Program Linkage

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California’s Cap-and-Trade Program is currently linked with the Cap-and-Trade System of Québec.  This linkage commenced on January 1, 2014.  Background information on the linkage with Québec and the required regulatory processes for linkage can be found below.  An archive version of this webpage is also available.

The Cap-and-Trade Regulation includes general requirements for linking to other trading programs.  To enable the mutual acceptance of compliance instruments from another emissions trading program, California must initiate a public process to amend the Cap-and-Trade Regulation.  Linkage allows for the use of compliance instruments from an external greenhouse gas emission trading system to meet compliance obligations pursuant to the California Cap-and-Trade Regulation, and the reciprocal approval of compliance instruments issued by California to meet compliance obligations in the external trading program.  Any staff recommended amendments for Board consideration will go through a full rulemaking process as required under the Administrative Procedure Act and the linkage must meet the requirements of Senate Bill 1018.

General Linkage Information

Linkage with Québec Cap-and-Trade System

In May 2012, CARB released proposed amendments to the Cap-and-Trade Regulation to approve a linkage between the California and Québec Cap-and-Trade Programs. Subsequent to the release of the proposed amendments, the Legislature enacted Senate Bill 1018, which requires state agencies to notify the Governor if the agency intends to take action to link with another ETS, and the Governor to make specified findings prior to the agency taking action to approve the linkage.

In February 2013, CARB’s Executive Officer sent a letter to Governor Edmund G. Brown Jr. requesting that the Governor consider and make the SB 1018 findings for linkage with the Québec Cap-and-Trade System.  The Governor issued the SB 1018 findings in April 2013 and directed CARB to take a number of additional steps prior to linkage, including preparing a linkage readiness report.  In October 2013, the proposed amendments to the Cap-and-Trade Regulation were approved, recognizing instruments from Québec starting on January 1, 2014. The linkage itself was effectuated through this regulation amendment. CARB and the Government of Québec also developed a non-binding agreement expressing their intentions to continue consulting and coordinating with each other related to the already-adopted linkage. In November 2013, Chair Nichols transmitted the linkage readiness report to the Governor.  Pursuant to California’s regulatory process, California’s Cap-and-Trade Program linked with Québec’s Cap-and-Trade System on January 1, 2014.

California-Québec Linkage Documents

Other background documents

Linkage with Ontario Cap-and-Trade Program

California and Québec also linked their Cap-and-Trade Programs with the ETS in Ontario for the first half of 2018. Similar to the process CARB undertook when proposing linkage with Québec, CARB requested the Governor make the SB 1018 findings regarding Ontario’s cap-and-trade program in January 2017. At the same time, CARB proposed amendments to the Cap-and-Trade Regulation to link with Ontario. The Governor made the required findings in March 2017 and the Board approved the amendments to the Cap-and-Trade Regulation in July 2017. Linkage of California’s Cap-and-Trade Program with Ontario’s Cap-and-Trade Program occurred on January 1, 2018.

On July 3, 2018, the Ontario government published a regulation (386/18) revoking Ontario’s Cap-and-Trade Regulation (144/16), and suspended all Ontario entity accounts.  With Ontario’s departure from the linked carbon market, California and Québec worked together to ensure that the environmental integrity and stringency  of each respective cap-and-trade program and market was maintained.  CARB’s goal was to make certain that California’s program continued to reduce emissions of climate-changing gases as a crucial part of California’s efforts to combat the existential threat of climate change, while also continuing the smooth operation and integrity of the linked California and Québec carbon market. In December 2018, the Board approved amendments to the Cap-and-Trade Regulation to remove Ontario as a recognized linked ETS.

California-Ontario-Québec Linkage Documents