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Texas has quickly become a new epicenter for data center development, on track to pass Virginia as the largest data center market in the U.S. in the coming years. As of right now, there are about 335 data centers in operation in the state, with at least 247 projects in development.
These facilities will need enormous amounts of electricity, with demand in the state projected to skyrocket by nearly 60% in less than four years. Already, there are 32 polluting gas-fired plants planned in the state to supply power for data centers — more than in any other state.
Data centers are causing and exacerbating serious pollution, water use and cost impacts on communities, leading to strong local pushback. While there are plenty of challenges to address, some of the major questions being determined by state officials right now focus on who will be responsible for paying for all this build-out caused by data centers? Without the right safeguards, Texas families and businesses could end up footing the bill for the massive energy, transmission and grid upgrades needed to serve new data centers.
While some public officials, including Governor Abbott, are raising the alarm about costs, a law passed in the 2025 legislative session (Senate Bill 6) is already setting some guardrails for how large load projects — which includes data centers — will connect to the Texas grid while minimizing costs and maintaining power reliability.
It is now up to the Public Utility Commission of Texas, the state utility regulator, to determine how Senate Bill 6 gets implemented. The rules it adopts will determine whether data centers pay their fair share and help keep the grid reliable — or whether the costs unfairly fall onto Texas families and businesses. Those decisions will also shape the next round of legislative proposals in 2027.
Here, we break down why these highly technical rules matter, how they can ensure that data centers pay their own way and preview the many other guardrails that Texas needs.
What it is: As Texas sees a surge in data center development, this rulemaking (PUCT #58481) will determine the rules for connecting these massive new electricity users to the grid, including what requirements they must meet and how much of the costs they must cover. In March of 2026, PUCT published a draft rule which proposed a fee structure and potential financial penalties for large load projects that are delayed or cancelled to help regulators predict the amount of load anticipated to come online and discourage “speculative” applications.
Why it matters: Utilities rely on predictions of future loads to plan and build out the grid. If they build facilities to serve an anticipated new data center but then the data center fails to materialize, Texans could be the ones footing the bill. EDF’s comments argue that prospective data centers should pay both refundable and nonrefundable fees to connect to the grid, which would help deter speculative projects while ensuring that data centers pay for all transmission costs they trigger.
What it is: Many large electricity users, including data centers, can temporarily reduce their electricity use or switch to onsite power for short periods, known as “demand flexibility.”
The Public Utility Commission of Texas is considering a program that would reward data centers for briefly reducing their power consumption when the grid is under stress. Known as the Large Load Demand Management Service (PUCT #58482), the program is designed to use demand flexibility as a grid reliability tool, helping meet peak power demand while reducing costs.
Why it matters: Maintaining grid stability is a balancing act, and there are different ways to manage it by adding power or subtracting demand. Instead of relying solely on building expensive new power plants to bring more power into the grid or over-relying on expensive, dirty “peaker plants,” PUCT can call on data centers to power down. In other words, subtracting power demand in these high stress periods can reduce costs for everyone.
In EDF’s comments, we recommended design features intended to maintain robust customer participation while controlling costs, including commitments from large customers on a seasonal basis — ensuring there’s enough flexibility during the times it’s needed the most. Maintaining strong participation from large electricity users is critical because every megawatt of flexible demand is a megawatt Texas doesn’t have to serve with new power plants or emergency measures. The more large customers that can reduce their electricity use during periods of grid stress, the more reliable and affordable the grid can be for everyone. We also encouraged regulators to consider how to expand demand management opportunities beyond large loads to smaller customers as well, in light of the enormous, untapped savings potential they represent.
What it is: As electricity demand grows, utilities must build new transmission lines to reliably deliver power to customers — including data centers — and those costs are ultimately paid by all electricity customers. Under the state’s current transmission cost rules, many large electricity users can avoid paying millions in transmission costs by reducing their demand during a few peak hours each summer. That means data centers can substantially lower their transmission bills while still requiring the grid to build enough infrastructure to serve them the rest of the year. This rulemaking on the evaluation of transmission cost recovery (PUCT #58484), seeks to update the rules regarding how these costs are allocated to ensure data centers are paying their fair share.
Related to this issue: During these peak periods, large commercial and industrial customers receive far greater financial benefits for reducing electricity use than residential customers. One analysis found that reducing one megawatt of demand saves a commercial or industrial customer about $68,550 in annual transmission costs, compared with just $94 for a residential customer — a 727-to-1 disparity for providing the same grid benefit.
Why it matters: EDF argued that the state should assign transmission costs to retail energy providers serving residential customers on a demand basis. This would give households more opportunities to reduce their costs by avoiding peak periods, thereby incentivizing use of grid-benefiting behaviors and technologies, like smart thermostats and batteries. As more customers reduce demand when the grid is most constrained, the amount of transmission infrastructure needed — and the costs that must be recovered from all customers over time — can also be reduced.
Grid load forecasting: As Texas braces for an onslaught of new large load customers joining the grid, it is essential that Texas regulators have an accurate way to forecast demand. An accurate forecast allows the state to assess reliability and determine transmission and infrastructure investment needs. In October, EDF submitted comments on PUCT #58480, which aims to update how Texas projects future grid supply and demand.
In a step forward, PUCT recently decided to improve large-load forecasting by incorporating adjustments based on the actual baseline electricity use of early projects (known as “Batch Zero”). Taking more time to refine these forecasts will help ensure future reports accurately reflect how much new demand is likely to come online and when.
Transmission cost recovery in the long term: There is another key rulemaking that is currently open for comments ahead of Senate Bill 6 implementation in late 2026 (#58000) that seeks to determine how large electricity users should be charged for transmission service along with determining if/for how they should remain responsible for full costs if their usage is not as high as expected or declines over time. This rulemaking may impact who gets shouldered with the cost of infrastructure in the long term, since data centers may be obligated to pay less over time, and that may mean that costs get shifted onto other Texas customers.
These rulemakings are just a slice of what Texas must address with regard to data centers. The PUCT’s Senate Bill 6 implementation may resolve some of these issues but certainly not all of them.
Policymakers, tech companies and utilities should create enabling conditions for data centers to realize bring-your-own clean power solutions that can serve their load, reduce costs and reduce stress on the grid. They should also expand access to distributed energy resources — such as residential battery storage, rooftop solar and energy efficiency — to support data center growth and increase reliability. At the same time, they should ensure data centers strengthen, rather than strain, local water resources, and take further steps to protect ratepayers from price increases spurred by data centers.
As Texas prepares for unprecedented growth in electricity, state officials have a choice right now: create rules that ensure data centers pay their fair share, keep the grid reliable and continue the rapid deployment of affordable clean energy — or risk shifting the costs onto families and businesses.
New York recently passed major rollbacks to its landmark Climate Leadership and Community Protection Act in an opaque process as part of New York’s FY2027 budget negotiations. While the state’s long-term climate commitments remain, these changes allow the state to delay action on cutting climate and health-harming pollution and slow the transition away from price-volatile fossil fuels.
The CLCPA amendments make changes to three major components of the law: the deadline for regulations to achieve statewide greenhouse gas emissions reduction targets, GHG emissions accounting methodology and the GHG emissions targets themselves. While strong long-term commitments are preserved, these changes collectively have the effect of allowing for less-ambitious near-term action to drive down climate pollution and improve energy affordability, risking the state’s ability to timely and cost-effectively meet its long-term targets.
In this blog, we dive into the impacts of changes to the deadline for statewide regulations and how this change further delays already overdue benefits promised to New Yorkers when the CLCPA was first passed in 2019: cleaner air, decreased climate pollution and reduced dependence on price-volatile fossil fuels. Future blogs in this series will examine the impacts of other recently enacted changes to the law.
Among the amendments passed into law at the end of May was a shift to the deadline for regulations to achieve the state’s GHG emissions limits. The original law required that these regulations be in place by January 1, 2024—a deadline the state missed and was therefore subsequently found by the New York State Supreme Court-Albany County to be out of compliance. Under the amended law, regulations are now not due until December 31, 2028 – nearly a decade after the law’s original passage and five years after the original deadline. The state’s 2022 Scoping Plan identified cap-and-invest as the most cost-effective program design to drive down statewide GHG reductions, and the Hochul Administration previously drafted but never released cap-and-invest regulations to fulfill this requirement. If the state takes all the time it is given under the amended law, a program will not start generating pollution cuts, household energy cost savings and job creating investment programs until 2029.
Delays in these implementing regulations mean that New Yorkers continue to miss out on the public health and economic benefits promised since 2019. Looking at the effects of delaying cap-and-invest alone, the cost impacts are clear. In the intervening period between the program’s originally anticipated 2025 start and a potential 2029 start, New Yorkers will have missed out on an estimated $16.7 billion in clean energy and affordability investments. These investments would fund utility bill rebates and help households adopt home efficiency measures and upgrade to clean, efficient technologies that lower bills, including electric vehicles, heat pumps, rooftop solar and more.
Based on prior analysis of how New York cap-and-invest dollars could flow to clean energy programs, a delay until 2029 would mean hundreds of thousands of New Yorkers – particularly low- and moderate-income households – miss out on investments that make it cheaper and easier to access clean energy and efficiency upgrades that lead to month-over-month energy cost savings. To be clear, New Yorkers are paying more for energy now than they would be if cap-and-invest were in place. For example, delaying cap-and-invest from 2025 to 2029 would mean:
It also means billions in foregone investments in public transit, in job-creating clean energy projects and in programs that would cut pollution and create economic opportunity in disadvantaged communities. These are only a few examples of potential investments that should already be delivering cost-savings and pollution cuts in communities today.
Delaying climate progress also means delaying cleaner air and the health benefits that come with it, in addition to good-paying job opportunities. Based on prior analysis by NYSERDA and DEC, cap-and-invest would have delivered an estimated $16.9 billion in public health benefits between 2025 and 2029 and avoided over 1,500 premature deaths and thousands of emergency room visits from asthma. Over that same period, cap-and-invest would have supported 118,000 new good-paying jobs across New York, with average earnings 21% above the state median income.
At a moment when the costs of relying on the volatile fossil fuel economy are higher than ever, changes made to the CLCPA are delaying the job, health and economic benefits that New Yorkers need now. Further delay is now enabled by these amendments, but it is not inevitable. There are clear actions the administration and legislators can take to provide immediate relief to New Yorkers, limit the growing costs of fossil fuel reliance and improve our access to clean and reliable energy.
Most critically, it is in every New Yorkers’ interest for the Hochul Administration to move swiftly on cap-and-invest and get a program up and running before 2029. The sooner the program is in place, the sooner cost-saving and pollution-cutting investments start flowing.
In the interim, it is essential that state leaders accelerate investment of $2 billion available to benefit New Yorkers now through the Sustainable Future Fund. These programs will help homeowners and renters lower utility bills through clean heating and efficiency measures, help school children breathe cleaner air with zero-emissions buses and healthy school retrofits, and much more. These critical cost-saving and job-creating investments are precisely the type that could be scaled and sustained over time by cap-and-invest.
In the coming years, legislative leaders must seek every avenue to ensure timely spending of available funds on these benefits, oversee rapid and robust implementation of the amended climate law, and work to advance additional policies that remove barriers to clean energy progress or require robust action for specific emissions sectors or sources.
New Yorkers cannot afford to wait years longer for the benefits they were promised. Each year of delay means higher energy costs, more avoidable pollution, missed clean energy investments, and fewer good-paying jobs. The 2026 CLCPA amendments may have lowered the floor for near-term action, but they did not lessen the urgency of the climate, affordability and public health challenges New Yorkers face. State leaders must move faster, not slower, to deliver the cleaner air, lower bills and good-paying jobs the CLCPA is designed to deliver.
The battle over the future of North Carolina’s electric grid is heating up in front of the North Carolina Utilities Commission. At the center of the debate is Duke Energy Carolinas’ 2026 general rate case, a multi-billion-dollar request that initially sought a staggering 18.1% rate hike for residential consumers.
In a historic and highly unusual mid-case course correction, Duke Energy filed a rebuttal just weeks before hearings, slashing its overall rate hike request from 18% to 11%, and pulling partially back on its aggressive return on equity demands that were among the top 5 in the country. But as Attorney General Jeff Jackson noted in a response, that proposal is “a step in the right direction by bringing the new rate down, but it is still too high.”
What’s next? In July and August, expert witness hearings at the North Carolina Utilities Commission will take place, where parties like the Public Staff — the state’s consumer advocate before the Commission — the Attorney General’s office and advocacy groups for the environment and commercial and industrial interests, will litigate the rate cases, first for Duke Energy Carolinas, then for Duke Energy Progress.
Environmental Defense Fund is an intervenor, having filed expert witness testimony from experts Daymark Energy Advisors to make the case for how customers can be protected from the costs of the data center boom, how North Carolina can enable data centers to bring and pay for their own clean electricity, and how the utility can take advantage of the growth of electric vehicles to lower power bills for customers.
The most glaring issue identified by EDF’s clean energy experts is who pays for the massive grid upgrades Duke claims are necessary. Thanks to artificial intelligence and cloud computing, tech giants are building massive data centers across the Carolinas, requiring gigawatts of new power.
EDF’s analysis emphasizes that under Duke’s original proposal, ordinary residential ratepayers would absorb an unfair share of the infrastructure costs required to hook up these large corporate users. EDF’s experts argue for a “fair share” pricing mechanism. If a multi-billion-dollar tech conglomerate requires dedicated grid expansions, substation upgrades or new peaker plants to manage their specialized demand, they should foot that specific bill — not local families already grappling with rising household costs.
Instead of simply building expensive, centralized fossil-fuel infrastructure to support data centers, EDF proposes a more reasonable solution: incentivizing large energy users to bring their own clean energy online.
EDF’s testimony outlines policies that would encourage or require incoming data centers to co-locate or contract for their own low-cost solar and battery storage systems. By allowing corporate giants to serve their own localized demand with clean energy, Duke could drastically reduce the upward pressure on the broader grid. This protects residential consumers from footing the bill for massive transmission buildouts while simultaneously helping North Carolina hit its state climate goals.
Duke Energy needs to take its EV pilot programs to the next level by turning electric vehicles into grid assets, not grid liabilities. By expanding its time-of-use rates, EDF and Daymark testify that the utility can reward drivers who actively participate in managed charging or vehicle-to-grid tech that feeds power back when the grid needs it most.
Commercial fleets shouldn’t be left out either. Stripping away restrictive demand charges for businesses willing to coordinate their fast-charging schedules — akin to Florida’s successful Fleet Advisory Program — can unlock flexible power that stabilizes the grid for everyone.
The upcoming rate cases will determine the trajectory of tens of billions of dollars in energy investments across North Carolina. The stakes could not be higher: the right decisions can deliver a vital combination of customer savings, reduced pollution and grid resilience. But our state’s century-old regulatory framework must be modernized to meet the demands of the unprecedented data center boom.
Regulators have an opportunity to ensure this transition prioritizes the economic well-being of North Carolina families over the profit margins of out-of-state developers and Duke Energy shareholders.
Recent proposals in Congress and across federal agencies have emphasized fully suppressing wildfire.
Putting out every wildfire as quickly as possible can increase the threat posed to communities by the most dangerous wildfires. Sometimes a slower approach to firefighting can help protect firefighters and nearby communities while reducing the risk of more catastrophic wildfires in the future.
Past approaches prioritizing near-total suppression offer important lessons for today’s policy decisions. For many years the U.S. Forest Service chased what was known as the “10 a.m. policy,” full containment of all wildfires by the morning after ignition. While rapid fire suppression is critical in many situations, especially near communities, overly prescriptive mandates can make it harder for firefighters to respond to wildfire flexibly and effectively.
Most U.S. ecosystems have adapted to routine wildfire of some kind. Fire is nature’s way of keeping fuels like drier trees and kindling from building up. Reducing all instances of fire can allow wildfire fuels to build up, leading to more harmful, more catastrophic wildfire.
A more strategic approach to firefighting, and equipping wildland firefighters with the right tools and resources, can help protect firefighters and nearby communities while reducing the risk of more catastrophic wildfires in the future.
Expanding community risk reduction efforts alongside ecological fuel treatments can help reduce the risk of loss from wildfire.
Homeowners with homes in wildfire prone areas can address fuel on their property. Creating defensible space (buffer areas between homes and surrounding wild areas) and hardening homes by using fire-resistant materials reduces the likelihood these homes will ignite and spread fire.
Ecological fuel treatments, such as thinning dense trees and prescribed fire, create forest conditions where wildfire behavior will be less severe. There is an urgent need to sustain and rapidly expand fuel treatments alongside community risk reduction efforts, including home hardening and creating defensible space. Together, with safe, effective wildfire response, these strategies reduce risk of loss from wildfire.
The Forest Service has a backlog of over 80 million acres that need treatment, which is over 41% of all national forestland. Because of the removal of fire as beneficial process, trees in these areas are less healthy, fire-loving species are less abundant, and when trees burn, they are more likely to burn hotter than what local plants, animal and fungi evolved to withstand. Meaningfully scaling restoration is also important for reducing climate-harming pollution from wildfire.
Moreover, it is not possible for the Forest Service and other public land managers to treat every acre that needs it. Resources for fuel treatment are limited, and even with a massive expansion, many areas are difficult to treat because of steep slopes, remote locations, and restrictions on human activity, such as rules for wilderness areas. Managing wildfire for resource benefit, which is strategically letting some ignitions burn during favorable weather conditions in remote areas, is a tool for restoring ecological function and reducing risk.
We should prioritize our limited resources on projects that reduce risks to communities, sustain culturally important plants, protect drinking water source areas and make wildland firefighters safer and more effective. Under the right conditions, at an appropriate scale and with thoughtful pre-planning, wildfires that are not immediately contained can restore backcountry ecosystems while reducing fuel that would otherwise be ready to burn during hotter, drier times of the year. Requiring all wildfire to be fully suppressed will make catastrophic wildfire stretch further and burn areas more severely.
Sometimes sending firefighters to put out newly ignited fire in wildland areas is risky and not necessary. The ruggedness of many wilderness areas could present dangerous conditions for firefighters and their remoteness means no nearby communities are at risk.
While no new wildfire is without risk, focusing on containing wildfire quickly misses the full picture. In the United States, our massive wildland fire system is actually very good at suppression: Over 98% of all new wildfire is contained quickly. The 2% that escape firefighting do almost all of the damage. These fires overwhelmingly happen during the hottest, driest, windiest weather, in the worst fuel conditions, and during peak months when firefighting resources are over-prescribed.
Choosing when and where to fight a new fire is an opening to reduce future risk and protect firefighter wellbeing. Mandates for aggressive suppression remove that choice. Moreover, legal mandates for full suppression could force wildfire response leaders to make difficult decisions: use their limited resources to respond to every ignition, even when the conditions are dangerous for firefighters, or face potential legal liability.
Policy should reflect proven ways to improve outcomes in wildland firefighting. There are many ways to improve our wildland firefighting system:
Wildfire is going to be a part of the equation no matter what. We choose whether they burn during a wet spring with many firefighting resources available or during a dry, windy, hot August when the firefighting system is stretched thin. Policy mandating full suppression results in firefighters and communities facing worse conditions for no benefit. Smart policies will help turn the tide on wildfire by taking a comprehensive look at what is driving risk and more intense wildfire, rather than narrowing the range of options available to fire managers.
The ocean is the foundation for life on Earth. It supports global trade, food and nutrition systems, energy security, and economic stability, while also serving as the planet’s largest active carbon sink, absorbing roughly 25% of global carbon emissions and more than 90% of excess heat from climate change.
Today, it sits at the nexus of interconnected challenges: climate change, biodiversity loss, food insecurity, and economic resilience. As countries move into the next phase of the Paris Agreement – implementation – this shift is unfolding against a backdrop of growing geopolitical and economic strain. Shipping disruptions, shifting fish stocks, supply chain volatility, rising food insecurity, and fertilizer shortages have exposed how vulnerable our global systems remain to climate shocks and political conflict.
While the ocean’s role as a carbon sink is well recognized, its role in adaptation is just as critical. Recent disruptions to fertilizer supply chains in the Strait of Hormuz have underscored how dependent global food production remains on trade that is vulnerable to geopolitical shocks. This rings particularly true for coastal communities and developing economies already on the front lines of climate impacts. Blue foods – fisheries and aquaculture – are a clear example, offering locally-led, climate-resilient alternatives that do not rely on fertilizers, offering a pathway to strengthen food security, livelihoods, and economic stability in times of global disruption.
The ocean is no longer a niche issue at the margins of multilateral negotiations. It is now central to whether countries can meet climate goals while protecting biodiversity and supporting livelihoods.
A growing awareness of the ocean as a climate ally defined this year’s Ocean and Climate Change Dialogue at the 64th Sessions of the UNFCCC Subsidiary Bodies (SB64) in Bonn. Discussions centered on implementation – specifically on the Nationally Determined Contributions (NDCs), means of implementation (including finance and capacity), and strengthening synergies across sectors and international processes.
Three themes emerged clearly from the Dialogue at SB64 in Bonn:
Countries are increasingly recognizing the importance of ocean-based solutions in national climate planning. Efforts such as integrating blue foods into NDCs demonstrate how ocean action can support adaptation, mitigation, and resilience simultaneously – but greater support is needed to move from recognition to delivery.
Fisheries and aquaculture can strengthen resilience, support nutrition and livelihoods, and reduce dependence on vulnerable global supply chains – but many countries still face barriers to fully integrating these solutions into climate plans, including gaps in policy coordination, technical capacity, and financing.
While more than 300 ocean solutions have been identified in the dialogue process, scaling and replicating them requires sustained financing, technical capacity, and stronger enabling environments – particularly in Small Island Developing States (SIDS) and Least Developed Countries (LDCs) where capacity and access are limited.
Financing is central to bridging this gap. Ocean-based solutions currently receive less than 1% of global climate and development finance, despite their cross-cutting benefits. Compounded with high borrowing costs and declining Official Development Assistance (ODA) – the challenge of scaling these solutions becomes even more acute. Strengthening the link between NDC priorities, investment-ready projects, and accessible finance will be critical to moving from ambition to delivery.
Within the UNFCCC process, attention to ocean and water is increasing, including through upcoming discussions under the Standing Committee on Finance (SCF), which has an opportunity to further shape how ocean priorities move from policy into funding pipelines.
There is growing momentum to align climate, biodiversity, and ocean governance across the UNFCCC, CBD, and BBNJ processes. The challenge now is demonstrating how these synergies can be implemented in practice. The mesopelagic (or “twilight”) zone offers a clear example of this integrated, “One Ocean” approach in action – and how Rio Convention synergies can be translated into practice. Stretching roughly 200 to 1,000 meters below the surface, the mesopelagic zone plays a critical role in marine food webs and in regulating the Earth’s climate through the biological carbon pump.
EDF is working with partners to advance precautionary, science-based governance approaches that prioritize ecosystem integrity while improving scientific understanding. This work reflects a broader climate-biodiversity approach and offers a practical example of Rio Convention synergies in action – connecting climate mitigation, biodiversity conservation, and sustainable fisheries management.
From Bonn to Mombasa: turning dialogue into delivery
The Our Ocean Conference (OOC) in Mombasa, Kenya, marks the next step in shifting these priorities from dialogue toward implementation.
Across developing economies – particularly in Africa – this transition is already underway. EDF is working with partners through the Aquatic Blue Food Coalition and convening OOC-linked workshops with African stakeholders to translate ambition into actionable commitments, grounded in local priorities and supported by policy and finance.
Further, EDF is also advancing the Rio synergies approach on mesopelagic conservation. At OOC, this effort will move forward through the launch of the Mesopelagic Zone Conservation Challenge, led by champion countries in partnership with the Ocean Conservancy, the Marine Conservation Institute, and EDF. The Challenge aims to catalyze action to protect biodiversity and the ocean’s biological carbon pump, calling for a precautionary approach, stronger science, and the development of robust, transparent management frameworks.
OOC provides an opportunity to take forward the priorities identified in Bonn – on NDC integration, financing, and Rio synergies – and translate them into concrete pledges, partnerships, and delivery mechanisms.
For more information on what EDF is doing at OOC, see here.
Looking ahead: from ambition to action
The trajectory from Bonn is now set in motion: ambition is translating into implementation.
The dialogue has built shared understanding and momentum, but there is a clear and growing appetite to go further. The next phase must focus on delivery – anchoring ocean priorities in concrete outcomes, supported by financing, and driven by country leadership.
Upcoming convenings, including the UNFCCCC Pre-COP, COP31, and future COPs across the Rio conventions, will play a critical role in carrying this momentum forward – ensuring that ocean priorities remain integrated across processes while translating commitments into measurable outcomes.
The ocean has always connected ecosystems, economies, and communities across borders. The task now is to ensure that global processes can do the same – a shared collective goal to elevate ambition through coordinated, practical, and locally grounded action at scale.
Results were released today for the second auction of the year, and 14th overall, in Washington’s Cap-and-Invest program. The auction, conducted last week, followed shortly after Washington’s Department of Ecology officially launched its formal rulemaking process to link Washington’s Carbon Market with the California-Québec market.
This is the second major linkage milestone achieved this year; in March, Washington, California and Québec released a joint draft linkage agreement, which lays out the logistics of integrating Washington into the California-Québec market.
Washington’s Cap-and-Invest auctions are administered quarterly by the Department of Ecology. During the auction, participating entities submitted their bids for allowances.
Under the Climate Commitment Act — Washington’s landmark climate law that sets a binding, declining limit on pollution — major emitters in Washington are required to hold one allowance for every ton of climate pollution they emit, with the total number of allowances decreasing each year.
This system requires Washington’s polluters to reduce their emissions in line with the state’s climate targets, as fewer allowances become available annually.
Today’s results, which settled below the APCR trigger price for the first time in a year, continue the gradual cooling trend in the Washington market which began earlier this year following the release of a draft linkage agreement between Washington, California and Québec.
This second quarterly auction was conducted just a few days after the announcement on June 1 that the Washington Department of Ecology was launching its formal rulemaking process on linkage, and the auction results seen today may reflect the growing confidence among covered entities that, upon finalization of linkage processes in each jurisdiction, they will have access to a larger pool of allowances from a future joint market with California and Québec.
California and Québec have shared a linked market for over a decade, demonstrating that well-designed linked cap-and-invest programs can lead to deeper pollution cuts while supporting economic growth.
Linking these three markets would bring about significant advantages for all participants, including:
Linkage is a key opportunity for climate leadership for Washington, California and Québec, to take a step that will strengthen one of our best and most cost-effective tools to reduce emissions and raise revenue for community investments. With Washington’s linkage rulemaking underway, we expect to see similar steps taken by Québec and California in the coming months.
The need for scalable, durable climate action at the state level has never been greater, and these jurisdictions are showing how working across borders can drive meaningful progress.
