---
title: "2026 Carbon Market Fundamentals, Pricing Trends and Sentiments: California and US Subnational Markets"
description: New analysis from IETA and OPIS explores market sentiment, price expectations and the policy developments influencing California, Washington and RGGI.
---

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### **2026 Carbon Market Fundamentals, Pricing Trends and Sentiments: California and US Subnational Markets**

#### Download 2026 Carbon Market Fundamentals, Pricing Trends and Sentiments: California and US Subnational Markets

Executive Summary

This joint publication by the International Emissions Trading Association (IETA) and OPIS, a Dow Jones company, provides OPIS pricing data and market intelligence, and an initial view of market sentiment across U.S. subnational states and jurisdictions during a period of regulatory transition. From the expected linkage of California, Québec and Washington’s carbon markets to Virginia’s reentry into the Regional Greenhouse Gas Initiative, U.S. states and programs will continue to navigate complex regulatory shifts throughout the remainder of 2026 and into 2027. This report is an initial publication regarding market sentiments and expectations. As the policy landscape continues to change and solidify, IETA and OPIS will partner to launch a more comprehensive carbon market report in Q1 2027.

## **Key Findings:**

- **Historical Price Drivers:** Over the past few years, California Carbon Allowance (CCA) market trade levels were varied and depended on contemporary events (e.g., unexpected delays in proposed program review, proposals for new regulations, program extensions). As current regulatory uncertainties begin to resolve, CCA market sentiment shifts toward a more bullish outlook through 2030 and beyond.
- **Price Expectations:** OPIS’s short-term price forecast for V26 Dec 2026 CCA is between $35-40/mt by the end of 2026, aligning with price expectations of some survey respondents, although the majority of respondents expect the V26 CCA Dec26 contract to trade between $30-$35/mt.
- **Market Fundamentals:** Driven by the state's steep cap decline rate and the program's limited market size relative to California and RGGI, the majority of respondents identified Washington as the U.S. subnational market with the strongest fundamentals
- **Policy Drivers of Outlook:** Key policy developments shaping sentiment include the post-2030 emissions cap trajectory, market linkage procedures (between California, Washington, and Québec) and federal climate policy. This also includes, but is not limited to, state-level complementary emissions reductions strategies and interactions. California’s low-emission vehicle regulations, for example, are undergoing legal challenges (at the time of publication) which impact the state’s mitigation approach.
- **Regulatory Uncertainty Remains:** The Manufacturing Decarbonization Incentive remains a secondary, yet critical, variable. While intended to address industrial leakage and support decarbonization, its implementation is currently subject to legal scrutiny and stakeholder engagement, contributing to market caution.

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