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4. What happens to the Cap when a recession lowers the total emissions from Capped Facilities below the planned Cap?

When a Government establishes a cap-and-trade system, the government specifies the Cap for each year into the future.  i.e. how many megatonnes of CO2e will be in the Cap for 2015, 2016, and so on.

This future Cap is based on a forecast of what the emissions from Capped Facilities would be without the implementation of the cap-and-trade system in these future years.

If the forecast is significantly wrong, the government should consider changing the Caps for future years.


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