Cap-and-Invest Program Updates and Linkage Rulemaking (Chapter 173-446 WAC and Chapter 173-441 WAC)
Agency
Ecology, Department of
Title of action
Cap-and-Invest Program Updates and Linkage Rulemaking (Chapter 173-446 WAC and Chapter 173-441 WAC)
Date significant agency action was initiated
Monday, March 31, 2025
Category
Significant legislative rules
Brief description of significant agency actions for which the agency is initiating an environmental justice assessment.
Last year, the Washington Department of Ecology initiated a rulemaking process to consider amendments to Chapter 173-446 WAC and Chapter 173-441 WAC that would facilitate the option of linking Washington’s carbon market with the California-Québec carbon market. We are announcing a new rulemaking today that replaces the previous rulemaking and expands the scope to include other necessary updates to the Cap-and-Invest program rules.
In this new rulemaking, as required by the Climate Commitment Act (CCA) RCW 70A.65, the Department of Ecology is still exploring the option of linking Washington’s Cap-and-Invest carbon market with the California-Québec carbon market. This linkage would create a unified carbon market across the three jurisdictions so allowances issued by California and Québec could be used by Washington businesses for compliance, and vice versa. Linkage would also allow for joint allowance auctions, a common allowance price, and the free trading of allowances between jurisdictions.
This rulemaking is needed to update Chapter 173-446 WAC and Chapter 173-441 WAC in line with these legislative changes and make other updates to ensure the rules are consistent with a potential linked market. The rule changes will not in themselves automatically establish linkage but will set the stage for future actions, such as signing a formal linkage agreement.
Additionally, The Climate Commitment Act Program Rule requires the adoption of allowance budgets for the second compliance period (2027–2030), ensuring that emissions reductions align with Washington's 2030, 2040, and 2050 greenhouse gas emissions limits. This rule will also add one additional sector —waste to energy—to coverage under cap-and-invest as required by statute.
Pursuant to the Climate Commitment Act Program Rule, Ecology will also modify and adopt rules to continue to address topics associated with imported electricity and centralized electricity markets. Ecology will consider rules relevant to allowance allocation to electric utilities.
Through this rulemaking, Ecology will make updates as necessary to improve implementation of the Cap-and-Invest Program and to ensure the rule aligns with statute.
Methods for providing public comment for agency consideration as part of the environmental justice assessment.
Ecology is initiating this environmental justice assessment and the rulemaking process and will provide engagement opportunities that include public meetings and comment periods. Ecology plans to conduct public engagement, with outreach focused on people from overburdened communities and vulnerable populations for the purpose of developing the environmental justice assessment for this rule. Ecology will also hold Tribal forums and invite government-to-government consultation with Tribes. Ecology conducted engagement for the Linkage rulemaking and the comments gathered during that process will also be used to inform this Environmental Justice Assessment. Ecology is also available to meet with individual organizations and groups at their request during the rulemaking process. As we schedule opportunities for feedback and participation, we will share them through our website and distribution list. Please visit the rulemaking’s webpage for updates. Please contact Surabhi Subedi, Climate Pollution Reduction Program Rulemaking Planner, at CPRRulemaking@ecy.wa.gov
Link to agency webpage where the action is posted.
Status
