California Governor Gavin Newsom has authorized regulators to begin the formal process of linking the state's carbon market with Washington's Cap-and-Invest program, building on the existing California-Quebec linkage. Washington has already completed its regulatory changes to align with the current system. The three jurisdictions signed a linkage agreement in June and expect the expanded market to become operational in 2027, pending remaining steps in California and Quebec. A linked market would allow companies in any participating jurisdiction to use compliance instruments from the others, creating a larger and more flexible trading pool. Washington's governor's office notes that the combined economy of the three regions would be roughly the size of the world's third-largest national economy. The next year will be critical as California's Air Resources Board moves through rulemaking and Quebec finalizes its own procedures.
