California carbon market to include Quebec in 2014
On Monday Governor Jerry Brown published a letter supporting the California carbon market’s proposed linkage with Quebec.
Quebec has shown interest in joining the California carbon market for some time, and initially hoped to link this year.
Instead, Quebec will hold a practice joint auction with the California carbon market in order to test their combined platforms.
The California carbon market is already the second largest emissions market in the world, behind only the European Union’s, and the addition of Quebec provides additional volume.
Quebec aims to reduce emissions to 20% below 1990 levels by 2020, which is an even more aggressive target than California’s goal of achieving 1990 emission levels by 2020.
This will likely make Quebec a net purchaser of carbon allowances and offset credits, further driving demand for these compliance instruments.
Earlier this year Thomson Reuters analysts forecasted that the California carbon market would be valued at $2.3 billion this year, perhaps taking into account the likely market expansion into Canada.
Last month Washington state legislators began developing strategies to reduce state emissions and a successful link between the California carbon market and Quebec could spur Washington to further expand the North American carbon market.
The California Air Resources Board expects Quebec to join the market in 2014, when it will begin participating in quarterly allowance auctions.