Washington and California Linked Carbon Markets
The two states have finalized regulatory steps to merge their carbon trading systems by 2027.
Updated on Sept. 23, 2026 in Electric Vehicles
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Washington and California have officially moved to link their carbon markets, building on a framework already shared by Quebec. This integration aims to create a more stable carbon price and accelerate emissions reductions across the three jurisdictions.
Why it matters
By combining these markets, the states aim to achieve greater price stability for businesses and drive deeper investment into emission-reducing technologies. The partnership leverages the scale of the combined economies to increase the efficiency of environmental policy.
The combined region currently represents the third-largest economy among the three involved jurisdictions. The formal linkage process follows three years of intensive analysis and public engagement.
The players
California Air Resources Board
This state agency is responsible for implementing and overseeing air quality regulations and the state's cap-and-trade program.
Gavin Newsom
As the Governor of California, he authorized the steps necessary to move forward with the carbon market linkage.
The details
Washington has aligned its auction rules with the existing California-Quebec model to ensure a unified approach to carbon pricing. Each jurisdiction will pool their supply of allowances into joint auctions, creating a singular price signal for industry participants.
Timeline
California launched its carbon market in 2013.
The partnership between California and Quebec began in 2014.
Washington established its own carbon market in 2023.
California and Washington signed a linkage agreement in 2026.
The integrated carbon market is expected to launch in 2027.
Roadmap
This move signals a broader transition toward regionalized, cross-border carbon pricing as a primary tool for industrial decarbonization. By scaling the market, the states are positioning themselves to set a continental standard for climate-related economic policy.
Businesses operating in these regions should prepare for shifts in carbon pricing and auction compliance requirements as the systems merge. Drivers and consumers may see the downstream effects through increased investment in cleaner technologies and shifts in the costs of high-emission products.
The takeaway
The move toward a unified carbon market highlights how state-level environmental policies are increasingly coalescing into larger, more stable regional blocks. Readers should watch for how this alignment influences the long-term cost and availability of low-carbon technologies.
What happens next
Quebec is scheduled to finalize its own regulatory updates throughout 2026, while the joint carbon market is expected to begin operations in 2027.
Further reading
Learn more about the infrastructure and policy shifts in our Electric Vehicles section.
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Do you support linking state carbon markets to create a broader regional carbon pricing system?
