On June 16, 2026, the Washington State Department of Ecology officially adopted amendments to update the U.S. Forest Offset Protocol under Chapter 173-446 WAC of the Climate Commitment Act (CCA) Cap-and-Invest Program. The rule was formally proposed in January 2026, followed by public hearings in February and March 2026. The rulemaking process began in September 2023 and included stakeholder engagement, public outreach, and multiple opportunities for comment. The CCA requires Ecology to periodically review, and update offset protocols to maintain environmental integrity and ensure they continue to deliver meaningful environmental benefits to Washington communities.
Washington originally adopted four offset protocols from California’s Cap-and-Trade Program: Ozone Depleting Substances, Urban Forest, Livestock, and the U.S. Forest Protocol. The current amendments tailor the California-based U.S. Forest Protocol to Washington’s unique forest ecosystems, timberlands, and ecological regions while incorporating the best available scientific understanding.
The U.S. Forest Offset Protocol is one of the approved compliance offset protocols under Chapter 173-446 WAC and allows eligible forest projects to generate offset credits through increased carbon sequestration or the maintenance of forest carbon stocks. The updated protocol strengthens technical robustness and carbon accounting methodologies while addressing Washington-specific factors, including forest conditions, wildfire risk, and the long-term durability of carbon storage.
Offset projects provide a limited compliance option under Washington’s Cap-and-Invest Program by supporting activities that reduce, remove, or avoid greenhouse gas emissions. In the first compliance period (2023–2026), covered entities may use offsets for up to 8% of their compliance obligations (5% Non-Tribal, 3% Tribal), decreasing to 6% in the second compliance period (2027 onward) (4% Non-Tribal, 2% Tribal). The updated U.S. Forest Offset Protocol applies to eligible forest projects on both Tribal and non-Tribal lands; however, offset credits are categorized by land ownership.
Implications for Washington & WCI Carbon Markets
The adoption of Washington’s updated U.S. Forest Offset Protocol may have significant implications for the state’s compliance market by strengthening the long-term supply and credibility of offset credits. By incorporating Washington-specific forest growth rates, regional species, ecological conditions, and wildfire risks, the updated rules establish a more scientifically robust framework for generating high-integrity local forestry offset credits. Regulated entities may use certified offsets as a limited alternative (up to a maximum of 8% of compliance obligation) to purchasing allowances, providing additional compliance flexibility and a cost-containment mechanism within the Cap-and-Invest Program. Since offset credits are traded through the secondary compliance market rather than purchased at state auctions, a predictable supply of high-quality forestry offsets can provide regulated entities with greater compliance flexibility, reduce compliance costs, and help mitigate allowance price volatility. As Ecology adjusts the supply of auction allowances to account for offset use while maintaining the overall emissions cap, a reliable offset framework becomes increasingly important as the cap tightens and allowance availability declines over time.
Recently, Washington advanced a proposal to link its Cap-and-Invest Program with the joint WCI market by 2027. Beyond Washington’s standalone market, the protocol updates may have broader implications for potential linkage with the California–Québec carbon markets where regulatory alignment particularly around offset quality and additionality, is a key prerequisite. If linkage is achieved, Washington-generated forest offset credits could become valuable compliance instruments across the broader WCI market, providing California and Québec entities with access to an additional source of high-integrity forest credits.
By adopting more stringent Washington-specific carbon accounting methods, the updated protocol better aligns with the environmental integrity standards required by the California Air Resources Board (CARB). This reduces a key technical barrier to linking Washington’s carbon market with other jurisdictions. Overall, the amendments strengthen the credibility of Washington’s carbon market while improving its readiness for future integration into a larger compliance system.
Next Steps:
- The Washington State Department of Ecology is holding public meetings to provide updates on the rulemaking process and gather stakeholder feedback. Interested parties can receive updates on upcoming meetings by joining Ecology’s email distribution list.
- ClearBlue is actively monitoring these developments. For more information regarding ClearBlue’s advisory services or market intelligence coverage, please contact us.