Governor Gavin Newsom of California authorized the state to move forward with linking its Cap-and-Invest carbon market program with Washington State's carbon market, according to an announcement during Climate Week NYC.
Newsom made formal findings legally required for California to advance to the final step of linking the two states' markets. The findings allow the California Air Resources Board to begin the public regulatory process needed to formally link the carbon trading systems.
"California has long shown that climate action means a stronger economy, cleaner air, and billions of dollars of investment back into communities across our state. By joining forces with our partner in Washington State, we will build a stronger, more durable carbon market that will drive investment, cut pollution, and power the clean economy of the future," Newsom said in a statement.
The proposed linkage would create a larger, more stable carbon market to help California continue reducing climate pollution while supporting investments in cleaner transportation, affordable housing, wildfire resilience, and other community priorities, the state said.
California's Cap-and-Invest Program establishes a declining limit on emissions from the largest polluters, including large factories, energy companies, and oil and gas suppliers, which account for 80 percent of the state's total climate emissions. Entities that exceed this limit must invest in projects that benefit Californians.
California previously linked with Quebec's Cap-and-Trade System on January 1, 2014. Linkage allows entities subject to each program to use allowances and credits from the other systems to meet compliance requirements, making emissions reductions more cost-effective.
Since implementation 13 years ago, California's program has generated $37 billion for climate investments, funded 600,000 projects statewide, supported 143,000 jobs, and delivered $16 billion in utility bill credits to Californians.