On April 10th, California Governor Jerry Brown approved a proposal to link California’s carbon market system with a similar program in Quebec, a step that would allow companies to trade carbon permits across borders. Starting next January, both carbon markets will be interconnected allowing more than 350 companies in the U.S. and 75 firms in Canada to buy and sell emissions permits.
Governor Brown sent a letter on Monday to the California’s Air Resources Board (CARB) where he confirmed that California’s carbon market had met all the minimum requirements to share its emissions trading platform with Quebec.
The benefits gained from both systems joining are numerous. California’s Air Resource Board has stated that a link with Quebec would expand investments in low-carbon technologies, many of which are being already developed in California. Also, a link between systems would further improve market liquidity for carbon allowances by increasing the pool of both permits and companies trading them. Moreover, the reduction in CO2 emissions achieved by combining the two programs would be larger than cuts made by both systems trading alone.
California launched its trading platform six months ago, in the hope that their carbon market would be part of a Western states unified system. However, no other state has stepped up to the plate and committed to run a similar market. So far, only the Canadian province has decided to join in. The hope is that, with a link between Quebec and California, more states will follow.
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