by about 1.24 million allowances per year. This will result in a cap of 44.14 million allowances in 2030.

China
Emissions: 10976 MtC02e (2012)

Type of Cap: ~3300 MtCO2e/year


China - Beijing pilot system
Emissions: 188.1 MtC02e (2012)

2010 carbon emission: n.a.
2010 energy intensity: 0.493 ton SCE/10,000 CNY

Type of Cap: Absolute

46 MtCO2e (2016, existing facilities only)
China - Chongqing pilot system
Emissions: 250 MtC02e (2014)

Type of Cap: Absolute

100.4 MtCO2e (2016)
China - Fujian pilot system
Emissions: 240 MtCO2e MtC02e (2016)

Type of Cap: Absolute

Around 200 MtCO2e
China - Guangdong pilot system
Emissions: 610.5 MtCO2e MtC02e (2012)

 

Type of Cap: Absolute

422 MtCO2e (2017 including 23 MtCO2e kept as government reserves for new entrants and market stability)


China - Hubei pilot system
Emissions: 463.1 MtC02e (2012)

Type of Cap: Absolute

257 MtCO2e (2017)
China - Shanghai pilot system
Emissions: 297.7 MtCO2e MtC02e (2012)

Type of Cap: Absolute

156 MtCO2e (2017)


China - Shenzhen pilot system
Emissions: 83.45 MtC02e (2010)

Type of Cap: Absolute

31.45 MtCO2e (excluding buildings, 2015)
China - Tianjin pilot system
Emissions: 215 MtC02e (2012)

Type of Cap: Absolute

160-170 MtCO2e
EU Emissions Trading System (EU ETS)
Emissions: 4,367 MtC02e (2015)

Aggregation of data from the National Inventory Reports (NIRs) 2013 submitted to the UNFCCC and accessed via the EEA Greenhouse Gas Data Viewer: 27 EU Member States (4,550 MtCo2e), Croatia (28.256 MtCO2e), Iceland (4.413 MtCO2e), Lichtenstein (0.22 MtCO2e) and Norway (53.4 MtCO2e). Data bases mostly on 1996 IPCC guidelines and on the IPCC Good Practice Guidances. Please refer to the respective NIRs for detailed information on methodologies used for emissions reporting.

Type of Cap: Absolute

Phases one and two (2005-2012): Decentralized cap-setting, the EU cap resulted from the aggregation of the National Allocation Plans of each Member State.

Phase three (2013-2020): Single EU-wide cap for stationary sources: 2,084 MtCO2e in 2013, which will be annually reduced by a constant linear reduction factor (currently 1.74% of the midpoint of the cap in phase 2 or around 38.3 million tons).
Aviation sector cap: 210 MtCO2e/year for 2013-2020 (not decreasing). However, following the temporary derogation of obligations related to flights to and from third countries until the end of 2016, the issuance of allowances has been adjusted accordingly.

Phase four (2021-2030): A Linear Reduction Factor of 2.2% annually for both stationary sources and the aviation sector. The linear reduction factor does not have a sunset clause and as such the cap will continue to decline beyond 2030.  

Japan - Saitama Target Setting Emissions Trading System
Emissions: 37.2 MtC02e (FY2015 (demand side))

*The overall emissions figure for Saitama is higher than the total of the emissions by sector because the former includes all GHGs in Saitama, whereas the emissions by sector only measures CO2 emissions.

Type of Cap: Absolute

An absolute cap is set at the facility level, which aggregates to a Saitama-wide cap.

This is calculated according to the following formula:
Sum of base year emissions of covered facilities x compliance factor (8%/6%) x number of years of a compliance period. (First Period: four years, Second Period: five years).

Compliance factor:
First Period (FY2011-FY2014): 8% or 6% reduction below base-year emissions.
Second Period (FY2015-FY2019): 15% or 13% reduction below base-year emissions.
Japan - Tokyo Cap-and-Trade Program
Emissions: 65.9 MtC02e (2015)

The overall emissions figure for Tokyo is higher than the total of the emissions by sector because the former includes all GHGs in Tokyo, whereas the emissions by sector only measures CO2 emissions.

Type of Cap: Absolute

The absolute cap is set at the facility level that aggregates to a Tokyo-wide cap.

This is calculated according to the following formula:
Sum of base year emissions of covered facilities x compliance factor x number of years of a compliance period (five years).

Base-year emissions are the average emissions of three consecutive fiscal years selected by facilities between FY2002-FY2007.

Compliance factor:
First Period (FY2010-FY2014): 8% or 6% reduction below base-year emissions.
Second Period (FY2015-FY2019): 17% or 15% reduction below base-year emissions.

The higher compliance factors (8% and 17%) apply to office buildings, and district and cooling plant facilities (excluding facilities which use a large amount of district heating and cooling).
The lower compliance factors (6% and 15%) apply among others to office buildings, facilities which are heavy users of district and cooling plants, and factories.
Highly energy efficient facilities that have already made significant progress with regards to climate change measures are subject to half or three-quarters of the compliance factor.
Kazakhstan Emissions Trading Scheme (KAZ ETS)
Emissions: 298.06 MtC02e (2015)

Data submitted to the UNFCCC. Submissions to the UNFCCC must be made in accordance with the reporting requirements adopted under the Convention, such as The UNFCCC Reporting Guidelines on Annex I Inventories (document FCCC/SBSTA/2004/8) for Annex I Parties and Guidelines for the preparation of national communications for non-Annex I Parites (decision 17/CP.8).

Type of Cap: Absolute

Phase I (2013): 147 MtCO2 (plus a reserve of 20.6 MtCO2). This equals a stabilization of the capped entities' emissions at 2010 levels.

Phase II (2014-2015): 2014: 155.4 MtCO2; 2015: 153.0 MtCO2. This represents reduction targets of 0% and 1.5% respectively, compared to the average CO2 emissions of capped entities in 2011-2012.

Phase III (2018-2020): 485.9 MtCO₂ (161.9 MtCO₂ for each year). The cap is set at a 5% reduction by 2020 from 1990 levels.
Korea Emissions Trading Scheme
Emissions: 690.6 MtC02e (2014)

Official data of the Greenhouse Gas Inventory & Research Center of Korea (GIR)

Type of Cap:

Phase one (2015-2017): 1,687 MtCO2e, including a reserve of 89 million tCO2e for market stabilization measures, early action and new entrants.

2015: 573 MtCO2e, 2016: 562 MtCO2e, 2017: 551 MtCO2e

Phase two (2018-20): 2018: 538.5MtCO2e. Caps for 2019 and 2020 will be announced in 2018.
New Zealand Emissions Trading Scheme (NZ ETS)
Emissions: 80.2 MtC02e (2015)

Type of Cap: If auctioning is introduced, then a cap on the supply of NZUs from free allocation and auctioning will be set.

The NZ ETS was originally designed to operate within the international cap on developed country emissions provided by the Kyoto Protocol and has therefore operated without a specific domestic cap. This accommodated carbon sequestration from forestry activities and a full link to the international Kyoto Protocol carbon markets. As allowance supply is now restricted to New Zealand Units (NZUs), and future access to international units is will be subject to quantitative limits, the NZ ETS is expected to
have its own fixed cap in the future.

NZUs are issued either as free allocation to Emissions Intensive Trade Exposed (EITE) activities or for domestic removal activities (i.e. forestry). This means that as long as NZU prices remain below the fixed price offer level (NZD 25/NZU [EUR 15.17/NZU]), the annual cap is equivalent to the quantity of free allowances and removal units issued (see Allocation).

The NZ ETS legislation includes provisions to introduce auctioning of New Zealand Units (NZUs) within an overall cap on non-forestry sectors. This would cap the amount of allowances (it will not limit the volume of NZUs representing removals from forestry or other removal activities). In future this will combine with a quantity limit on international units to provide the NZ ETS with an overall cap on emissions.
Swiss ETS
Emissions: 48.14 MtC02e (2015)

Type of Cap: Absolute

Voluntary phase (2008-2012): Each participant received its own entity-specific reduction target.

Mandatory phase (2013-2020): Overall cap of 5.63 MtCO2e (2013), to be reduced annually by a constant linear reduction factor (currently 1.74%), to 4.9 MtCO2e in 2020.
USA - California Cap-and-Trade Program
Emissions: 440.4 MtC02e (2015)

Estimations generally follow a top down-approach. Bottom-up data from the Mandatory Reporting Program is used exclusively in the case of cement plants and refineries and as a complement to top-down sources for in-state electricity generation and imported electricity. All methods are consistent with IPCC 2006 guidelines.

Type of Cap: Absolute

The caps are listed below in MtCO2e allowances.

First Compliance Period (2013-2014):
2013: 162.8; 2014: 159.7.

Second Compliance Period (2015-2017): 2015: 394.5; 2016: 382.4; 2017: 370.4.

Third Compliance Period (2018-2020): 2018: 358.3; 2019: 346.3; 2020: 334.2.

From 2021 to 2031, the annual caps are: 2021: 320.8; 2022: 307.5; 2023: 294.1; 2024: 280.7; 2025: 267.4; 2026: 254.0; 2027: 240.6; 2028: 227.3; 2029: 213.9; 2030: 200.5; 2031: 193.8

Beyond 2020, compliance periods will be between two and three years long (2021–2022, 2023–2024, 2025–2027, 2028–2029, and 2030–31), if US Environmental Protection Agency (EPA) approves Californiaʼs plan for compliance with the federal Clean Power Plan by 1 January 2019. Otherwise, the fourth compliance period will start on 1 January 2021, and end on 31 December 2023, and each subsequent compliance period will be three years long.
USA - Massachusetts Limits on Emissions from Electricity Generators
Emissions: 74.8 MtCO2e MtC02e (2014)

Type of Cap: 8.96 MtCO2e (2018)

The cap declines annually by 2.5% of the 2018 cap, which corresponds to 223,876 tCO2e per year until it reaches a cap of 1.8 MtCO2e by 2050.
USA - Regional Greenhouse Gas Initiative (RGGI)
Emissions: 446 MtC02e (2012)

CAIT-US GHG data are derived by the World Resources Institute from the State Inventory Tool (SIT) of the U.S. Environmental Protection Agency's (EPA's) Emissions Inventory Improvement Program (EIIP).

Type of Cap: Absolute

The original cap was stabilized at 149.7 Mt (165 million short tons) CO2 (2009-2014) with a 2.5% annual reduction factor from 2015 through 2018, totaling 10%. However, by 2012, RGGI had experienced more than a 40% reduction in emissions from the original cap. Because of these reduced emissions, the states lowered the cap to 91 million short tons in 2014 as part of the 2012 program review. The revised regulations extend the 2.5% annual reduction factor through 2020, with a 2020 cap of approximately 78 million short tons.

Following the most recent program review, the proposed reduction factor between 2021 and 2030 is about 3% of the 2020 cap resulting in a 2030 regional cap of about 55 million short tons.
Canada - Nova Scotia
Emissions: 16.2 MtCO2e MtC02e (2015)

No information available yet.

Mexico
Emissions: 633 MtC02e (2013)

No information available yet.

Taiwan, China
Emissions: 284.5 MtC02e (2013)

No information available yet.

Ukraine
Emissions: 323.4 MtC02e (2015)

No information available yet.

USA - Virginia
Emissions: 104 MtCO2e (million metric tons) MtC02e (2014)

No information available yet.

Brazil
Emissions: 1051.4 MtC02e (2014)

No information available yet.

Chile
Emissions: 109.9 MtC02e (2013)

No information available yet.

Colombia
Emissions: 178.3 MtCO2e MtC02e (2013)

No information available yet.

Japan
Emissions: 1324.7 MtC02e (2015)

No information available yet.

Thailand
Emissions: 344.35 MtC02e (2013)

No information available yet.

Turkey
Emissions: 475.1 MtC02e (2015)

No information available yet.

USA - Oregon
Emissions: 63.4 MtCO2e (million metric tons) MtC02e (2015)

 

No information available yet.

USA - Washington
Emissions: 98.3 MtCO2e (million metric tons) MtC02e (2015)

No information available yet.

Vietnam
Emissions: 293.3 MtC02e (2013)

No information available yet.

Studies

Gilbert, A., Blinde, P., Lam, L., Blyth, W. (2014): Cap-Setting, Price Uncertainty and Investment Decisions in Emissions Trading Systems. Ecofys and Oxford Energy Associates.

Wing, S., Ellerman, A.D., Song, J. (2009):
Absolute vs. Intensity Limits for CO2 Emission Control: Performance under Uncertainty. Published in: H. Tulkens & R. Guesnerie (eds.) Design of Climate Policy. Cambridge, MA: MIT Press. 

Diekman, J. (2013): EU Emissions Trading: The Need for Cap Adjustment in Response to External Shocks and Unexpected Developments? On behalf of the German Federal Environment Agency.