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    • Climate 411

    Blogging the science and policy of global warming

    Washington’s latest cap-and-invest auction shows growing confidence as linkage processes move forward

    Posted: in California, Carbon Markets, Cities and states, Greenhouse Gas Emissions, News, Policy

    Written By

    Caroline Jones
    Caroline Jones

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    Summary

    • Washington’s 14th consecutive sold-out auction settled at $64.56, generating roughly $233 million for climate, jobs and air quality investments across the state.
    • Prices fell below the APCR trigger price for the first time in a year, continuing a trend of lower prices as market confidence grows in line with continued progress towards linkage with California and Québec.
    • Linkage would create a broader regional market, stabilize allowance prices for covered businesses and enable deeper regional emissions cuts than any jurisdiction could achieve alone.

    Results were released today for the second auction of the year, and 14th overall, in Washington’s Cap-and-Invest program. The auction, conducted last week, followed shortly after Washington’s Department of Ecology officially launched its formal rulemaking process to link Washington’s Carbon Market with the California-Québec market.

    This is the second major linkage milestone achieved this year; in March, Washington, California and Québec released a joint draft linkage agreement, which lays out the logistics of integrating Washington into the California-Québec market.

    Cap-and-Invest 101

    Washington’s Cap-and-Invest auctions are administered quarterly by the Department of 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 climate pollution 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.

    June auction results

    • All 2,800,000 current vintage allowances offered for sale by the Department of Ecology were purchased, resulting in the 14th consecutive sold out quarterly auction for Washington.
    • The current auction settled at $64.56, $36.64 above the price floor of $27.92 and $0.70 below Washington’s last quarterly auction price of $65.26. Since prices did not reach the Allowance Price Containment Reserve Tier 1 price of $65.26, this auction will not trigger an APCR auction.
    • All 1,750,000 future vintage allowances offered for sale by the Department of Ecology were purchased at a settlement price of $30.00, $2.08 above the price floor of $27.92 and $0.60 above the last settlement price for future vintages.
    • This auction is projected to generate roughly $233 million in revenue, which will be invested into Washington communities to enhance climate resilience, create jobs and improve air quality. A report from the Department of Ecology confirming the amount of revenue raised in this auction will be published later this month.

    What these results mean

    Today’s results, which settled below the APCR trigger price for the first time in a year, continue the gradual cooling trend in the Washington market which began earlier this year following the release of a draft linkage agreement between Washington, California and Québec.

    This second quarterly auction was conducted just a few days after the announcement on June 1 that the Washington Department of Ecology was launching its formal rulemaking process on linkage, and the auction results seen today may reflect the growing 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.

    Background on linked markets

    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.

    Linking these three markets would bring about significant advantages for all participants, including:

    Looking ahead

    Linkage is a key opportunity for climate leadership for Washington, California and Québec, 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 Washington’s linkage rulemaking underway, we expect to see similar steps taken by Québec and California in the coming months.

    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.

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