Washington State is moving forward with plans to link its cap-and-trade program with existing carbon markets in California and Quebec, according to a draft agreement released this week by the Department of Ecology. The agency opened a public comment period through May 1, with the potential for a unified carbon market to launch as early as 2027. Officials project the linkage will help stabilize prices and reduce compliance costs for businesses participating in Washington’s climate program.
The draft linkage agreement was published on Tuesday by the state Department of Ecology, which created Washington’s carbon market under the 2021 Climate Commitment Act. If approved, the three jurisdictions would conduct joint quarterly auctions where businesses could purchase carbon allowances across state and provincial borders. Washington Governor Bob Ferguson has expressed support for the proposal.
How Carbon Market Linkage Would Work
Under a linked system, all three jurisdictions would hold synchronized auctions for carbon allowances. A company operating in Washington could purchase emissions credits in Quebec, and businesses in California could buy allowances from Washington’s market. This integration would create a larger, more liquid trading system for carbon credits.
The cap-and-trade program requires major air polluters to pay for each metric ton of carbon they emit beyond established limits. Each quarter, participating states auction a finite number of pollution allowances, with availability decreasing over time to drive emissions reductions. Companies that use fewer allowances than allocated can sell unused credits to other businesses.
Price Stabilization Expected from Market Integration
Washington’s carbon market has experienced significant volatility since launching three years ago, with allowance prices reaching just over $70 in December 2025. In contrast, California and Quebec allowances trade below $30 each, according to agency officials. The price disparity reflects Washington’s newer market and more aggressive decarbonization timeline.
Additionally, linking to the more established California-Quebec market could help absorb price shocks. California’s cap-and-trade program began in 2012, while Quebec launched its system in 2013, with the two markets merging in 2014. Todd Myers, vice president of research for the Washington Policy Center, acknowledged that the linkage would provide stability, stating the proposal “makes a bad system less bad.”
Meanwhile, Washington’s carbon auctions have generated over $4 billion in revenue since inception. However, nearly $2 billion came during the first year when prices soared, followed by a dramatic drop in 2024 when a ballot initiative threatened to eliminate the Climate Commitment Act. After voters rejected that measure in November 2024 with 61% support for keeping the program, the market rebounded in 2025.
Differing Climate Goals Among Jurisdictions
Washington’s Climate Commitment Act mandates that greenhouse gas emissions reach 45% below 1990 levels by 2030, a more aggressive target than its potential partners. California’s recently reauthorized program requires a 40% reduction below 1990 levels by the same deadline, while Quebec aims for a 37.5% decrease. Washington also dedicates 35% of carbon credit revenue to benefit vulnerable populations, a provision not matched by the other jurisdictions.
Department of Ecology Director Casey Sixkiller emphasized the climate urgency driving the linkage proposal. “From historic flooding and drought to extreme heat and devastating wildfires, climate change is impacting communities across our state and threatening our natural resources,” Sixkiller said. The director added that the partnership demonstrates how states and provinces can collaborate on climate action.
Furthermore, Leah Missik, Washington legislative director for Climate Solutions, noted that California had to reauthorize and extend its program to align more closely with Washington’s framework. “Because we went third after both California and Quebec, we were able to learn lessons,” Missik said, adding that each jurisdiction can look to the others for improvement strategies.
Business Benefits and Consumer Impact
Caroline Halter, communications manager for the Department of Ecology, explained that greater cost certainty would help companies budget for decarbonization investments. “When companies decarbonize, they need fewer allowances, reducing their compliance costs and allowing them to deliver lower prices to consumers,” Halter said. Market expansion would likely decrease carbon prices in Washington while slightly increasing costs in California and Quebec.
The public comment period on the draft linkage agreement remains open until May 1, after which state officials will review feedback and finalize terms. Authorities have not confirmed an exact implementation timeline beyond the 2027 target date for launching the unified carbon market.