The Western Climate Initiative is internationally recognized as a success story in global climate negotiations. However, between the first expression of the idea of a cap-andtrade system in 2007 and the launch of carbon trading in 2013, the number of participating Canadian provinces and US states fell from 11 to 2, and important hurdles risked derailing the project completely. The trajectory of this innovative cross-boundary policy holds important lessons for the prospects and pitfalls of green paradiplomacy in North America. This paper examines the impetus for subnational efforts to combat climate change in the face of federal inaction, and, through detailed examination of the WCI, looks at jurisdictional, administrative, legal, political, social and economic factors that complicate the implementation of these initiatives. The analysis enables a better understanding of prospects for the establishment of norms, rules and institutions among North American federated states that can provide durable environmental regimes.