Results were released today for Washington’s second quarterly auction of 2024, administered last Wednesday by the Department of Ecology (Ecology). During the auction, participating entities submitted their bids for allowances. Under the Climate Commitment Act, Washington’s major emitters are required to hold one allowance for every ton of greenhouse gas that they emit, with the total number of allowances available declining each year. This requires polluters in Washington to reduce their emissions in line with the state’s climate targets. By distributing allowances via auction, the state can both regulate emissions and raise important revenue to invest in frontline communities, accelerate clean job creation, and more.
Here are the results, released today:
June auction results
- All 5,260,000 current vintage allowances offered for sale by Ecology were purchased, resulting in the 6th consecutive sold out quarterly auction.
- The current auction settled at $29.92, $5.90 above the price floor of $24.02 and $4.16 above Washington’s last quarterly auction price of $25.76.
- This auction is projected to generate roughly $157 million in revenue, which will be invested into Washington communities to enhance climate resilience, create jobs, and improve air quality. A report from Ecology confirming the amount of revenue raised in this auction will be published on July 3.
What factors may be at play with these results?
Today’s results saw the market bounce back a bit from the lower price of this year’s first quarterly auction. A few factors could be at play with these results, the first of which, as always, is general market variability. This is still a relatively young market and price variability is to be expected in the first few years of this kind of program. Additionally, potential changes to the program — such as linkage with the joint California-Quebec cap-and-trade market, known as the Western Climate Initiative (WCI) — could be affecting market behavior.
Washington has made steady progress towards linkage over the past several months, including passing a law making small programmatic tweaks to further align Washington’s market with the WCI. Most recently, the Department of Ecology announced last week that they’ll begin holding public workshops on a linkage rulemaking this summer. A broader linked market could bring about significant benefits for all participating jurisdictions by supporting a more stable and predictable market that can drive deeper and faster cuts in climate pollution. Washington’s progress towards linkage could be building confidence among covered entities in the program’s long-term viability and might have driven slightly higher allowance bids.
Another potential factor affecting the market in Washington could be Initiative 2117 — one of several ballot initiatives backed by a wealthy hedge-fund executive — which seeks to completely repeal the Climate Commitment Act (CCA). Although prices settled higher today compared with last month, they’re still well below the prices seen last fall. There are many factors influencing these prices, but the uncertainty created by the possibility of the program being terminated could be having an impact on the market it enables. A repeal of the CCA would be a devastating blow to Washington communities, who are only just starting to see the benefits from improved air quality and investment from auction revenue into climate resilience, clean jobs and pollution reduction measures.
How cap-and-invest revenue is benefitting Washington
The revenue raised in this auction, along with Washington’s past and future auctions, is going to fund critical community investments in clean energy, clean air, wildfire prevention, ferry electrification, road and bridge improvements, vehicle charging infrastructure, a cleaner power grid and much more. There are thousands of projects in the works all across the state and hundreds of community programs underway to enable a just and clean transition for Washington — all of which are threatened by the potential repeal of the CCA through ballot measure I-2117. The CCA has also allowed Washington to unlock significant additional federal funding for climate projects, which could be redirected to other states if the CCA is repealed, further depriving Washington residents of the benefits that the CCA is set up to deliver.
As revenue from Washington’s quarterly auctions provides funding for more and more critical projects around the state, the costs of repealing the Climate Commitment Act become clearer and clearer. Rising average temperatures are, once again, expected to set heat records this summer, making the need for meaningful policy that cuts climate pollution and makes communities healthier and more resilient more evident than ever.