Proposed regulations lay groundwork to connect Washington’s carbon market with California and Québec

Today, the Washington Department of Ecology proposed regulatory changes that will facilitate linkage between Washington's Cap-and-Invest carbon market and the joint California-Québec carbon market.

The proposed regulatory changes include technical adjustments that will make Washington's market compatible with California and Quebec's, such as making sure each jurisdiction has the same deadlines for turning in carbon allowances. The proposed changes come on the heels of a draft linkage agreement between the jurisdictions, and an analysis showing that linkage would deliver greater greenhouse gas reductions at lower costs. These recent milestones position Washington to sign a linkage agreement in 2026 and begin operating a shared market with California and Québec in 2027.

"We're on track to form a historic partnership that will set the stage for sustainable progress," said Casey Sixkiller, Ecology's director. "A combined market can deliver stable, efficient emission reductions, and set a model for what state and provincial leadership can achieve."

By joining the largest subnational carbon market in the world, Washington businesses will reap the benefits of more stable carbon allowance prices. That predictability will allow businesses to make long-term investments in reducing greenhouse gases. In a linked market, Washington will also continue advancing environmental justice by directing at least 35% of Cap-and-Invest revenue towards the state's most vulnerable communities and addressing local air quality disparities, as required by law.

This rulemaking also makes sure that future allowance budgets are consistent with Washington's limits on greenhouse gas emissions so that Cap-and-Invest can continue to drive the state towards net zero emissions by 2050. Additionally, the rulemaking implements recently enacted legislation, including a bill that helps farmers claim exempt fuel uses, and makes changes that will allow the program to run more efficiently.

Ecology will accept comments on the proposed changes through 11:59 p.m. on July 17.

More information about this rulemaking, including full details on the changes being considered, is available on the Cap-and-Invest Program updates and linkage rulemaking webpage.