The joint California-Quebec climate market, known as the Western Climate Initiative (WCI), is on tenterhooks going into 2025, stymied by rulemaking delays but on the cusp of a more mature phase.
Both California and Quebec are eyeing more-stringent future programs and have floated a series of changes over the past year and a half designed to achieve those goals.
The California Air Resources Board (CARB) is considering moving its program's mandate from the present 2030 target of a 40pc reduction in greenhouse gas (GHG) emissions, compared with 1990 levels, to a 48pc reduction to keep the state on target to meet its 2045 goal of net-zero emissions. In line with this increased ambition, CARB will need to remove at least 180mn metric tonnes (t) of allowances from the 2026-2030 auction and allocation annual budgets to start with, and up to 265mn t in total from the program budgets from 2026-2045.
CARB has floated other changes, including toughening corporate relationship disclosure requirements, increasing the program's cost-containment allowance price tiers and updating a portion of the program's carbon offset protocols.
Quebec has considered removing 17.5mn t of allowances, which correspond to carbon offset uses for compliance in the province over 2013-2020. The Quebec Environmental Ministry proposed to address this by removing these allowances from the province's 2025-2030 auction budgets in a November 2023 workshop.
Quebec is also mulling changing the current three-year compliance period to align with statutory 2030 and 2050 GHG targets. But this a move that California, which had discussed similar compliance period changes in April, has not revisited since.
Quebec is considering tapering the limit for carbon offset use for compliance in the province by 2030 and transitioning over to a provincial reduction purchase mechanism in 2031, although regulators have not gone in-depth on how a replacement system would function.
The WCI rulemakings have been marked by a series of delays over this year, pushing past projections from the end of last year that it would finalize program changes by the second half of 2024.
Quebec, which was set to deliver a draft of program amendments in September, rescheduled to early 2025, with implementation expected in spring 2025. While the regulation was nearly complete in late September, the Quebec Environmental Ministry chose to postpone, since it cannot publish before California, said Jean-Yves Benoit, the agency's director general of carbon regulation and emissions data.
CARB has signaled it intends to publish its package of rulemaking amendments in early 2025.
The agency on 19 December confirmed it expects to "complete and release the regulatory package for a 45-day public comment period" in early 2025 but did not explain the delay. The agency may be waiting for a formal extension of the cap-and-trade program when the legislature resumes on 6 January.
California lawmakers have given CARB explicit authority to utilize a cap-and-trade system to reduce GHG emissions out to 2030. CARB maintains it has authority to operate a cap-and-trade program past 2030, but program participants have stressed the need for formal certainty around the program to aid future planning. CARB will begin invoking the post-2030 budgets starting in 2028 for the program's advance auctions.
The various delays have compressed the timelines California and Quebec must achieve their statutory target ambitions, making 2025 a potentially pivotal year.
