WA, CA, Quebec move closer to creating a joint carbon market
The site for Puget Sound Energy’s new Tacoma LNG Facility in a photo from Tuesday, Jan. 29, 2019. At 5.6 million tons in 2021, PSE is the state’s top emitter of greenhouse gases. (Dorothy Edwards/Cascade PBS)
California and Quebec on Wednesday took the next step toward partnering with Washington to form a bigger carbon market.
The state and Canadian province formally announced their interest in the joint venture. The earliest that the proposed alliance could happen is 2025. Lurking in the background is a November referendum on whether to repeal Washington’s cap-and-invest program.
“Though Washington has formally expressed interest in joining the California-Québec carbon market, today’s joint statement is the first time that all three governments have expressed their mutual interest in forming a shared market,” wrote Washington Department of Ecology spokeswoman Caroline Halter in an email. Details will be hashed out among the three governments.
The Washington Legislature recently passed a bill that brings this state’s fledgling carbon market regulations in sync with the joint California/Quebec market. A bigger market is expected to bring down carbon emission auction prices, which would lead to lower gasoline prices.
Washington’s carbon polluters, including oil companies, bid every three months on the amount of carbon emissions they can release. The volume of allowances is limited, which has driven up auction bids.
Until recently, Washington’s auction prices — ranging from $48.50 to $63.03 per allowance of about one metric ton of carbon emissions — have been significantly higher than those of the California/Quebec joint market, taking a lot of blame for this state’s high gasoline prices. But while Washington’s carbon auction prices have been higher than those in California, Washington has frequently had lower gas prices.
New York, Massachusetts and Maryland are watching Washington and this potential alliance with thoughts of creating their own cap-and-trade programs to eventually join the bigger market.
Earlier this month, at Washington’s first auction of the year, carbon allowance prices of $25.76 came in dramatically lower than those in the California/Quebec market, whose bid prices increased from $19 in 2021 to $41.76 last month, according to the California Air Resources Board.
Since January 2023, Washington has raised $1.96 billion in cap-and-invest revenue for many dozen climate change mitigation programs.