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Amid WA repeal threat, CA and Quebec support looking into carbon market linkage

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(The Center Square) – The governments of Washington state, California and the Canadian province of Quebec on Wednesday issued a joint statement on the potential to form a shared carbon market.

“The California Air Resources Board on behalf of the state of California, the Gouvernement du Quebec, and the Department of Ecology representing the state of Washington each recognize that fighting climate change requires sustained collaboration by all governments,” the news release reads. “Today they are officially expressing their interest in the potential formation of a shared carbon market between the three jurisdictions.”

Efforts to possibly merge Washington’s carbon market with the joint California-Quebec market are meant to lower the cost of carbon allowances.

Per the Climate Commitment Act passed by the state Legislature and signed into law by Gov. Jay Inslee in 2021, Washington’s cap-and-trade program requires emitters to obtain “emissions allowances” equal to their covered greenhouse gas emissions. Similar to stocks and bonds, these allowances can be obtained through quarterly auctions hosted by the Department of Ecology.

Washington’s auctions, which began in 2023, have brought in more than $2 billion so far.

CCA opponents argue carbon auctions have driven up gas prices as much as 50 cents a gallon.

An October 2023 analysis by the Department of Ecology found that a larger, linked market would result in more predictability when it comes to allowance prices and incentivize businesses to increase investments to curb their greenhouse gas emissions.

The report warned that failing to pursue linkage could doom the entire program.

“Linking the California-Québec carbon market and the Washington carbon market would enhance the ability of all three jurisdictions to work together to develop and implement cost-effective programs to fight climate change, while allowing each jurisdiction to maintain authority over its own program’s design and enforcement,” Monday’s news release says.

There was no mention in the news release of Initiative 2117 that could moot efforts to link the three carbon markets.

I-2117, on the ballot this November, would repeal the CCA and get rid of Washington’s carbon market.

The Center Square reached out to all three jurisdictions about the possibility of voters passing I-2117.

“Though Washington has formally expressed interest in joining the California-Quebec carbon market, today’s joint statement is the first time that all three governments have expressed their mutual interest in forming a shared market,” Caroline Halter, communications manager with Ecology’s Climate Pollution Reduction Program, told The Center Square in an email.

She went on to say, “This joint statement is a strong signal about the potential for building on our longstanding partnerships in order to create a joint market. Obviously, creating a linked carbon market would not be possible if Washington’s cap-and-invest program were ended. However, all three governments recognize the importance of cooperation in addressing climate change, as well as the economic benefits that will come from moving quickly to transition to a clean energy economy.”

Dave Clegern, public information officer with the California Air Resources Board’s Climate Change Programs, also responded.

“The three jurisdictions have agreed to evaluate the possibilities of linkage and all will be doing our due diligence,” he emailed The Center Square. “Beyond that, the notice speaks for itself and right now we have no timeline for further action.”

The Center Square did not get a response from Quebec.

California has been operating a carbon market since 2012, and Quebec has been operating one since 2013. These two markets were linked on Jan. 1, 2014.