Washington, California and Quebec will formally consider whether to link their carbon markets, hoping to build momentum to cut greenhouse gas emissions and stave off the worst effects of climate change.
The two American states and the Canadian province announced their plan to explore linkage, as it’s called, Wednesday. California and Quebec merged their markets in 2014, so the question is whether to fold in Washington’s burgeoning market.
The negotiations are unfolding during an election year, in which voters will decide whether to repeal the state’s new carbon market outright. Even if the policy survives, outgoing Gov. Jay Inslee must hand off his keystone achievement to an entirely new administration.
There would be multiple benefits to the combined markets, said Laura Watson, director of Washington’s Department of Ecology. Perhaps chief among them would be a signal to the world that this type of emission-cutting effort can be done and encourage others to join.
“No single jurisdiction can do this alone,” Watson said. “Cooperation is key.”
Washington’s carbon market works by selling major polluters allowances, each of which represents a metric ton of greenhouse gas emissions. The state will gradually ratchet down the number of allowances it accepts, forcing companies to emit less and less. At the same time money raised from the allowances (nearly $2 billion so far) will go to green initiatives.
Allowance prices started much higher than expected when Washington’s market launched last year, though in the latest quarterly auction they sank dramatically. Joining California and Quebec should stabilize the market, Watson said, offering polluters and speculators a broader spectrum across which they could buy and sell their allowances. The governments would hold joint auctions with a common allowance price between them.
Less exposure to price swings means companies required to cut their emissions can better plan into the future, said Joel Creswell, manager of Ecology’s climate pollution reduction program.
That stability should, in turn, lower gas prices, which rose with the launch of Washington’s market as polluters passed their increased costs on to consumers, Creswell said.
Precisely how much allowance prices influenced the cost of gas remains unclear. It’s a point of contention in the ongoing effort to repeal Washington’s Climate Commitment Act, which launched the market.
A Republican-backed signature-gathering campaign won a spot on the November ballot, and those behind the repeal effort paint the policy as ineffective and a cash grab.
Should voters repeal the Climate Commitment Act in November, the linkage negotiations would be rendered moot.
Officials in California and Quebec are aware of the repeal effort, Watson said, but it’s not influencing the negotiations. She noted California’s carbon market survived similar pushes.
As negotiations continue, officials in Washington must make sure linkage wouldn’t hinder the state’s ongoing goals and requirements to cut its reliance on fossil fuels, Watson said. California and Quebec are performing similar analyses.
Should the three governments decide to move forward, Watson said, the markets likely couldn’t be combined before 2025.
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