(The Center Square) – Two significant events this month advanced Washington state on its path toward linking its carbon market with the established systems of California and Quebec, Canada.
California extended its cap-and-trade program, which was set to expire in 2030, through 2045 as part of a six-bill climate and energy package passed by the Legislature on Sept. 13. Gov. Gavin Newsom signed the bill into law Friday. The reauthorization puts the two states’ programs on similar timelines and goals, setting the stage for a California-Quebec-Washington linked market.
On Sept. 5, the Washington State Department of Ecology ended an informal comment period on linkage rule-making. Recent draft rules reflect legislation passed during this year’s legislative session, including House Bill 1975, which amends the state’s Climate Commitment Act to stabilize its carbon market and help facilitate a future linkage with other jurisdictions. The law is effective as of July 27.
The push to link Washington’s carbon market to other jurisdictions is based on the belief that creating a larger, more stable and efficient market will lead to lower business compliance costs, increased regional emissions reductions and more clean energy spending.
A cap-and-trade system caps total greenhouse gas emissions. This cap is divided into a limited number of tradable permits, or “allowances,” distributed to companies. Companies that emit less than their allotted amount can sell their excess allowances to those who have exceeded their share, creating a market price for carbon.
“This is a win for California and for states like Washington that are taking meaningful actions to confront the impacts of climate change, support innovation, and transition our economy away from fossil fuels,” Washington State Department of Ecology Director Casey Sixkiller posted on social media regarding the Golden State’s decision to extend its cap-and-trade program.
He concluded, “There has never been a more important time for states to lead on this issue, and we look forward to continuing to work with California to link our carbon markets. A combined market will help businesses make long-term investments in reducing carbon pollution and building a clean energy economy.”
Caroline Halter, communications manager with the Department of Ecology’s Climate Pollution Reduction Program, said rule-making related to linkage is still ongoing.
“We have an open rule-making that will include making changes that make our market more compatible with the CA-QC market, so that is part of what’s necessary to link,” she emailed The Center Square. “Another piece is completing a linkage agreement with the other two jurisdictions, which we are actively discussing.”
According to Halter, Washington should be able to link to California and Quebec in 2026 or 2027.
California and Washington, per AAA, currently have the highest gas prices in the nation.
