Key Takeaways
- What’s Happening: The Washington Department of Ecology (Ecology) filed a proposed rulemaking on June 1, 2026, to amend the Climate Commitment Act Program Rule, Chapter 173-446 WAC, and the Reporting of Emissions of Greenhouse Gases (GHG) Rule, Chapter 173-441 WAC. The proposal would make broad updates to Washington’s Cap-and-Invest Program, including changes designed to enable future linkage with the California-Québec carbon market.
- Who’s Impacted: Entities that participate in Washington’s allowance market. Entities with interests in California or Québec may likewise be affected by market linkage.
- How to Respond and When: The comment period opened June 1, 2026, and comments are due July 17, 2026. Ecology’s next public hearing is scheduled for July 13, 2026, at 9:00 a.m. Ecology expects to adopt the rule on September 23, 2026, with an estimated effective date of October 24, 2026.
Summary of Proposed Ruled Amendments
Prepare Washington for Market Linkage
The proposed rules establish the framework for potential future linkage between Washington’s Cap-and-Invest Program and the California-Québec carbon market. In a linked market, compliance instruments can be used across jurisdictions, and market participants can participate in a broader joint market with common auction and trading rules.
The proposal does not automatically link Washington with California and Québec. Instead, it aligns Washington’s rules and adds procedures for formal adoption. See WAC 173-446-090. The proposal also establishes rules for suspending or revoking linkage if another jurisdiction repeals, suspends, or withdraws from its emissions trading system or linkage agreement.
Allowance Budgets and Expanded Program Coverage
The proposal sets annual allowance budgets through 2050. It also adjusts budgets for 2023 through 2026 to be consistent with Washington’s 2030, 2040, and 2050 GHG emissions limits. These budget changes are central to market planning because they affect supply, compliance costs, and auction strategy.
The rulemaking also prepares for additional sectors to enter the program in future compliance periods, including waste-to-energy facilities and railroads.
Update Reporting, Electricity, and Utility Allocation Rules
The proposed rules address imported electricity and centralized electricity markets, as well as allocation provisions affecting both electric and natural gas utilities. The proposal would update the no-cost allowance provisions and consignment requirements, including requiring utilities to transfer consigned allowances to auction holding accounts before auction. Rather than holding all allocated allowances for compliance, utilities may be required to consign a portion of those allowances to auction. Proceeds from these sales are directed back for customer or ratepayer benefit. Natural gas utilities must consign increasing percentages of no-cost allowances, reaching 100% in 2030 and every year thereafter.
Revise Market Infrastructure, Auctions, Price Controls, and Enforcement
The proposal changes several market rules, including corporate association and disclosure requirements, holding limits, allowance transfers, clearinghouse transactions, and use of future vintage allowances for compliance. These changes are intended to support linkage and promote fairness in a broader linked market.
The proposal also revises allowance reserve requirements and price control mechanisms and updates provisions governing unsold allowances. Ecology would retain certain unsold allowances for later auctions, subject to limits, and may place allowances in the emissions containment reserve if they remain unsold for specified periods. For price containment, the proposed rules require Ecology to place 2% to 5% of the 2027–2040 allowance budgets in the allowance price containment reserve. The proposal also sets the price ceiling for 2026 and 2027 at $80.
