Washington state’s first Cap-and-Invest auction of the year shows growing confidence as momentum builds towards linkage with California-Québec market

Results were released today for the first auction of the year, and 13th overall, in Washington’s Cap-and-Invest program. With prices down over $5 from Washington’s last auction, today’s results may be a reflection of covered entities’ growing confidence in a future linked market, following on the release last week of a draft linkage agreement between Washington, Québec and California.

The auction showed a continuation of the strong demand seen in all of Washington’s auctions thus far, and is projected to generate $183 million in revenue for investments in communities, affordability and climate resilience in Washington State.

Cap-and-Invest 101

Washington’s Cap-and-Invest auctions are administered quarterly 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 5,315,841 current vintage allowances offered for sale by Ecology were purchased, resulting in the 13th consecutive sold out quarterly auction for Washington.
• The current auction settled at $65.26, $37.34 above the price floor of $27.92 and $5.60 below Washington’s last quarterly auction price of $70.86. Since this auction settled at exactly the Allowance Price Containment Reserve (APCR) Tier 1 price of $65.26, today’s results will trigger an APCR auction.
• This auction is projected to generate roughly $183 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 later this month.

What these results mean

Today’s results come just over a week after the release of a draft linkage agreement between California, Washington and Québec. The decline in auction prices seen in today’s results may be a reflection of improved confidence among covered entities that, upon finalization of linkage processes in each jurisdiction, they will have access to a larger pool of allowances from a future joint market with California and Québec.

California and Québec have shared a linked market for over a decade, demonstrating that well-designed linked cap-and-invest programs can lead to deeper pollution cuts while supporting economic growth. Adding Washington to this established partnership would build on a proven model and strengthen the programs of all participants. Merging into a larger market would likely lead to more stable, predictable allowance prices, which is crucial for polluters to make decisions about compliance planning and investing in decarbonization.

Washington has been making steady progress towards their linkage rulemaking, which they’re expecting to finalize in mid-2026. California has been working to update their own program rules, including updating their emissions allowance budgets, and is expected to take up its own linkage process this year as well. Linkage is a key opportunity for climate leadership for both states, to take a step that will strengthen one of our best and most cost-effective tools to reduce emissions and raise revenue for community investments.

With a draft agreement now published, Washington, California and Québec are taking a significant step towards market linkage and stronger programs that can drive long-term emissions reductions with greater certainty. Washington’s Department of Ecology is taking public feedback on the draft through May 1, and the linked market could launch as early as 2027. The need for scalable, durable climate action at the state level has never been greater, and these jurisdictions are showing how working across borders can drive meaningful progress.