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On March 20, Washington, California, and Québec issued a joint statement about their mutual interest in exploring carbon market linkage. This follows Ecology Director Laura Watson’s November announcement about pursuing linkage with those jurisdictions. While much of Washington’s program is designed to align with California and Québec's programs, we have identified policies that need further alignment through changes to the law and rules in order to facilitate potential future linkage. Washington Senate Bill 6058, Ecology’s agency request legislation to amend provisions of the Climate Commitment Act (CCA), was signed by the Governor in March. Today we announced the beginning of rulemaking to implement Senate Bill 6058 and make other changes to the Climate Commitment Act Program Rule (Chapter 174-446 WAC) and Reporting of Emissions of Greenhouse Gases Rule (Chapter 173-441 WAC).
The topics that Ecology has initially identified for consideration in this rulemaking are listed below. We are sharing this information broadly so that all interested parties receive the same information at the same time. The list below includes topics that Ecology must address as a result of the agency request legislation, as well as aspects of the carbon market that we have identified must be aligned to link. During the rulemaking process, Ecology will gather public input on potential changes to the rule. It is important to note that California and Québec are currently considering regulatory amendments for their cap-and-trade regulations and changes to those programs would be reviewed during Washington’s rulemaking process. The scope of rulemaking topics will continue to be evaluated as part of the process and may change as we gather additional information through discussions with interested parties, and from reviewing California’s and Québec’s proposals.
Possible rulemaking topics include:
- Compliance period length
- Program registration requirements for covered entities, opt-in entities, and general market participants
- Program participation by exchange clearinghouses
- Allowance purchase limit
- Allowance holding limits
- Currency reconciliation
- Electricity sector topics including:
- Reporting for electric power entities
- Coverage for imported electricity from unspecified sources
- Program participation requirements for federal power marketing administrations
- Use of offset credits from projects on Tribal lands for compliance
- Removal of Ecology discretion for penalties during the first compliance period
- Greenhouse gas emissions reporting methodologies, with emphasis on consistent reporting for facilities
- Definition of biofuels
Visit the Cap-and-Invest Linkage rulemaking webpage for more information, including the proposed timeline.
Linkage process
The rule changes Ecology is considering would facilitate linking Washington’s carbon market with the California-Québec market. However, rule changes would not directly result in linkage or make linkage inevitable.
To link, Washington would need to enter into a linkage agreement with California and Québec. Before Ecology’s Director makes a decision to sign on to a linkage agreement, we would complete an Environmental Justice Assessment and ensure that linkage meets the criteria in the CCA.
California and Québec would need to go through their own respective processes to decide whether to link with Washington and would also need to make regulatory adjustments before entering into a linkage agreement.
There will be opportunities for public input, including on a draft linkage agreement, before Ecology makes a final decision whether to link. You can visit the linkage webpage to learn more about the process.
Sign up for Climate Commitment Act email alerts to stay up-to-date on this rulemaking and our work on carbon market linkage.
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