Ecology Director announces decision to pursue linkage
On Nov. 2, Director Watson announced that the Department of Ecology will pursue linking Washington's carbon market with California and Québec. Director Watson explains her decision, the research and public input that led to the decision, and what happens next for Washington and its potential partners. Read the announcement.
Established by the Climate Commitment Act (CCA) in 2021, Washington’s cap-and-invest program is only the second of its kind in the United States. The first U.S. program began in California in 2012, and a similar program was launched in Québec, Canada the following year. Given their similar structure and goals, it was determined that "linking" the two carbon markets could yield important benefits in emissions reductions and long-term program sustainability. California and Québec connected their programs in 2014, creating one shared carbon market.
Washington has decided to pursue linking our carbon market with these other jurisdictions. California and Québec would need to undergo their own processes to decide whether to link. All three programs might need to revise some regulations, so finalizing linkage would not happen until at least 2025.
Find more information in our Focus on Cap-and-Invest Program Linkage resource.
What would linkage mean for Washington?
Linkage means combining Washington's cap-and-invest program with similar carbon markets.
A linked cap-and-invest program would mean that Washington would have joint allowance auctions with California and Québec, and all three jurisdictions would share a common allowance price. Market participants could also trade allowances across jurisdictions — meaning allowances issued by the other two programs could be used by Washington businesses to cover their emissions, and vice versa.
The Climate Commitment Act directs us to actively consider linking Washington's cap-and-invest program with other carbon markets and requires that our state's program be built in such a way that linking would be as seamless as possible. However, the law also requires us to review specific criteria to ensure linkage would benefit our state’s communities, economy, and climate goals.
Linkage overview video
The video provides an overview of how Washington's cap-and-invest market currently works and how it would change if linked with other markets.
What are some of the potential impacts of linking markets with California and Québec?
When California and Québec linked in 2014, it created a single market with a higher volume of emissions allowances being traded. Larger markets are generally more stable and have more consistent pricing, because a larger pool of emitters reduces price swings when participants enter or leave the program.
The agreement to link California and Québec's markets has enabled businesses to participate in these programs more sustainably and has generated lasting reductions in carbon pollution and much-needed revenue for critical climate projects.
Linkage Criteria: Preliminary Analysis Report
Read the report for our analysis of how linking would impact Washington’s communities, economy, and climate goals. The report includes our initial evaluation of the linkage criteria from the CCA and a summary of input received. We will continue to assess the potential impacts of linking and share a final assessment of the criteria before making a final decision to link. Read the Preliminary Linkage Criteria Analysis.
The decision to link markets is a multi-step process that will include additional opportunities for public input. First, we gathered input from our partners and the public on whether linkage would be beneficial for Washington and shared an initial evaluation of the linkage criteria set forth in the law.
On Nov. 2, Ecology announced that we will pursue linking with California and Québec. The other two jurisdictions would also need to go through their own processes to see if they want to link.
Below, you'll find a general timeline for how we expect this process to roll out, and we'll update this information if we anticipate any changes.
We asked for public input during a Spring outreach period, which ended May 15, 2023. We used your input to inform our analysis of the linkage criteria laid out in the CCA and the preliminary decision to pursue linkage.
The Preliminary Linkage Criteria Analysis includes background on linkage, a summary of input received, and Ecology’s initial evaluation of the linkage criteria from the CCA.
We’ll need to submit agency request legislation to amend provisions of the CCA. We're interesting in your thoughts on the request legislation.
- Read about the topics that may be included in the request legislation.
- Watch recordings of our question and answer sessions on Monday, Nov. 13 or Thursday, Nov. 16.
- Submit comments online.
- Email comments to Tamara.Jones@ecy.wa.gov.
Environmental Justice Assessment for agency request legislation
We are in the process of completing an Environmental Justice Assessment for the agency request legislation development process, required under the HEAL Act. We held two public meetings on Oct. 25 and Oct. 26. We recently extended the comment period to accept comments until Dec. 31 to gather input from overburdened communities on impacts from this proposed legislation. Please contact us at CCALinkage@ecy.wa.gov to request a meeting.
We are holding separate forums for Tribal governments on Nov. 2 and Dec. 11. If you represent a Tribal government and would like to attend a Tribal Forum or meet with us, please contact us at CCALinkage@ecy.wa.gov.
Future opportunities for input
There will be other opportunities for public input in 2024 or later, before we make a final decision on linkage. You can sign up for Climate Commitment Act email alerts to stay up-to-date on our work.