The governments of California and Québec have become the first in North America to link their greenhouse-gas cap-and-trade systems, enabling companies to swap GHG emission allowances or credits in a joint carbon market. The agreement, which took effect on Jan. 1, follows new regulations in both jurisdictions requiring companies to purchase credits for each tonne of carbon dioxide they send into the atmosphere.
Robin Fraser, a Toronto-based analyst with the International Emissions Trading Association, said the agreement will strengthen the carbon market in both Québec and California by expanding the trading market for participating companies, leading to cheaper emissions reductions. Fraser added that, if successful, the system could provide incentives to other states and provinces. “Other jurisdictions who may be waiting to see how it goes down may decide to create a program of their own and link with California and Québec as well.”