Pursued intent to link Washington State to California-Quebec carbon market announced

OLYMPIA, Wash. — Today [Nov. 2, 2023], the Washington Department of Ecology (Ecology) issued a statement outlining Washington’s intent to pursue linking its cap-and-invest program with the joint cap-and-trade system operated in California and Quebec. This decision is an important milestone in the linkage process, which, if also pursued by California and Quebec, would lead to a tri-jurisdictional system operated jointly by all parties. In a linked carbon market, all participating jurisdictions pool their supply of emission allowances and conduct shared auctions.

“By linking carbon markets, Washington state can join forces with California and Quebec to drive even greater climate progress,” said Caroline Jones, Senior Analyst for U.S. Climate at EDF. “A larger, linked market can enable accelerated cuts in climate pollution, reduce the costs of compliance for Washington companies, and improve overall efficiency and stability.”

“A cornerstone of climate leadership is forging collaboration with others. Washington’s desire to pursue collaboration with California and Quebec underscores the state’s commitment to being a long-term climate leader and securing the strongest possible future for its communities.

“As this process moves forward, it’s critical that Washington’s Department of Ecology prioritizes meaningful engagement with communities overburdened by pollution and works to address the concerns of environmental justice advocates. This includes using the tools at Ecology’s disposal to improve air quality in overburdened communities. Now that Ecology has made this decision, the ball is in California and Quebec’s court to make their own determination and facilitate strong collaboration across borders. Their continued role as sub-national leaders on climate policy is vital in shaping a united and ambitious response to climate change.”

Background 

• California’s program launched in 2013 and linked with Quebec in 2014, with the two jurisdictions operating together as the Western Climate Initiative (WCI) for the past nine years.
• In 2021, Washington passed the most ambitious climate program in the country — the Climate Commitment Act — which put a firm, declining limit on climate pollution across the state’s economy and established a cap-and-invest program to drive down emissions. Washington’s program also takes aim at local air pollution by equipping Ecology with more tools to better monitor and regulate air quality in communities that are disproportionately burdened by environmental and health impacts.
• The program’s regular quarterly auctions began in January of 2023 and have so far raised over $1 billion in revenue that will be invested into Washington communities to build climate resilience, improve air quality and create jobs.
• Washington’s program was designed to be compatible with the WCI. The Department of Ecology published economic modeling on the potential impacts of linkage and found that expected linkage with California and Quebec could cause a significant drop in the prices of allowances in Washington.

Next steps

• Washington’s Department of Ecology will now consider requesting legislation in the spring legislative session to amend a few design details of the Climate Commitment Act (CCA) to better facilitate linkage. Ecology has already begun the Environmental Justice Assessment portion of this process.
• California and Quebec now have to make their own decisions regarding linkage with Washington, with each respective jurisdiction undertaking its own process. Any eventual program linkage would not take place until 2025 or later.

Source: “Washington state releases landmark decision to move toward linking with California-Quebec carbon market,” a Nov. 2, 2023 Environmental Defense Fund press release.