Full Title: Considerations for Washington’s Linkage Negotiations with California and Québec
Author(s): Nicholas Roy, Suzanne Russo, and Dallas Burtraw
Publisher(s): Resources For the Future
Publication Date: March 19, 2025
Full Text: Download Resource
Description (excerpt):
Washington State is exploring linking its cap-and-invest emissions trading system with the already linked market of California and Québec. To inform the discussions, Resources for the Future analyzed auction allowance revenue and emissions both with and without linkage and studied how the range of outcomes could affect Washington’s environmentally overburdened communities designated as highly impacted by air pollution.
The analysis found that linkage would lead to greater regional emissions reductions, more regional environmental benefits, and a more affordable program because of the expanded emissions reduction opportunities across the linked jurisdictions. However, assuming no new state policy interventions, Washington’s revenue would be moderately lower and the rate of emissions reductions moderately slower.
As part of its due diligence in exploring linkage, Washington is exploring potential environmental justice consequences and has received a memo from the state’s Environmental Justice Council outlining concerns as well as a set of recommendations for how to mitigate against these concerns. In this report, the authors look at three of those recommendations:
• limit the use of banked allowances to mitigate the influence of the California Québec allowance bank on Washington’s allowance revenue and emissions;
• align offset rules to ensure environmental benefits in linked states; and
• implement a facility-specific emissions cap.