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Representatives from California, Québec, and Washington plan to sign a linkage agreement, which is one step in ultimately linking the Washington Cap-and-Invest Program with the already linked California Cap-and-Invest Program and Québec Cap-and-Trade System.
The signing of this linkage agreement follows sustained discussions among the jurisdictions over recent years. California, Québec, and Washington continue to work through their own processes to link their programs. In California, establishing a program linkage requires several steps, including positive linkage findings by the California Governor under Senate Bill 1018 (Stats. 2012, ch. 39) and completion of a formal rulemaking process with adoption of linkage amendments to the Cap-and-Invest Regulation by the California Air Resources Board (CARB). Pending the Governor’s action, updates to regulations, and the completion of other process steps across all three jurisdictions, the three jurisdictions expect to begin operating a linked market in 2027.
Background
The California Air Resources Board (CARB) first formally adopted the Cap-and-Invest Regulation (formerly Cap-and-Trade Regulation) in October 2011. The Cap-and-Invest Regulation establishes a declining limit on major sources of GHG emissions throughout California, and it creates a powerful economic incentive for significant investment in cleaner, more efficient technologies. The Regulation is one of the measures adopted by CARB, pursuant to Health and Safety Code Sections 38500-38599 (AB 32, Stats. 2006, ch. 488), to reduce California’s greenhouse gas emissions and advance the State’s climate goals. It complements other measures to ensure that California cost-effectively meets its goals for greenhouse gas (GHG) emissions reductions.
The California Cap-and-Invest Program and Québec Cap-and-Trade System have been linked since January 2014. Linking enables compliance instruments, allowances and offset credits, to be traded and used for compliance interchangeably across the linked programs.
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