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With climate policy under attack at the federal level, it’s more important than ever that state leaders deliver real action that lowers pollution, creates jobs and expands affordable clean energy. Washington state’s cap-and-invest program continues to show the power of state policies that cut pollution and raise funds for their communities.
Results were released today for Washington’s first cap-and-invest auction of the year, 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 landmark climate law that sets a binding, declining limit on pollution — major emitters in Washington are required to hold one allowance for every ton of greenhouse gas they emit, with the total number of allowances decreasing each year. This system requires Washington’s polluters to reduce their emissions in line with the state’s climate targets, as fewer allowances become available annually.
March auction results
- All 4,600,000 current vintage allowances offered for sale by Ecology were purchased, resulting in the 9th consecutive sold out quarterly auction. This is 712,871 fewer allowances than were offered by Ecology at the last auction. No future vintage allowances were offered in this auction.
- The current auction settled at $50.00, $24.15 above the price floor of $25.85 and $9.74 above Washington’s last quarterly auction price of $40.26.
- This auction is projected to generate roughly $230 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 April 2.
What factors may be at play with these results?
This month’s auction is the second held since voters decisively rejected an attempt to repeal the cap-and-invest program in November, and today’s results demonstrate the program’s durability. The December auction, conducted soon after the defeat of the ballot initiative, saw prices rise as market participants adjusted to greater confidence in the program’s future. Today’s results build on that trend, with a price increase signaling continued strong demand for allowances, as covered entities prioritize compliance and long-term planning in a program where the number of available allowances declines annually.
The revenue generated from Washington’s cap-and-invest auctions is a vital driver of the state’s climate and economic goals, funding transformative projects that cut emissions, enhance climate resilience and improve public health. The roughly $230 million generated by this quarter’s auction will go towards critical investments in communities all across the state, supporting initiatives such as electrified public transportation, expanded renewable energy infrastructure, wildfire prevention and air quality improvements. Importantly, the Climate Commitment Act ensures that a significant portion of these funds directly benefits vulnerable and overburdened communities. With each auction, Washington secures additional resources to tackle the climate crisis while fostering job creation and economic opportunity statewide.
Looking ahead, linkage with the California-Quebec market remains a promising opportunity to further enhance market stability and reduce regional emissions. The Climate Commitment Act was designed with the intent to be compatible for linkage with California and Quebec, and leaders in all three jurisdictions have expressed their interest in exploring linkage. Washington has continued to take steps toward linkage, including initiating a rulemaking process and hosting a series of public workshops on the topic. With this next step on the horizon, these three jurisdictions have the opportunity to strengthen their programs and demonstrate the power of regional cooperation in tackling climate change — which is needed more than ever in the face of federal attacks on climate policy.