Climate 411

As Washington state considers linking carbon market with California-Quebec, this cost-containment tool ensures that its program continues to run smoothly

Fall foliage over a Washington lake

Today, the Washington State Department of Ecology (Ecology) released the results from Washington’s second Allowance Price Containment Reserve (APCR) auction, held on November 8th. At this auction, all 5 million available APCR allowances were sold at the Tier 1 price of $51.90. This auction, along with three previous sold-out cap-and-invest auctions, continues to show strong demand for allowances in Washington’s cap-and-invest program and illustrates the important role of the APCR in providing predictability and stability in allowance prices.

APCRs: A Recap

An APCR is a price containment mechanism that was designed into Washington’s cap-and-invest program as a way to keep allowance prices stable and predictable. It functions similar to a soft price ceiling by ensuring that, if a certain price is reached in a quarterly auction, a separate number of allowances set aside for this purpose become available at a separate APCR auction. Importantly, these allowances are set aside ahead of time and are still part of the overall allowance budget set by Ecology to keep Washington on track to meet its climate targets. By making these allowances available at a transparent and predetermined point, an APCR auction helps to stabilize prices in the market overall.

Want more information about how Washington’s APCR works? Check out our blog from earlier this summer explaining this key program feature.

APCR auction results

At last week’s auction, participating entities submitted bids for APCR allowances at the Tier 1 price of $51.90. All allowances were offered at the Tier 1 price, with none available at the Tier 2 price of $66.68.

Here are the results, released today:

  • Tier Price 1: 5,000,000 allowances sold at a price of $51.90 per allowance.

In this auction, Ecology offered all APCR allowances at the Tier 1 price, rather than dividing them between Tier 1 and Tier 2 prices. There were also more allowances available at this APCR auction than at August’s APCR auction, with 5 million made available this month compared with just over 1 million in August. Ecology determined that this is an important strategy for increasing market stability by putting downward pressure on compliance costs early in the program, while many covered entities are still developing their strategies for compliance and decarbonization.

What these results mean

This was Washington’s second APCR auction and its implementation shows just how important this feature is as a price-stabilizer. In the first year of this program, covered entities are still in the early stages of figuring out and implementing their plans to reduce their emissions. As these early auctions play out, businesses are inclined to out-bid each other for allowances sooner rather than later — with the expectation that allowances will get more expensive over time. This drives strong demand in these early auctions, illustrating the utility of a cost containment mechanism like the APCR. As covered entities reduce their emissions, they’ll need fewer allowances to cover their pollution — which will lower demand and keep prices low in turn.

An APCR might not be triggered at every quarterly auction, but it was designed into the program from the beginning to keep it functioning smoothly. In doing so, Ecology created a more stable and durable program while utilizing allowances that are still part of the planned allowance budget.

Cutting costs through linkage

Earlier this month, Ecology announced its decision to pursue market linkage with the joint California-Quebec carbon market. This is great news for long-term cost containment and stabilization for Washington and, if also pursued by California and Quebec, could bring about significant advantages for all participating markets. A broader, linked market could drive deeper and faster cuts in climate pollution, lower the cost of compliance for Washington companies and support a more stable, predictable market overall. Ecology’s decision is the start of a process in Washington and we’ll be watching for further developments in the Evergreen State as well as in California and Quebec.

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

New tool equips community voices to spur a just energy transition

Community Voices in Energy logo(This post originally appeared on EDF’s Energy Exchange)

Our new website, Community Voices in Energy — a collaboration with Chicago-based Blacks in Green — equips frontline communities to participate as experts in climate and energy proceedings and influence energy investments. By ensuring that community members are able to share their direct experience on the record in public utility commission hearings, the site helps utility regulators to make rulings that lead to a more equitable, healthy and affordable energy future.

Health and economy at stake

Communities located near polluting power plants experience more health problems, including high rates of asthma and lung disease. They also have less wealth, in part because of lower property values and unaffordable energy rates. Yet frontline, BIPOC and low-income communities have historically been excluded from energy regulatory and legal decision-making spaces that directly impact their quality of life.

Energy is among the largest sources of man-made climate pollution in the world, and energy solutions that benefit communities will also be healthier for the climate. A just transition requires equitable distribution of the benefits of clean energy to communities that have been left behind in the past.

A solution emerges in Illinois

In Illinois, regulators this year alone are considering $1.8 billion in rate hike requests from utilities, much of which will repair and extend systems that would lock in fossil-powered energy for generations to come. But cleaner, more affordable, solutions are available.

Environmental Defense Fund, Blacks in Green, and Citizens Utility Board pioneered the idea of bringing community experts into energy proceedings to provide testimony that could be entered into the legal record on which all commission decisions must be based. In a 2022 decision, the Illinois Commerce Commission explicitly acknowledged that EDF and partners raised its awareness that environmental justice communities experienced longer and more frequent power outages than wealthier Chicago communities, while also having fewer resources to recover from disruptions. As a result, the Commission required the utility to address system disparities, rather than only measuring their system as a whole.

Family staring at wind turbines with a sunset

Community Voices in Energy website drives energy justice

Our Illinois win encouraged us to expand our work and develop the Community Voices in Energy website, so that our community-centered approach can be replicated and spread around the country. Community expert contributors helped to shape the trainings offered on the website to enable meaningful participation in cases, and we developed the Energy Justice Intervenor certification program to support them.

With tools to frame what a just energy system is and how to get involved, the Community Voices in Energy website equips community members to advocate for a more just and equitable system. Including lived experiences at the forefront of big energy decisions will speed the transition to an equitable, affordable, clean, and healthy energy future for everyone.

Since our launch, we have already heard from federal energy regulators and from other states where energy proceedings threaten to lock in high rates and fossil energy at a moment where we must urgently transition to a clean energy. The new Community Voices in Energy website, and the movement it supports, give hope for our energy future.

Also posted in Cities and states, Energy, Health, News, Partners for Change / Comments are closed

Washington state’s carbon market continues to raise major investments, as state leaders consider linking to California-Quebec market

Results were released today for Washington’s third quarterly cap-and-invest auction, which was held on August 30th. The results from this sold-out auction continue to demonstrate strong demand for allowances in this program, which has brought in significant revenue for the state of Washington to reinvest in its communities. These results follow on two previous sold-out quarterly auctions, as well as an auction from the Allowance Price Containment Reserve last month which raised an additional $62,491,660 while functioning as a market stabilizing feature. In total, these auctions have generated $919,564,777 for Washington communities.

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Also posted in California, Carbon Markets, Cities and states, Energy, Greenhouse Gas Emissions, Health, Policy / Read 1 Response

Washington state’s cap-and-invest program demonstrates cost containment features with special August auction

Yesterday, the Washington State Department of Ecology (Ecology) released the results from Washington’s first Allowance Price Containment Reserve (APCR) auction, held on August 9th. At this auction, all 1,054,000 of the available APCR allowances were sold at the two APCR tier prices of $51.90 and $66.68, with 527,000 allowances available at each price tier. This auction, along with two previous sold-out cap-and-invest auctions, shows continued strong demand for allowances under Washington’s cap-and-invest program and demonstrates the important role that an APCR can play in building predictability and stability into allowances prices.

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

IRA across the USA: 5 communities winning clean energy manufacturing jobs

Two clean manufacturing workers training on site.

A year since the Inflation Reduction Act (IRA) was signed into law, this historic climate legislation has already led to $278 billion in private investment that will support more than 170,000 clean energy jobs across the country.

And the work is just getting started.

Manufacturing incentives in the law, which encourage companies to build the clean energy supply chain here in the U.S., are creating manufacturing jobs and new economic opportunities for communities. According to the BlueGreen Alliance, the IRA will spur an estimated 900,000 U.S. manufacturing jobs over the next decade. The law also pairs incentives with labor standards that protect and prepare workers by requiring fair wages and apprenticeships.

Get to know some of the towns and communities around the country that are winning these major manufacturing investments and getting ready to build the clean energy technologies that will power our future.

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Also posted in Cities and states, Energy, Green Jobs, Innovation, Jobs, News, Policy / Comments are closed

To make nature financing more equitable, we must understand how NCS credits are used

This blog was authored by Julia Ilhardt, former High Meadows Fellow, Global Climate Cooperation. 

sunset over a forest

At the end of last year, 196 nations agreed to the historic Global Biodiversity Framework, which includes the goal to protect 30% of land and sea area by 2030. Still, nature is woefully underfinanced, with investments in nature-based solutions needing to double to USD 384 billion per year by 2025, according to UNEP. 

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Also posted in Carbon Markets, Forest protection, News, REDD+ / Comments are closed