Washington state, California and Québec release draft agreement to link Cap-and-Invest programs

SAN FRANCISCO — Today, Washington, California and Québec released a draft agreement to link their cap-and-invest programs to form a unified emissions market. The draft agreement lays out the logistics of integrating Washington within the California-Québec market, which has been operating for over ten years as the largest market of its kind in North America.

“By joining forces, California, Washington and Québec can cut climate pollution even faster and facilitate greater investment in affordable clean energy.” said Caroline Jones, Manager for Energy Transition & Carbon Markets. “At a time when the Trump administration is abandoning pollution protections, this draft agreement shows the potential for sub-national action to cut emissions efficiently and effectively. Climate pollution does not stop at borders, and neither should climate solutions.”

California and Québec have demonstrated for over a decade that well-designed, linked cap-and-invest programs can lead to deeper pollution cuts while supporting economic growth. Joining with Washington’s program builds upon a proven model and will strengthen the programs of all participants.

Benefits of linked cap-and-invest programs

• More program confidence: A larger, linked emissions market means more liquidity, i.e. there are more trading partners available, which helps to reduce volatility including potential price spikes. This in turn builds confidence in the system, which means there is more certainty the programs can meet climate goals.

• Greater climate ambition: More predictable compliance costs can allow policymakers and covered entities to be more ambitious in their emissions reductions targets — with huge benefits to local air quality and the climate. When California and Québec linked their programs, they were able to achieve greater regional emissions reductions at lower costs than either jurisdiction would have achieved alone.

• Lower costs: Linking cap-and-invest programs can result in lower costs for compliance, which means lower costs for businesses and a more affordable transition to a healthy, clean energy economy. This means that under a linked market, participants can secure deep pollution cuts in the most cost-effective way.