Colorado Incentivizes GHG Emissions Reduction With Credit Trading Program

Colorado, which recently held its second annual GHG allowance auction, joins a growing number of states that have adopted greenhouse gas (GHG) emissions trading programs as part of their broader climate policies. These state and regional initiatives continue to evolve as the programs mature, expand, and adapt to changing policy environments. While limited in scope, Colorado’s GHG emissions trading program (trading program) is slowly expanding across high-emitting sectors. Companies that can reduce emissions at lower cost stand to profit from selling the emissions credits they generate. In contrast, companies facing higher emissions-reduction costs can avoid large business disruptions by purchasing credits to help meet their emissions requirements. This market-based approach can reduce the overall costs of emissions reductions and minimize impacts on the state’s economy.