Officials in Washington, California and Québec have taken a step toward creating a shared carbon trading system, releasing a draft agreement that outlines how their emissions markets could be connected, as announced last week.
The proposal would link Washington State’s cap-and-invest program with the long-standing cap-and-trade carbon market jointly operated by California and Québec. If regulatory steps and rulemaking processes proceed as expected, the three jurisdictions could begin operating a unified carbon market as early as 2027.
Under a linked system, companies regulated in Washington would be able to use emissions allowances issued in California or Québec to meet compliance obligations, and vice versa. The jurisdictions could also hold joint allowance auctions and operate with a shared market price for carbon permits.
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An emissions allowance represents permission to release one metric ton of carbon dioxide equivalent (CO2e). Expanding the pool of buyers and sellers through a combined market is expected to improve price stability and reduce volatility.
Officials say larger carbon markets generally function more efficiently, with broader participation providing stronger liquidity and more consistent price signals for companies investing in lower-emissions technologies.
Washington Gov. Bob Ferguson said cooperation among jurisdictions is essential to tackling climate change. “No state or province can handle the climate crisis alone,” he said in a statement announcing the draft framework.
California and Québec have operated a linked carbon market for more than a decade under the broader Western Climate Initiative (WCI), which coordinates emissions trading systems across participating jurisdictions.
The newly released draft agreement begins a public consultation process while each government evaluates regulatory changes required for integration. Officials say further steps, including rulemaking and environmental assessments, must be completed before a final linkage decision is made.
If implemented, the move would expand one of North America’s largest regional carbon markets and deepen cooperation among subnational governments pursuing market-based climate policies.
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