California Energy Journal: Climate and Emissions

California, Washington, Quebec Publish Draft Agreement on Carbon Markets

Fri, 20 Mar 2026 18:38:16 GMT

California and Washington state released a draft agreement outlining how their carbon emissions trading programs could be linked. This step would expand the existing California–Québec cap-and-trade market and potentially create a larger West Coast carbon market.

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Under a linked system, regulated entities in each jurisdiction would be able to use emissions allowances issued by the others for compliance with their greenhouse-gas (GHG) limits. The programs would also coordinate emissions allowance auctions and maintain shared accounting systems for tracking emissions permits.

The proposed linkage agreement, published March 3, 2026 by the Washington Department of Ecology, sets out the legal and administrative framework for integrating the emissions trading programs of California, Washington, and Quebec. The release of the draft agreement begins a public review process during which state regulators must complete rulemakings and make formal findings before integrating the programs.

Expanding the existing California–Québec market

California and Québec have operated a joint cap-and-trade market since 2014 under an international linkage agreement authorized by California’s AB 32, known as the Global Warming Solutions Act of 2006. The program is part of the broader Western Climate Initiative carbon market. Washington launched its own carbon trading system in 2023 under the Climate Commitment Act, which established the state’s cap-and-invest program covering major industrial emitters, electricity suppliers, and fuel distributors.

Key provisions in the draft agreement

The draft agreement outlines governance rules and operational requirements that would apply if Washington joins the California–Québec market. Key goals of the agreement are:

regulatory harmonization for reporting GHG emissions and for the market-based program;
equivalence and interchangeability of compliance instruments to allow compliance with Québec’s, California’s, and Washington State’s own market-based program;
a transparent and data-driven calculation that attributes to Québec, California, and Washington State their respective portion of the total greenhouse gas emission reduction;
permit the transfer and exchange of compliance instruments between participants registered with each respective market-based programs using a common secure registry;
compatible market requirements for Québec’s, California’s, and Washington State’s respective market-based programs to ensure no entities in any of the programs are disadvantaged relative to their counterparts in the other jurisdictions;
joint auctions of compliance instruments;
information sharing to support effective administration and enforcement of Québec, California, and Washington State statutes and regulations.

Potential market impact

California must complete a regulatory review and make formal findings that the linked program will maintain equivalent emissions reductions and enforcement standards under state law. The other parties would also need to complete their regulatory processes. Officials from the participating jurisdictions say the goal is to complete the regulatory process and implement the linked market as early as 2027, depending on the outcome of rulemaking and public review.

The integrated system would represent the largest carbon trading market in North America and one of the most significant subnational climate policy collaborations in the United States. Policymakers say a larger market could increase liquidity and stabilize allowance prices by increasing the number of participants trading emissions permits.

CARB Approves Regulations Implementing California’s Emissions Reporting Laws

Wed, 04 Mar 2026 22:54:00 GMT

The California Air Resources Board (CARB) voted on February 26, 2026 to approve regulations implementing California’s landmark corporate climate disclosure laws, establishing compliance timelines and administrative rules for companies subject to the requirements. The regulations confirm that companies must submit their first emissions disclosures by Aug…

Bill Would Expand CARB Authority over Indirect Emissions Sources

Tue, 17 Feb 2026 22:23:44 GMT

California Assemblymember Robert Garcia introduced legislation to expand the state’s authority to regulate greenhouse gas (GHG) emissions. AB 1777 would empower the California Air Resources Board (CARB) to adopt regulations targeting emissions linked to “indirect sources,” which are facilities and land uses that attract significant mobile emissions but …

CARB Proposes Amendments to California’s Cap-and-Trade Rules

Fri, 23 Jan 2026 16:57:26 GMT

In January 2026, the California Air Resources Board (CARB) issued a set of proposed regulatory amendments to the rules governing California’s greenhouse gas trading program, now referred to as Cap-and-Invest. The proposal is designed to realign the program with California’s long-term climate objectives, including the statutory goal of achieving economy-…

Appeals Court Halts California Climate Risk Law

Wed, 19 Nov 2025 23:33:31 GMT

A federal appeals court granted an injunction against one of California’s climate reporting laws. The Chamber of Commerce and other business groups have challenged the laws on First Amendment grounds and have sought to block implementation of the laws while their lawsuit proceeds.

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On August 18, 2025, the Ninth Circuit Court of Appeals granted a request f…

Business Groups Petition U.S. Supreme Court to Pause California Climate Law

Mon, 17 Nov 2025 19:29:48 GMT

The U.S. Chamber of Commerce and other industry groups filed an emergency appeal on November 15, 2025, requesting the U.S. Supreme Court to put California’s climate reporting laws on hold while legal challenges continue, the AP reported. The laws take effect January 1, 2026.

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SB 253, known as the Climate Corporate Data Accountability Act, requires compani…

ExxonMobil Challenges California Climate Reporting Laws on Speech Grounds

Mon, 27 Oct 2025 17:54:55 GMT

ExxonMobil is challenging California’s greenhouse gas (GHG) emissions reporting laws as a violation of the company’s right to free speech. The company is asking the court to block implementation of SB 253 and SB 261, scheduled to take effect in 2026. Exxon filed the lawsuit in the U.S. District Court for the Eastern District of California on October 24,…

CARB Publishes Preliminary List of Entities Subject to Climate Reporting

Mon, 29 Sep 2025 20:09:30 GMT

The California Air Resources Board (CARB) published a preliminary list of the entities that might have to report climate emissions and climate risks starting in 2026. CARB listed 4,160 companies and is asking for feedback from entities that believe they may be subject to these requirements, or may qualify for an exemption.

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The list is preliminary, and CA…

U.S. District Judge Denies Injunction Against Climate Reporting Law

Mon, 18 Aug 2025 13:28:00 GMT

A U.S. district judge denied a motion for a preliminary injunction against California’s two climate reporting laws on First Amendment grounds. The Chamber of Commerce sought to block implementation of SB 253, known as the Climate Corporate Data Accountability Act, and SB 261, known as the Climate-Related Financial Risk Act, while their lawsuit proceeds.…

Clean Energy Groups Request California Policy Changes after Federal Tax Credit Cuts

Thu, 17 Jul 2025 18:17:39 GMT

Clean energy industry groups asked Governor Gavin Newsom and California legislative leaders to make policy changes to assist clean energy projects after the recent cuts in federal energy tax credits. The group, which includes solar and wind energy representatives, requested that the legislature and the governor “use all available tools at your disposal …

California Joins in Lawsuit over Trump’s “National Energy Emergency”

Thu, 15 May 2025 19:58:35 GMT

California is joining a coalition of 14 states in challenging President Donald Trump’s executive order on “Declaring a National Energy Emergency.” In the lawsuit, filed on May 9, 2025, the states are seeking to block the implementation of the order and prevent the expedited permitting process. The states argue that the fast-track permitting process ille…

Newsom and Legislative Leaders to Seek Extension of Cap-and-Trade Program

Tue, 22 Apr 2025 22:03:31 GMT

Governor Gavin Newsom and legislative leaders announced April 15, 2025 that they will seek an extension of California’s cap-and-trade program during the current legislative year. Unless it is extended, the state’s top climate program is scheduled to expire in 2030.

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Newsom and the legislative leaders made this decision after the Trump administration issue…

Trump Blocks Enforcement of State-Level Climate Regulations

Thu, 10 Apr 2025 15:31:14 GMT

President Donald Trump issued an executive order aimed at stopping the enforcement of state laws that were passed to address climate change. The order identified California’s cap-and-trade law as well as lawsuits against oil companies for damages from climate change. The order is part of the Trump administration’s policy to increase domestic production …

Bill Would Regulate Emissions from “Indirect” Sources

Wed, 26 Mar 2025 21:05:11 GMT

A recently amended bill in the state Assembly, AB 914, would give the California Air Resources Board (CARB) new authority to regulate emissions from “indirect sources.” An indirect source includes a facility, building, real property, or road that attracts mobile sources of pollution, like trucks and trains.

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Under existing law, CARB has primary responsibi…

U.S. District Judge Dismisses Two Claims Against Climate Reporting Law

Tue, 11 Feb 2025 22:58:32 GMT

On February 3, 2025, a U.S. District Court judge dismissed two claims in the lawsuit brought by the U.S. Chamber of Commerce and other business groups against California’s carbon reporting laws.

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A coalition of business groups filed a lawsuit challenging SB 253 and SB 261, two new California laws that require companies to report greenhouse gas emissions (…

CARB Defers Enforcement in First Year of California’s Corporate Climate Disclosure Law

Wed, 11 Dec 2024 23:31:00 GMT

The California Air Resources Board (CARB) will “exercise enforcement discretion” for 2026 under SB 253, known as the Climate Corporate Data Accountability Act. CARB said in its December 5, 2024 Enforcement Notice that it will not take enforcement action for incomplete Scope 1 and Scope 2 emissions reporting in 2026 provided companies demonstrate a “good…

California Voters Approve $10 Billion Climate Bond

Tue, 19 Nov 2024 16:10:05 GMT

On November 5, 2024, California voters approved a $10 billion bond to fund climate-related programs. The bond measure, known as Proposition 4, received approval by 59.5% of the electorate. The Legislative Analyst’s Office reported that repaying the bond would increase state costs of about $400 million annually for 40 years.

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Proposition 4 authorizes the s…

U.S. District Judge Denies Summary Judgement in Climate Reporting Case

Fri, 08 Nov 2024 16:42:00 GMT

On November 5, 2024, a U.S. district judge denied a motion for summary judgment from against California’s climate reporting laws on the claim that the laws violate the First Amendment.

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The Chamber of Commerce and other business groups have challenged SB 253, known as the Climate Corporate Data Accountability Act, and SB 261, known as the Climate-Related…

California Delays Climate Reporting until July 2025

Mon, 30 Sep 2024 15:08:37 GMT

California is delaying implementation of the state’s climate reporting laws until July 1, 2025. On September 27, 2024, Governor Gavin Newsom signed into law SB 219, which implements the six-month delay for SB 253, known as the Climate Corporate Data Accountability Act. The bill also makes changes to laws created under SB 261, which requires certain comp…

Governor Proposes Delay to Climate Reporting

Wed, 31 Jul 2024 16:14:06 GMT

California Governor Gavin Newsom proposed budget legislation that would delay the implementation of the state’s climate reporting laws by two years, until 2028. The budget trailer bill gives the California Air Resources Board (CARB) until 2027 to adopt regulations for the bill and would give companies until 2028 to report on scopes 1 and 2 emissions and…