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Ecology introduces draft language on linking WA’s carbon market to CA-Quebec

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(The Center Square) – The Washington State Department of Ecology late last month released draft language for request legislation regarding linking the state’s carbon market with the joint California-Quebec market.

The cap-and-trade portion of the Climate Commitment Act, which went into effect at the beginning of the year, requires emitters to obtain “emissions allowances” equal to their covered greenhouse gas emissions at quarterly auctions hosted by the Department of Ecology, as well as special auctions triggered when quarterly auction prices go above a certain level.

In early November, Ecology Director Laura Watson gave her provisional go-ahead to pursue linking Washington’s carbon market with the California-Quebec market as a cost-containment tool to ensure the program continues to run smoothly.

The draft language for the request legislation is meant to make changes to the law that may be necessary to allow linking Washington’s carbon market with California and Quebec, as well as potential provisions to address other issues in the CCA.

The proposed changes include revising offset provisions to allow more offset credits to be sourced from projects on tribal lands, increasing the allowance purchase limit for covered entities from 10% to 25%, and changing definitions and policies related to electricity reporting and imports.

The Center Square reached out to Seattle-based Front and Centered – an organization that describes itself as “a diverse and powerful coalition of communities of color-led groups across Washington state, whose mission and work come together at the intersection of equity, environmental and climate justice” – to ask about the draft language.

James Lee, communications lead with Front and Centered, told The Center Square in an email that the organization wouldn’t comment on the draft bill at this time.

Front and Centered may have no official position on the draft language, but it has been critical of the prospect of linkage, even before Watson’s preliminary approval for Ecology to pursue linkage.

“Our take is that linkage would only accelerate and accentuate the issues of the Washington carbon market, including the unequal distribution of environmental benefits and burdens, slower carbon emissions reductions, and reduced accountability to local communities,” Nico Wedekind, policy counsel, wrote in an Oct. 24 blog.

Two days later, the Environmental Justice Council – a statewide panel whose members were appointed by Gov. Jay Inslee – wrote a letter to Watson complaining that combining the Washington market with the California-Quebec market would hurt communities where pollution causes the most harm and weaken existing air quality improvement programs.

Ecology may find itself caught between environmental groups that fear Washington’s carbon market will become less green in order to be part of the California-Quebec market and the fact that linkage may be required to maintain the viability of Washington’s carbon market.

An Oct. 12 Ecology report says being part of a larger climate market should result in companies paying lower prices for emissions allowances in Washington.

“Linkage would likely improve the cap-and-invest program’s economic durability, longevity, and efficacy,” the report states. “In a larger, more liquid market with a greater number of participants, allowance prices would likely be lower and change more predictably. Predictable prices can foster greater investments in decarbonization.”

The report warns that not pursuing linkage could be a mistake that endangers the entire program.

“Therefore, Washington continuing as a standalone program and rejecting linkage could lead to the program being curtailed or even repealed, making it significantly more difficult for our state to meet its GHG [greenhouse gas] emission reduction mandates.”

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