Washington state and the Western Climate Initiative (WCI) market partners California and Quebec on Tuesday finalized a draft agreement that would create a larger North American carbon market.
The initial agreement would allow Washington state to join its cap-and-invest program with the WCI market, made up of California and Quebec, as soon as 2027, the state Department of Ecology said.
"By linking Washington's carbon market with California and Quebec, we are expanding a proven, market-based system to cut greenhouse gas emissions, accelerate decarbonization, spur innovation, create jobs and deliver sustained investments in communities and climate solutions," Ecology director Casey Sixkiller said.
The draft agreement lays out the terms for cooperation between the jurisdictions in a linked market, with few changes from the previous agreements that Quebec and one-time market partner Ontario signed with California. One alteration from the agreement between Quebec and California is a change in the notice period for any entity wishing to withdraw from the linked market.
The agreement with Washington would require a 30-day withdrawal notice before the next joint auction, rather than the previous one-year notice before a withdrawal at the end of a compliance period. Under the new agreement, a partner still would not be allowed to withdraw from the linked market until the end of a compliance period. The draft also adds a provision that if a court holds that either California, Quebec or Washington cannot enter into this linkage agreement, it will not impact on the other partners.
Washington, California and Quebec are requesting stakeholder feedback on the agreement through 1 May.
Washington must still complete steps required by state law before signing any linkage agreement, including an environmental justice assessment and a public comment period. California and Quebec must also conduct their own evaluations to comply with respective state and provincial laws.
Washington began pursuing linkage with the WCI in 2023, with the hope of increasing market stability and lowering compliance costs for the state's covered participants.
Argus assessed Washington Carbon Allowances (WCAs) for December delivery at $74.25/t and for March delivery at $74.10/t on Monday. In comparison, California Carbon Allowance (CCAs) are less than half the cost of WCAs. Argus assessed the December delivery CCAs at $29.21/t and March delivery at $27.93/t on Monday.
The state cap-and-trade program aims to help Washington meet its mandate to cut greenhouse gas (GHG) emissions by 45pc by 2030, compared with 1990 levels, and to achieve net-zero emissions by 2050.
