National GHG emission reduction objectives can powerfully complement carbon trading mechanisms, as the trading cap can be embedded in the national objectives, thus helping to enhance the credibility of the system (though it is the cap of the emissions trading system itself that drives the price of the carbon allowances: the more stringent the cap, the higher the price of carbon and therefore the stronger the incentive to invest in clean energy infrastructure). Long-term emission reduction objectives can take different forms, such as reduction of GHG emissions with respect to a given historical emissions level (e.g. the EU and other developed countries), reduction of emissions intensity (e.g. carbon dioxide -CO2 - emissions per unit of GDP) or limiting emissions relative to “business-as-usual” projections. Care should be taken when defining the appropriate benchmark for emission reduction objectives, as their respective outcomes in terms of GHG emissions and carbon price vary substantially.