The new approach sets up a system for determining the amount of emission reductions that are delivered by each energy efficiency improvement and each renewable energy project. The system then rewards the owners for implementing these projects by giving them the equivalent amount of emission allowances.
Owners can keep, donate, sell, or retire their emission allowances.
This recognizes the emission reductions delivered by businesses, organizations and individuals who increase their energy efficiency or use of renewable energy. This approach gives credit where credit is due by rewarding these pollution reduction actions. Once a cap on a pollutant is set, emission allowances are created. The new approach uses allowances from under the cap on future allowances to reward early emission reductions from projects implemented 1990 or later. Giving credit for early action does not create any additional emission allowances.