Washington, California, and Quebec Draft Deal to Link Carbon Markets

Washington's Path to Carbon Pricing

Washington's Climate Commitment Act, which established the state's cap-and-trade system, has had a turbulent political journey. The program faced a ballot initiative challenge in 2024, surviving by a narrow margin. Linking to the larger California-Quebec market could provide additional stability by embedding Washington's carbon pricing within a broader, more established framework.

For Washington businesses, the linkage could offer both opportunities and challenges. Access to the larger market may reduce compliance costs by providing more options for acquiring permits. However, it also means Washington's carbon price will be increasingly influenced by market dynamics in California and Quebec, reducing the state's ability to independently adjust its program.

International Climate Leadership Through Subnational Action

The three-way linkage represents a growing trend of subnational governments driving climate policy in the absence of national carbon pricing. While the federal governments of both the United States and Canada have pursued varying and sometimes contradictory approaches to climate regulation, state and provincial governments have built durable market-based systems that outlast individual administrations.

The combined market would cover a significant portion of North American GDP and could serve as a model for further expansion. Oregon, which has explored its own cap-and-trade program, could potentially join in the future, as could other Canadian provinces looking for alternatives to the federal carbon pricing system.

The draft agreement is now subject to public comment before finalization. If adopted, it would represent one of the most ambitious cross-border environmental agreements at the subnational level, demonstrating that meaningful climate action can proceed even when national politics remain gridlocked.

This article is based on reporting by Utility Dive. Read the original article.