Climate 411

The auction results are in: Washington state’s cap-and-invest program is off to a strong start

By Caroline Jones / Bio / Published: March 7, 2023

This blog was co-authored by Delia Novak, Western States Climate Policy Intern, U.S. Region

Today, the Washington State Department of Ecology (ECY) released the results from Washington’s first cap-and-invest auction held last Tuesday, February 28. The results of this auction indicate long-term confidence in the program from covered entities and are an encouraging sign of what’s to come from the Evergreen State. Additionally, the ECY summary report shows that the auction operated smoothly, with oversight and regulatory mechanisms in place to ensure the integrity of the auction and ease of interface for bidders.

This inaugural quarterly auction marks a critical milestone for Washington’s cap-and-invest program, which sets the most ambitious limit — or cap — on climate pollution of any state in the nation through mid-century. Put simply, it’s where the rubber meets the road on progress toward the state’s climate goals. During the auction, Washington’s major polluters purchase emissions allowances to cover their climate pollution. The requirement to hold one allowance for every ton of greenhouse gas pollution emitted creates a strong incentive for polluters to find ways to reduce their emissions as the number of available allowances shrinks over time in line with the declining pollution limit. This is also the first time that Washington’s cap-and-invest program has raised revenue from the sale of allowances — revenue that will be invested in Washington’s communities to slash pollution and build climate resilience. (For more background on Washington’s cap-and-invest program and auction process, check out our recent blog.)

February auction results

At the auction, administered by the Department of Ecology, participating facilities submitted their bids for allowances. Each regulated business that emits over 25,000 metric tons of carbon annually is required to hold one allowance for every ton of greenhouse gas that it emits. Here are the results, released today:

All 6,185,222 current vintage allowances offered for sale were purchased. This was a sold out auction!
The auction settled at a price of $48.50, $26.30 above the $22.20 floor price. This was well below the price ceiling of $81.47.
The February auction generated almost $300 million USD ($299,983,267 to be precise), which will be invested in efforts to further decrease Washington’s climate pollution and increase resilience to climate change.

(Wondering more about how auctions work in Washington? Check out our 2023 FAQ on auctions.)

What these results mean

The results of this auction are a strong vote of confidence from participating polluters and businesses, demonstrating trust in the longevity of this program and its potential to make a meaningful impact on reducing Washington’s emissions. The final settlement price, $48.50, is a positive indicator for the future of Washington’s cap-and-invest program. It demonstrates strong demand for allowances, but stays well below the program’s predetermined price ceiling. Moreover, by selling out of allowances, Washington is increasing the proceeds that can be invested back into communities — nearly $300 million from this first auction alone.

Essentially, this auction shows that regulated businesses are taking this market seriously: there was strong demand for allowances, demonstrating confidence that this program — and the ambition of Washington’s climate policy — are here to stay.

What’s next

Over the next two years, these auctions are projected to generate $1.7 billion in revenue, which will then be invested in efforts to further reduce Washington’s climate pollution. The Climate Commitment Act requires more than one-third of the revenue to be invested in environmental and economic benefits for disproportionately-impacted communities. As for the remaining revenue, the Washington Legislature will determine how to allocate it for climate and clean energy projects that can unleash more good-paying clean energy jobs, strengthen climate resilience and build healthier communities. The proposed spending for auction revenue will likely be coming out in late March.

As Washington looks to continue securing cost-effective pollution reductions through its cap-and-invest program, it could pursue linking programs with the Western Climate Initiative (WCI), which currently includes cap-and-trade programs in California and Quebec. Linkage between Washington’s market and the joint California-Quebec emissions market could bring about key benefits for all participating markets, including bringing down (and generally stabilizing) allowance prices for covered polluters and businesses in Washington and enabling deeper cuts in climate pollution.

When carbon markets link, the common carbon price across linked systems expands allowance trading partnerships and reduces price fluctuations. This results in a more efficient system with a greater pool of available opportunities to reduce emissions, which means more savings across the board. As we saw when California and Quebec linked, program linkage was able to deliver more regional emission reductions at lower costs than either jurisdiction would have achieved alone. Economic modeling published by Washington’s Department of Ecology indicated that linkage with the Western Climate Initiative could cause a significant drop in the initial prices of allowances in a new system like Washington’s.

This inaugural auction shows that Washington’s program is off to a strong start, though it’s important to remember that this is only the beginning. We’ll learn more as trends in the auction results develop over time — especially as regulated businesses face compliance deadlines and continue to implement their pollution reduction strategies. For more in-depth analysis on Washington’s auctions, stay tuned to this blog series for quarterly auction updates from EDF.

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

4 reasons why Colorado legislators should strengthen the state’s climate targets

By Katie Schneer / Published: February 13, 2023

Photo Credit: Getty Images

This blog was co-authored by Alex DeGolia, Director, U.S. Climate.

Last month, Colorado’s Senate Transportation and Energy Committee approved SB 23-16 — a wide-ranging bill that strengthens Colorado’s commitment to cut statewide climate pollution beyond 2030. It would put new targets in law requiring cuts of at least 65% by 2035, 80% by 2040, 90% by 2045, and strengthen the state’s 2050 target to ensure a 100% cut in pollution by 2050.

This climate bill arrives at a moment of great urgency and opportunity for the state.

As Colorado faces down the consequences of more climate change-fueled impacts, like droughts and wildfires, Coloradans are looking to their leaders to raise the state’s climate ambition and secure a safer, healthier future for their communities. At the same time, Colorado now has more opportunity than ever before to make that ambition a reality, thanks to billions in federal climate and clean energy investments from the Inflation Reduction Act.

Here are 4 reasons why the legislature should pass these ambitious climate targets:

Also posted in Cities and states, Greenhouse Gas Emissions, News, Policy / Read 2 Responses

The ambition-raising opportunity of reducing methane emissions

By aalpert / Published: September 21, 2022

This blog was authored by Alice Alpert, Senior Climate Scientist at EDF.

Evening silhouette of oilfield pipeline. Source: Getty Images

Meaningful methane emission reductions are not only possible—such efforts can potentially have a massive impact on warming.

Readily available methods to reduce methane can deliver a whopping 0.25°C of avoided temperature rise by 2050. This year the Intergovernmental Panel on Climate Change (IPCC) stated that reductions of methane emissions would also lower peak warming and reduce the likelihood of overshooting the warming levels described in the Paris Agreement. In pathways limiting warming to 1.5°C, methane is reduced by around 33% in 2030 and 50% in 2050. But not all countries define methane targets or even include methane in their Nationally Determined Commitments (NDCs).

The Global Stocktake process, also called the Paris Agreement’s ambition “ratchet,” allows countries to assess collective progress toward the Paris Agreement’s long-term goals on mitigation, adaptation, and finance. A successful stocktake will help countries implement their existing climate commitments and provide the impetus and information necessary for them to raise the ambition of their next NDCs. EDF is collaborating on an extensive project with C2ES to help shape the Global Stocktake process by highlighting opportunities to scale up climate ambition.

As work in the Global Stocktake continues toward its conclusion at next year’s COP28, it’s important for all NDCs to include methane-specific targets, and policies and strategies to achieve those targets. Read More »

Also posted in Climate Change Legislation, Energy, International, Policy, United Nations / Comments are closed

Unlocking the planet-saving potential of crediting natural climate solutions

By Devyani Singh / Bio / Published: April 22, 2022

With contributions from Julia Paltseva, senior analyst, Britta Dosch, analyst, and Christine Gerbode, senior research analyst, all at Environmental Defense Fund.

Gardens of the Queen archipelago off the coast of Cuba

Earth’s forests, oceans, wetlands and other natural landscapes have the power to pull carbon out of the atmosphere and to store it – making well-managed ecosystems key resources in the fight to halt climate change. The latest report from the Intergovernmental Panel on Climate Change found protecting these resources offers one of the highest mitigation potentials.

Efforts to keep healthy ecosystems intact, restore those that have been cleared or degraded, and improve how these landscapes are managed can have huge benefits to people and the planet, like improving water quality or protecting biodiversity. When these efforts also increase carbon storage or avoid greenhouse gas emissions, they are known as natural climate solutions, or NCS.

Healthy ecosystems around the world are disappearing rapidly, as more of the planet is degraded or converted to other uses. This continued loss could have dire consequences for the entire globe through its effect on climate, while doing particular harm and injustice to the Indigenous and local communities who have historically stewarded many of these crucial environments.

Scaling up global funding and support for NCS activities is an opportunity to limit climate damage while enhancing and protecting the enormous good these ecosystems provide – and benefiting the local people carrying out these important tasks.

One way to do this is to incorporate NCS activities into global carbon markets by crediting emissions. Environmental Defense Fund is now leading a collaborative process to lay out the key considerations and challenges of supporting NCS with the potentially powerful tool of crediting emissions reductions and removals—and of making sure the systems to support this tool are ethical, equitable and effective at the much larger scales of ambition needed to meet the moment.

Also posted in Carbon Markets, Forest protection, Indigenous People, Plants & Animals / Comments are closed

Getting to net zero: New policy insights on the role of carbon management strategies

By Natasha Vidangos / Bio / Published: March 31, 2022

This blog was originally co-authored with Jake Higdon, former Manager for U.S. Climate Policy at EDF.

This summary for policymakers, based on new modeling from Evolved Energy Research, shares insights on the potential role of carbon removal and carbon capture strategies in reaching net-zero emissions in the U.S.

Emerging technologies to capture carbon are gaining traction at the federal level – evidenced by the new innovation investments in the bipartisan Infrastructure Investment and Jobs Act, the Department of Energy (DOE)’s re-organized Office of Fossil Energy and Carbon Management, and DOE’s Earthshot initiative to substantially cut the cost of carbon dioxide removal. However, it is hard to predict what role these technologies will play in reaching President Biden’s net-zero emissions goal when they are currently at different stages of development and vary widely in cost.

While harnessing widely available, cost-effective solutions we have at our fingertips right now is the unquestionable priority for tackling climate change, there are aspects of our carbon pollution problem that cannot be addressed with clean energy and efficiency solutions today. This is where technology-based “carbon management,” which refers to strategies that use technologies to capture carbon pollution from both heavy industrial facilities and the atmosphere, can help us close this emissions gap. Importantly, carbon management also addresses what happens after carbon is captured, whether it’s stored in geologic formations underground or utilized to help produce low-carbon materials or synthetic fuels.

To better understand these technologies’ potential and inform federal innovation policy, EDF commissioned Evolved Energy Research, a leading energy systems modeler, to explore a series of carbon management scenarios.

Also posted in Policy / Comments are closed

OSHA takes important first steps to address growing risks of heat to workers

By Stephanie Jones / Bio / Published: February 8, 2022

As climate change intensifies heat-related risks in the workplace, the Occupational Safety and Health Administration (OSHA) is developing regulations that would provide critical protections for workers from heat hazards in indoor and outdoor settings — a process that should incorporate consideration of climate impacts and the firsthand expertise of affected workers.

As an initial step in the rulemaking process, last fall, OSHA announced its intent to propose a rule and requested public comment on how to design a heat standard that will provide effective protection. Environmental Defense Fund and the Institute for Policy Integrity recently submitted joint comments supporting OSHA’s efforts to protect workers and urging that the agency design standards that account for the disproportionate impacts of extreme heat on marginalized communities and the increased heat risk that workers will face due to climate change.

Laboring under high heat can lead to heat exhaustion, stroke, kidney disease, and other maladies. Heat also makes workplace injuries more likely, with studies finding increased rates of accidents like ladder falls and even helicopter crashes. A day of over 100°F is associated with a 10-15% increase in traumatic workplace injuries, compared with a 60°F day. Climate change exacerbates these harms, driving up temperatures, humidity, and the frequency and severity of extreme heat events.

Also posted in Economics, Extreme Weather, Health, Jobs, News, Partners for Change, Policy / Read 5 Responses