Governor Inslee moves Washington state one step closer to linking carbon market with California and Quebec

Today, the state of Washington took a big step toward linking its cap-and-invest program with the carbon markets in California and Quebec, a move that could boost climate action and create a more stable, more predictable market for all. Governor Inslee signed E2SB 6058 into law, which will further align Washington’s program with the joint California-Quebec program (known as the Western Climate Initiative) and facilitate a smoother linkage process.

This latest development builds on the momentum of last week’s joint statement from the three jurisdictions, in which they expressed their shared interest in the potential creation of a larger, linked market among them. While Governor Inslee and Washington policymakers are tackling climate change head-on and trying to strengthen the state’s carbon market, a wealthy hedge fund executive is trying to bring climate progress to a screeching halt through a ballot initiative that would end the program altogether. The contrast between the two outcomes for Washington’s cap-and-invest program could not be starker.

Here’s what you need to know about the linkage bill and what’s at stake with Washington’s program.


First, linkage is not a new concept. California and Quebec have been successfully operating a linked market for a decade now; California was the first to implement a cap-and-trade program in 2012, with Quebec launching their program in 2013. The two officially joined forces roughly a year later.

Washington’s cap-and-invest program — launched in January of 2023 — was designed with the intent to be linkable with California and Quebec, and in November of last year the Department of Ecology announced its intent to formally pursue that program linkage. The joint statement last week and the signing of this linkage bill today further solidify the work being done by California, Quebec and Washington to move toward scaled-up climate action through a broader linked market.

Why link? There is a lot for Washington, California and Quebec to gain from linking their carbon markets. A bigger, linked market will provide more opportunities for companies to find lower-cost options to reduce their emissions because there is a larger pool of allowances and trading partners. This can unlock faster and deeper cuts in climate pollution. A linked market with a common price also helps insulate the market from potential price shocks, fostering more stability and certainty for participating companies.

What’s in the bill?

E2SB 6058 includes some tweaks to the cap-and-invest program in Washington that will make it easier for allowance auctions to be operated jointly across jurisdictions, such as aligning the limits on the number of allowances any one entity can purchase at auction or hold in their account at one time.

The bill also syncs up the compliance periods (the intervals at which covered entities have to turn in their allowances in accordance with their level of emissions) in Washington with those in California and Quebec, bringing them from four-year compliance periods previously to three-year compliance periods going forward.

Threat of repeal

Governor Inslee has championed climate issues throughout his three terms in Washington, and the passage of the Climate Commitment Act in 2021 was a significant part of his climate legacy. Signing this bill into law to further strengthen and solidify his signature piece of policy is an example of the kind of cross-border climate leadership that we urgently need to see.

His leadership on the Climate Commitment Act — which in its first year of operation has raised billions in revenue for the state to reinvest in communities and clean energy — stands in sharp contrast with the ongoing effort to repeal this landmark climate law and all the benefits it brings to Washingtonians. This repeal effort qualified for the November ballot after hedge fund executive Brian Heywood personally bankrolled a signature-gathering mission. If it passes in November, the initiative would fully repeal the cap-and-invest program and prohibit the state from ever enacting a similar program in the future. Repealing the CCA would deprive Washington’s residents of the benefits this program has only just begun to deliver, including improved air quality, access to clean transportation, resilience to the impacts of climate change and more.

An added complication of the repeal initiative is its potential impact on this linkage bill. Legal precedent in Washington indicates that if the legislature passes a bill on the same topic as an initiative that is qualified for the ballot in the same year, then the bill should also go on the ballot as an alternative to the initiative. While the linkage bill and the repeal initiative are both related to the CCA, it’s unclear if the linkage bill (which makes programmatic changes to a policy that was always intended to link with California and Quebec, and which wouldn’t go into effect until 2025) is really an ‘alternative’ to a full and immediate repeal of the CCA, especially when there were many other CCA-related bills this session as well. We’ll be keeping an eye out for any legal updates on that question.

The benefits of this program have only just started to materialize in Washington. By pursuing linkage with California and Quebec, the state stands to make its program stronger and more stable in the long term, while continuing to generate investments that are making communities healthier and more resilient. Moving forward and strengthening this program through linkage is a win for Washington.

This entry was posted in Carbon Markets, Cities and states, Economics, Energy, News, Policy. Bookmark the permalink. Both comments and trackbacks are currently closed.