Connecting Washington’s cap-and-invest program to similar carbon markets in California and Québec could create a stronger, more durable system with significant benefits for our state. That is the conclusion that Washington Department of Ecology Director Laura Watson made in her preliminary decision today. The decision clears the way for the agency to begin discussions with those potential partners on what a combined program might look like.
“Linking Washington’s carbon market with similar programs across North America promises to strengthen our state’s ability to meet its carbon reduction goals, while also showing the world the importance of partnership in fighting climate change,” Watson said. “I look forward to working with my colleagues in California and Québec to investigate how a linked program could work, and to continuing the dialogue we’ve begun with Washington residents on the benefits of a shared path toward decarbonization.”
Watson’s decision was based on an Oct. 12 Ecology report that evaluated the criteria for linkage laid out in Washington’s Climate Commitment Act, along with input from Tribes, Washington’s Environmental Justice Council, stakeholders, and the public. The report found that a linked market would be larger and more liquid, reducing compliance costs for businesses while also increasing price stability, which will allow those businesses to make long-term plans to reduce their emissions.
In a decision letter sent to Gov. Jay Inslee and state legislators, Watson said “I have directed my staff to immediately begin the process of pursuing a linkage agreement to ensure that our state’s economy and communities can begin enjoying the benefits of linkage as soon as possible.”
Watson’s preliminary decision does not guarantee that Washington’s carbon market will link with California and Québec. Each jurisdiction must follow its own process to determine whether to link, and what statutory or regulatory changes would be needed to complete such an agreement. Even if all three potential partners agree on a plan, the negotiations and determination will likely take until 2025 or later.
Watson said in a blog post that “This decision is not an end, but a beginning. We must now work with California and Québec to determine their interest in linking, what a combined market might look like, what issues need to be resolved, and what timeline would make sense for all three parties.”
Getting to a linkage agreement will require several steps that include aligning Washington’s cap-and-invest policies with California and Québec, conducting an Environmental Justice Assessment, and getting input from the public on a potential agreement.
The cap-and-invest program established under the Climate Commitment Act started on Jan. 1, 2023, and the first emissions allowance auction was held on Feb. 28. Washington’s carbon market will continue to operate independently while the linkage process goes forward.