Sep 2, 2026
North American carbon markets enter a new chapter
This week, following a multi-year effort of stakeholder engagement California's updated Cap-and-Invest Program comes into force, with Québec's corresponding amendments following on September 10, marking a major milestone for the evolution of the linked California-Québec carbon market.
For IETA, this moment reflects years of engagement with policymakers and regulators in both jurisdictions. Throughout the amendment processes, IETA and our members submitted detailed comments, technical analyses, and recommendations aimed at strengthening market integrity, preserving liquidity, supporting cost-effective emissions reductions, and ensuring the long-term durability of emissions trading as a climate policy tool.
Some key figures from California’s regulatory amendments:
- Program extended through 2045 to support meeting the state’s statutory GHG reduction targets
- 118 million allowances removed from 2027-2030 budgets
- 7% average annual decline in cap from 2031-2045
- Program expected to deliver $10 billion in electricity bill credits and $8 billion in climate and community investments in the coming years
Québec's amendments, which take effect on September 10, update and strengthen key elements of the province's cap-and-trade system while maintaining alignment with California under the Western Climate Initiative. Together, these reforms reinforce the long-term credibility and effectiveness of North America's largest carbon market.
The completion of these regulatory amendments is particularly important as California, Québec, and Washington State move towards market linkage, following the signing of a linkage agreement between the three jurisdictions. Washington State is expected to finalize its own regulatory amendments to prepare for linkage this month, aligning its program with the amendments in California and Québec. Strong, modernized regulations in California and Québec provide an important foundation for any future expansion of linked carbon markets in North America. Greater regional cooperation has the potential to enhance market liquidity, improve cost containment, and deliver emissions reductions more efficiently across jurisdictions.
IETA welcomes these significant milestones and appreciates the openness of both the California Air Resources Board (CARB) and the Government of Québec throughout the consultation processes. As implementation begins, we look forward to continuing our collaboration with regulators and stakeholders to support transparent, efficient, and cost-effective carbon market design. We are excited to convene state leaders from California, Québec, and beyond later this month at the North America Climate Summit to celebrate recent success and continue progress.