CA Extends Cap-and-Invest, Sets Stage for Linkage with WA

On September 13, the California legislature voted to reauthorize the state’s cap-and-invest program through 2045. The reauthorization puts California and Washington programs on similar timelines and ambition levels, setting the stage for a California-Québec-Washington linked market. You can read a full breakdown of what this means for Washington in The Seattle Times.

California’s cap-and-invest program was passed by the state legislature in 2006, and it forms the basis of Washington’s Climate Commitment Act. Clean & Prosperous Washington has been working closely with our partners – including Clean & Prosperous California – to support an effective, ambitious reauthorization of our neighbor’s carbon market.

Amidst unprecedented federal retrenchment on the clean energy transition, California and Washington state lead the nation in effective, market-based climate policy that reduces pollution while growing the economy and creating jobs.

In order for carbon markets to link, their programs must closely resemble each other on key elements – notably emissions-reduction timelines, authorization horizon, and program ambition. The reauthorization of California’s cap-and-invest program ensures that alignment with Washington’s Climate Commitment Act. Linking the California-Québec-Washington markets would provide substantial near- and long-term benefits, including program durability, market stability, lower compliance costs, reduced pollution leakage risk, increased investment predictability, and the potential for enhanced collective ambition to reduce greenhouse gas emissions across jurisdictions.

By linking with California-Québec, Washington state would join the fourth-largest carbon market in the world. The World Bank released a new report on the growth of carbon pricing – particularly carbon markets like Washington and California’s – internationally. According to the World Bank, 28 percent of global emissions – including roughly half of global emissions from the power and industrial sectors – are covered by a carbon price, compared to five percent in 2005. Additionally, economies that have implemented carbon pricing make up nearly two-thirds of global gross domestic product. Nations including India, Brazil, and Turkey have publicly indicated their intention to pursue carbon markets.

Statements from CA, Québec, and WA Leaders

“Californians, Washingtonians, and all of us engaged in the fight against climate change will be well-served by the California Legislature’s courageous decision to reauthorize California’s foundational greenhouse gas reduction program. This is a major step forward towards our aspiration in Washington for a joint market that maximizes emissions reductions and minimizes compliance costs,” said Washington state House Majority Leader Joe Fitzgibbon.

“California’s Cap-and-Trade program is the strongest, most cost-effective emissions reduction program in the world. With the passage of AB 1207, we reaffirmed our commitment to lead the effort to fight climate change while doing it in a manner that protects Californians’ pocket books. As the representative of the Pacific Palisades – where over 5,000 homes tragically burned nine months ago – I want to also remind everyone that the cost of inaction is immeasurable,” said California Assemblymember Jacqui Irwin.

“The California Legislature’s vote this past weekend offers a strong endorsement on the carbon market and provides us a clear avenue to continue our joint efforts on possible carbon market linkage between Québec and the states of California and Washington,” said Delegate David Ruiz of the Québec Government Office in Seattle.

“This historic legislation sets the stage to formally link together two of the most effective and proven climate programs globally. California, Québec, and Washington are showing governments and communities around the world that a firm cap on pollution and investing in climate action, affordability, and quality of life works. Cap-and-invest funds clean air, clean water, reduces wildfires, restores salmon runs, provides transit, timber and agriculture community support and so much more. Our bonds in the West Coast run deep and this legislation shows that together we can continue to grow our economies with a lighter touch on the earth,” said Reuven Carlyle, former Washington State Senator, founder of Earth Finance, and Clean & Prosperous Washington board member.

“This is a win for California and for states like Washington that are taking meaningful actions to confront the impacts of climate change, support innovation, and transition our economy away from fossil fuels,” said Casey Sixkiller, Director, Washington State Department of Ecology. “Climate change remains one of the most urgent and far-reaching threats to our health, economies, and ecosystems. Tackling it requires real science, sustained commitment, and the collective strength of like-minded governments moving in lockstep toward a more resilient and carbon-free future. There has never been a more important time for states to lead on this issue, and we look forward to continuing work with California and Québec to link our carbon markets. A combined market will help businesses make long-term investments in reducing carbon pollution and building a clean energy economy.”

“It’s exciting to see California re-approve its landmark cap-and-invest program. In Washington, our cap-and-invest program is already delivering billions in climate investments, cleaner air, and good-paying clean energy jobs—proving that bold climate policy can drive both environmental and economic progress. This is yet another clear signal that West Coast states will continue to lead the transition to a clean energy future,” said James Hove, Washington Director, Climate Solutions.

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