North American Carbon Markets

Overview

North America has a fragmented but growing carbon pricing landscape. It includes federal and state programs, with significant variation between jurisdictions.

US Federal

EPA Authority

• Clean Air Act provides foundation
• Current GHG programs limited
• No comprehensive federal ETS

California-Led Initiatives

• State programs influencing others
• Washington joining
• Potential for more states

Regional Greenhouse Gas Initiative (RGGI)

Overview

• Cap-and-trade for power sector
• First mandatory US market
• 11 Northeast/Mid-Atlantic states

Coverage

• CO2 from power plants (>25 MW)
• ~50% of US power sector emissions
• ~500 million tonnes covered

Price

• Allowances ~$13-15/tonne (2024)
• Lower than California/EU
• Limited stringency

California Cap-and-Trade

Overview

• Comprehensive cap-and-trade
• Covers ~80% of state emissions
• Most comprehensive US program

Coverage

• Power sector
• Large industrial facilities
• Transportation fuels
• Natural gas

Price

• $80-100+/tonne (2024)
• Higher than RGGI
• Stringent cap

Washington State

Cap-And-Invest Program

• Launched 2023
• Similar to California
• Phased implementation

Canada Federal

Carbon Pollution Pricing System

• Federal carbon levy
• $65/tonne (2024)
• Rising to $170/tonne (2030)

Provincial Systems

• British Columbia carbon tax
• Quebec cap-and-trade
• Alberta carbon levy
• Ontario cap-and-trade

Output-Based Pricing

• Output-based system for industry
• Free allocations
• Competitiveness protection

Key Differences

Business Implications

Multi-Jurisdictional

• Compliance complexity
• Planning challenges
• Cost variability

Opportunities

• Market-based approach
• Flexibility
• Innovation incentives

Practical Guidance

For Companies

1. Map exposure: Which markets apply?
2. Monitor prices: Planning
3. Plan compliance: Allowances
4. Engage policymakers: Comments

Trends

• More states expected
• Stringency increasing
• Potential federal action

Key Takeaways

• North American carbon pricing fragmented
• California most comprehensive
• RGGI for Northeast
• Canada has federal + provinces
• Price variation significant
• Expansion expected