Compliance Carbon Programs

Carbon Compliance Programs are regulatory mechanisms designed to limit greenhouse gas (GHG) emissions across carbon-intensive industries. These programs set an emissions cap, requiring companies to obtain allowances—permits for each ton of CO₂e emitted.

The cap decreases over time, pushing industries toward decarbonization while ensuring compliance with state and federal climate targets.

Some programs allocate free allowances to ease the transition. Others require companies to purchase allowances to cover emissions. Businesses can trade allowances to optimize compliance costs and incentivize emission reductions.

STX’s role by region

STX LLC actively participates in the three major carbon compliance markets in North America, helping companies navigate their obligations, optimize trading strategies and hedge risks.

California

California’s Cap-and-Trade Program, launched in 2013, is one of the most established carbon markets in the world. It applies to entities emitting over 25,000 metric tons of CO₂e annually and is linked to Québec’s program, allowing cross-border compliance. Covered entities must surrender allowances—California Carbon Allowances (CCAs) and California Carbon Offsets (CCOs)—to meet regulatory targets or face penalties.

Washington

Washington’s Cap-and-Invest Program, introduced under the 2021 Climate Commitment Act, became operational in 2023. It sets a statewide emissions cap and requires large emitters to purchase and retire Washington Carbon Allowances (WCAs). Unlike California’s program, it currently operates independently, with no market linkages to other states or provinces.

Northeastern US

Regional Greenhouse Gas Initiative (RGGI) is a cooperative program involving 11 Northeast and Mid-Atlantic states, focused on reducing emissions from the power sector. It targets electricity generators with a capacity above 25 megawatts, requiring them to purchase and retire RGGI allowances for each ton of CO₂ emitted. RGGI was the first mandatory cap-and-trade program in the U.S. and continues to expand its impact.

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Global Carbon Compliance Markets: The Bigger Picture

In 2022, ETS markets reached a record €850B ($909B), with the largest by far being the European Union (EU) ETS at €751B. However, their popularity continues to grow as a powerful policy instrument with established markets in several countries and states, including the United States, China, South Korea, Australia and New Zealand.

In certain ETS systems, a proportion of these allowances may be freely allocated by the authorities to the covered companies to ease their energy transition. However, it is also common that the entities have to buy the full obligation for each compliance period. Through this market-based mechanism, ETS systems create an economic incentive for companies to reduce emissions.

Interested in European ETS Markets?

Learn more about Vertis

STX Group: A Leading Partner in Carbon Markets

With over 25 years of experience, STX Group is a key player in carbon markets worldwide, supporting corporations in compliance, trading and sustainability strategies.

Global Carbon Market Presence

  • North America: Through STX LLC, we actively trade in the California Cap-and-Trade, Washington Cap-and-Invest and Regional Greenhouse Gas Initiative (RGGI) markets.
  • European Union: Through Vertis Environmental Finance, we operate in the EU Emissions Trading System (EU ETS), which remains the world’s largest carbon market.
  • United Kingdom: The UK Emissions Trading Scheme (UK ETS), launched post-Brexit, is another key market where we support clients with compliance and trading strategies.
  • Voluntary Carbon Markets: STX Group is also a leading participant in the Voluntary Carbon Market (VCM).

Our Services

  • Trading carbon allowances (SPOT, Forward, Option and SWAP contracts)
  • Market intelligence & insights on trading trends and price forecasts
  • Customized compliance strategies to manage cost exposure and hedge risk
  • Regulatory guidance to ensure alignment with evolving market rules

Interested in Voluntary Carbon Markets?

Learn more about our VCM Solutions

Why STX Group?

  • Experience & Proven Track Record: 25+ years as a global leader in environmental markets
  • Advanced Trading Infrastructure: Direct access to major exchanges (ICE, NODAL)
  • Liquidity Provider: Competitive pricing for carbon allowance transactions
  • Holistic Decarbonization Solutions – Expertise in compliance markets, VCMs, EACs and biofuels
  • Global Presence with Local Expertise: 12+ offices worldwide, 500+ professionals and a dedicated North America team

Let’s Talk – Connect with our team to discuss your carbon compliance strategy.