Climate 411

Multilateral Development Banks Must Turn Words into Action on Climate Finance

Shoreline protection in Bangladesh. IMF Photo/K M Asad 2021

By Angela Churie Kallhauge, Executive Vice President, Impact  

Addressing our planet’s climate crisis requires commitment, cooperation, and urgency – all underpinned by finance. But our international financial systems were not designed for a challenge of this scale, and we are falling behind in meeting the needs of developing countries in combatting climate change. 

In response to this challenge, the World Bank, the world’s largest multilateral development bank (MDB), adopted a reform agenda last year to become more fit-for-purpose, by providing countries with easier access to money to face the climate crisis. Other MDBs are pursuing similar transformations. 

We now need to ramp up the implementation of these reforms over the coming year. In November, the world will convene in Azerbaijan for the UN Climate Conference, COP29, to set a new target for climate finance. And unless we know how these reforms will allow MDBs to deliver and mobilize money where it’s needed most, the new finance goal may fall flat.  

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Governor Inslee moves Washington state one step closer to linking carbon market with California and Quebec

Today, the state of Washington took a big step toward linking its cap-and-invest program with the carbon markets in California and Quebec, a move that could boost climate action and create a more stable, more predictable market for all. Governor Inslee signed E2SB 6058 into law, which will further align Washington’s program with the joint California-Quebec program (known as the Western Climate Initiative) and facilitate a smoother linkage process.

This latest development builds on the momentum of last week’s joint statement from the three jurisdictions, in which they expressed their shared interest in the potential creation of a larger, linked market among them. While Governor Inslee and Washington policymakers are tackling climate change head-on and trying to strengthen the state’s carbon market, a wealthy hedge fund executive is trying to bring climate progress to a screeching halt through a ballot initiative that would end the program altogether. The contrast between the two outcomes for Washington’s cap-and-invest program could not be starker.

Here’s what you need to know about the linkage bill and what’s at stake with Washington’s program.

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Also posted in Carbon Markets, Cities and states, Energy, News, Policy / Comments are closed

Auction results and budget decisions emphasize importance of investments from Washington state’s Climate Commitment Act

This blog was co-authored by Janet Zamudio, Western States Climate Policy Intern

The last week has been eventful in Washington, seeing the end of legislative session last Thursday and the first quarterly cap-and-invest auction of 2024, which posted results today. With the legislative session wrapped up and budgets passed, we now know what additional spending lawmakers plan to do with the revenue generated by these cap-and-invest auctions thanks to the supplemental budget passed last week. And with the results from the first auction of 2024 now in the books, it seems the Evergreen State will continue to see significant revenue from this program to reinvest in communities, clean energy projects and climate resilience. There’s a lot to unpack, so let’s start with the auction results:

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Also posted in California, Carbon Markets, Cities and states, Energy, Greenhouse Gas Emissions, Health, Policy / Comments are closed

Building a greener future: How federal purchasing power can drive a low-carbon cement industry

This blog was co-authored by Dara Diamond, Federal Climate Innovation Intern

Historic climate investments from the Biden administration have put a much-needed down payment toward cutting emissions from industry — a major economic sector that makes up over a quarter of U.S. emissions. Still, a lot of hard work remains to meaningfully scale up solutions in this sector. A particularly tricky piece of the industrial emissions problem is hidden in plain sight all around us, in our buildings, sidewalks, highways and bridges: cement.

The scale of this climate challenge is colossal. Cement is the most widely used man-made material on the planet. If the cement industry were a country, it would be the third largest emitter in the world.

To slash emissions from cement production, policymakers will need to make the most of existing climate investments and put forward a range of new solutions, including putting the federal government’s massive purchasing power to work.

Here is why cement poses unique climate challenges — and how policymakers can leverage public procurement to help meet them.

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Also posted in Clean Power Plan, Energy, Greenhouse Gas Emissions, Health, Innovation, Policy, Science / Comments are closed

Cut carbon, raise cash: How New York’s cap-and-invest program could invest billions in communities

In leading climate states, you’ll find trailblazing projects that are benefiting people’s lives and cutting costly pollution right now.

In Washington, young people ride the ferry across Puget sound and buses around the state for free. In California, low-income residents get money-saving home energy efficiency upgrades at no cost. And in New York, businesses and apartments earn major rebates to install EV charging stations — with 4,000 stations installed so far.

These are just a few projects supported by funding from cap-and-invest programs. While limiting and driving down harmful climate pollution, these programs are in turn raising revenue that is re-invested in communities.

As New York develops the rules for its statewide cap-and-invest program — the third such program in the nation — a high-ambition program would give New Yorkers an exciting opportunity to shape and direct billions of potential investments each year for communities. From improving public transportation access to lowering energy bills, the possibilities are endless.

Here are just a few ways that other statewide programs, like California and Washington, are putting their revenues to work, and how New York’s participation in the Regional Greenhouse Gas Initiative (RGGI) is already funding projects around the state — investments that could be significantly expanded and scaled up with a strong statewide cap-and-invest program.

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Also posted in California, Carbon Markets, Cities and states, Energy, Greenhouse Gas Emissions, Health, Jobs, Policy / Comments are closed

One year into its cap-and-invest program, Washington state looks to build upon its landmark climate law

Photo of mountain in Washington state

Results were released today for Washington’s fourth quarterly cap-and-invest auction, which was held on December 6th. The results from this sold-out auction show continued strong demand for allowances in the program, which has brought in substantial revenue for the state of Washington to reinvest in its communities. This is the final auction of 2023, marking the end of this program’s first year of auctions, which in total have generated close to $2 billion for Washington communities. The revenue has already begun to be distributed to different projects that benefit communities across the state, including expanding public transportation in rural areas and improving pedestrian and bicyclist safety, with much more investment to come.

December auction results

At the auction, administered by the Department of Ecology (Ecology), participating facilities submitted their bids for allowances. Washington’s major emitters are required to hold one allowance for every ton of greenhouse gas that they emit, with the total number of available allowances declining each year. This declining cap requires Washington’s businesses to reduce their climate pollution in line with the state’s climate targets. Here are the results, released today:

  • All 7,142,146 current vintage allowances offered for sale were purchased, resulting in the 4th consecutive sold out quarterly auction.
  • The current auction settled at $51.89, $29.69 above the floor price of $22.20, and $11.14 below Washington’s last quarterly auction price of $63.03.
  • This auction is projected to generate roughly $370 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 January 4.

What these results mean

The settlement price for this auction is a very promising indication of strong and stable demand in the Washington market. Covered entities are still eager to acquire allowances early in the program, but the fact that this auction settled below the Allowance Price Containment Reserve (APCR) trigger price shows that those entities also feel more confident in their ability to secure enough allowances or to further reduce their emissions.

The lower settlement price in this auction compared to recent auctions could be driven by a few factors; for one, this could be the result of previous APCR auctions fulfilling their role as price stabilizers in a market with high demand. APCR allowances were budgeted out ahead of time when the cap-and-invest program was originally designed, and they’re still under the overall allowance budget set by Ecology in order to keep Washington on track with its climate targets. Making these additional allowances available at a predetermined and transparent price point through the APCR helps to stabilize allowance prices in the program, and that’s precisely why Ecology designed this feature into the program from the start. Entities who were able to secure additional allowances at the two APCR auctions held this year may have felt more confident in this auction that they don’t need to scramble to out-bid other entities to buy up allowances.

Another factor that may have driven slightly calmer demand in this auction is the recent decision by Washington’s Department of Ecology to officially pursue linkage with the joint California-Quebec market, known as the Western Climate Initiative (WCI). The December auction was the first auction to be held following this decision, and this step towards a larger, linked market with greater access to more allowances may have given covered entities more confidence in their ability to obtain allowances in the future through this broader market. Read on for more information about this milestone decision, what it means, and what’s next!

Looking ahead: Linkage and the legislative session

In case you missed it, early last month the Department of Ecology officially announced its intention to pursue linkage with the California-Quebec market. This decision is a significant milestone in the linkage process, and if California and Quebec follow suit, it would lead to a tri-jurisdictional system operated jointly by all three parties. California, Quebec, and Washington would all be able to pool their supply of emission allowances and hold shared auctions. As we’ve written previously, these jurisdictions all stand to benefit from a linked market as it can drive faster cuts in climate pollution and support a more stable, predictable market for all participants.

Before that happens though, there are a lot of things to get done. California and Quebec each have their own processes to go through and there’s some legislative fine-tuning that Ecology is planning to request in order to make the linkage process as smooth as possible.

That means potentially making small, strategic updates to the Climate Commitment Act (CCA) to build alignment with the joint California-Quebec program, with the goal of making it easier to operate as a single, linked market. The CCA is the landmark climate policy that Washington passed in 2021 that placed a firm, declining limit on climate pollution while also providing new tools for tackling local air pollution and creating the cap-and-invest market. Thanks to the CCA, Washington is one of only a few states in the nation that’s actually on track to meet its targets. Now, state leaders have an opportunity to scale up the state’s climate action by ensuring that Washington’s cap-and-invest market is ready to deliver enhanced climate and cost-savings benefits as part of a linked market.

As things progress in the legislative session, we’ll be keeping an eye on all things CCA and linkage — stay tuned for our updates and analysis!

Also posted in California, Carbon Markets, Cities and states, Energy, Greenhouse Gas Emissions, Policy / Comments are closed