{"id":23461,"date":"2023-08-17T09:28:51","date_gmt":"2023-08-17T14:28:51","guid":{"rendered":"https:\/\/blogs.edf.org\/climate411\/?p=23461"},"modified":"2025-12-02T16:47:57","modified_gmt":"2025-12-02T21:47:57","slug":"washington-states-cap-and-invest-program-demonstrates-cost-containment-features-with-special-august-auction","status":"publish","type":"post","link":"https:\/\/blogs.edf.org\/climate411\/2023\/08\/17\/washington-states-cap-and-invest-program-demonstrates-cost-containment-features-with-special-august-auction\/","title":{"rendered":"Washington state\u2019s cap-and-invest program demonstrates cost containment features with special August auction"},"content":{"rendered":"

Yesterday, the Washington State Department of Ecology (Ecology) released the results from Washington\u2019s 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\u2019s cap-and-invest program and demonstrates the important role that an APCR can play in building predictability and stability into allowances prices.<\/p>\n

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Overview of an APCR auction<\/h3>\n

The APCR is a price containment mechanism<\/a> that was built into Washington\u2019s cap-and-invest program to help keep allowance prices stable and predictable. The APCR functions as a soft price ceiling<\/strong>, wherein if a certain price level is reached at the quarterly auctions, a number of allowances set aside specifically for this scenario become available at a separate APCR auction. These APCR allowances were budgeted out ahead of time and are still part of the overall allowance budget<\/em> set by Ecology to keep the state on track to meet its climate targets. Conducting an APCR auction makes additional allowances available from the planned emissions budget, helping to stabilize allowance prices by making a specific pool of allowances available at a transparent, predictable, predetermined price point.<\/p>\n

In an APCR auction, only \u2018covered\u2019 and \u2018opt-in\u2019 entities<\/a> are eligible to bid on allowances (meaning only entities that are required to obtain allowances to cover their emissions). This differs from a regular quarterly auction, in which other investors \u2014 known as general market participants \u2014 can also bid on allowances. Another important difference in this auction is that APCR allowances can only be used to cover an entity\u2019s own emissions; they can\u2019t be sold or traded.<\/p>\n

APCR auction results<\/h3>\n

At the auction, administered by the Department of Ecology, participating entities submitted their bids for APCR allowances at two tiers. Bidders could submit multiple bids for the number of Tier 1 and Tier 2 allowances they wanted; Tier 1 allowances were sold first and, once they ran out or once all Tier 1 bids were fulfilled, Tier 2 allowances were sold until their supply was exhausted or until all bids were fulfilled. The 1,054,000 APCR allowances available at this auction were split evenly between the two tiers, with Tier 1 allowances priced at $51.90, and Tier 2 at $66.68.<\/p>\n

Here are the results<\/a>, released yesterday:<\/p>\n