Washington, California and Québec sign carbon market agreement, setting the stage for historic climate partnership

SEATTLE - Today, Washington signed a historic carbon market linkage agreement with California and Québec, setting the stage for large-scale greenhouse gas reductions and long-term investment in clean energy across the jurisdictions.

Governor Bob Ferguson was joined by Delegate David Ruiz of the Government of Québec, Rep. Joe Fitzgibbon, Climate Jobs Washington Executive Director Cassie Bordelon, Climate Solutions Washington Legislative Director Leah Missik and Washington State Department of Ecology Director Casey Sixkiller, who signed the linkage agreement at an event in Seattle. Video of the event is available here, and photos are available here (additional photos to be added later in the day).

The agreement is a major milestone for Washington in joining the largest subnational carbon market in the world. This unprecedented climate partnership means businesses in all three jurisdictions can make more predictable, long-term investments in reducing greenhouse gases. With greater investment, the cost of emission-reducing technologies will go down, leading to even higher rates of adoption and local economic benefits like job growth.

"This is a historic milestone in our climate partnership," Governor Ferguson said. "At a moment when the federal government is abandoning science-driven policy and climate leadership, Washington state is moving forward. This agreement shows it's possible to work together across borders to address the climate crisis. Our collaboration will reduce emissions and capitalize on the growing demand for clean energy."

"This Agreement strengthens a climate partnership that is already renowned worldwide," said Pascale Déry, Québec's Minister of the Environment, the Fight Against Climate Change, Wildlife and Parks. "It will bring even greater stability, predictability, and economic efficiency to our joint carbon market. The proceeds generated by the market flow back into Quebec's economy, helping to protect our communities from the impacts of climate change while also helping residents reduce their home energy costs. Our carbon market is truly a pillar of Québec's climate and energy transition."

"Signing this agreement is an important milestone as each government works through our own processes to enable linkage - a move that can help boost climate outcomes, enhance compliance flexibility and deliver even greater benefits to our residents," said Lauren Sanchez, Chair of the California Air Resources Board.

While completing a linkage agreement is a major milestone, it is just one part of each jurisdiction's linkage process. In Washington, the Climate Commitment Act establishes that the linkage agreement is the step that authorizes Washington's Cap-and-Invest Program to accept allowances and offset credits from California and Québec, completing the linkage process. California and Québec must complete additional steps, including adopting regulations to accept compliance instruments from Washington, before a linked market can take effect. Officials expect to operate a linked market in 2027.

Washington's Cap-and-Invest Program

Created by the Climate Commitment Act (CCA) in 2021, Cap-and-Invest aims to reduce carbon pollution and achieve the greenhouse gas limits set in state law. Similar to California and Québec's program, Cap-and-Invest sets a limit, or cap, on overall carbon emissions in the state and requires businesses to obtain allowances equal to their covered greenhouse gas emissions. These allowances can be obtained through quarterly auctions hosted by Ecology, or bought and sold on a secondary market (just like stocks and bonds).

In a linked market, allowances issued by California and Québec could be used by Washington businesses to cover their emissions, and vice versa. The three jurisdictions would host joint allowance auctions and share a common allowance price. Market participants could also trade allowances across jurisdictions.