Political Signals from Washington D.C. to Ottawa
At last week’s United Nations General Assembly, President Donald Trump once again dismissed climate change as a “scam.” While the rhetoric itself is not new, this framing risks setting a negative tone for U.S. climate progress. It signals to international partners and domestic actors that federal support for emissions reductions could remain fragmented, or even roll back.
For carbon markets, the consequences are indirect as states still retain autonomy to implement their own programs; however, negative rhetoric from the federal administration can make this more politically challenging. State-level programs, such as California’s Cap-and-Trade, Regional Greenhouse Gas Initiative (RGGI), and Washington’s cap-and-invest system, depend on political momentum and investor confidence to drive long-term emissions reductions. Federal dismissal of climate policy can undermine that momentum, creating uncertainty about how ambitious or durable state markets can be.
State Authority and Market Resilience
Still, states continue to hold the authority to chart their own course. Just this month, California confirmed it will extend its Cap-and-Trade Program through 2045, reinforcing its commitment to carbon pricing as a cornerstone of its climate strategy. Governor Newsom's signing of the extension legislation will pave the way for the Program Review workshop, which is designed to strengthen the state-level program. Moves like this highlight that, despite negative signals from the federal administration, states can still continue to lead climate policy and action.
Canada’s Climate Gap
Meanwhile, north of the border, Canada is increasingly under pressure to confront a reality: we are not on track to meet our targets. A recent report from the Canadian Climate Institute estimates that Canada is not on course to reduce emissions, falling far short of the legislated goal of 40–45% below 2005 levels by 2030. At New York Climate Week, panelists warned that Canada’s patchwork of carbon pricing systems is a major barrier to scale and efficiency in reducing emissions. This fragmentation matters. Without a consistent national signal, the lack of harmonization constrains investment decisions, complicates trade, and limits the fungibility of emissions reductions.
Ottawa’s Next Move
Prime Minister Mark Carney has reaffirmed his commitment to industrial carbon pricing as the backbone of Canadian climate policy. A 2026 interim review of the federal benchmark is already scheduled, and Ottawa has signaled that it intends to use this review to strengthen and harmonize provincial and federal systems.
ClearBlue Markets is closely following these developments. Part 1 of our special 2-part report examines how the federal benchmark is shaping provincial systems and where key risks and divergences are emerging. For a copy of the report and to learn about how the benchmark review may impact your facility’s carbon position and financial exposure, please reach out to us here or contact nvij@clearbluemarkets.com.