North America’s carbon market map just got more interesting. Officials from Washington State, California, and Québec have released a draft agreement that lays out how their three emissions trading systems could be linked into a single cross-border market.
What’s Actually Happening
Washington’s Climate Commitment Act created a cap-and-invest program that launched in 2023. California and Québec have been running a linked cap-and-trade system since 2014. The new draft agreement — released last week — proposes connecting all three.
If finalized, this would create the largest carbon market in North America by a wide margin. California’s system alone covers roughly 450 million tonnes of CO₂ per year. Adding Washington and deepening the Québec linkage would expand coverage and liquidity.
Why It Matters for CDR
Linked carbon markets create larger pools of demand. When carbon prices are consistent across jurisdictions, it’s easier for removal projects to plan long-term. California’s market already includes provisions for offset credits, and a larger linked market could eventually integrate carbon removal credits at scale.
The timing is notable: while Washington is pushing to expand carbon pricing, the federal government in D.C. is pulling in the opposite direction. States are building the carbon market infrastructure that federal policy won’t.
The Details Still Being Worked Out
Linking emissions markets across international borders isn’t simple. The draft covers mutual recognition of allowances, harmonization of compliance timelines, and rules for cross-border trading. But there are real gaps: how to handle different price floors, what happens if one jurisdiction weakens its cap, and whether offset protocols will be fully aligned.
Chevron has already pushed back, warning that California’s proposed cap-and-invest amendments could drive up fuel costs and accelerate refinery closures. The fossil fuel industry sees this linking as a threat — which is probably the best endorsement the policy could get.
The Bottom Line
Carbon markets work better when they’re bigger. Washington joining California-Québec would send a clear signal: subnational climate leadership in North America is accelerating, regardless of what happens in Washington D.C.
Source: Carbon Herald