Washington state held its first cap-and-invest auction on February 28, marking an important milestone in the state’s efforts to reduce greenhouse gas emissions. Information from the auction is now published online in an Auction Summary Report, following validation by staff at the Washington Department of Ecology and an independent market monitor.
The cap-and-invest program was codified in Washington’s Climate Commitment Act (CCA), which the Legislature passed in 2021. The program places a limit on the amount of carbon pollution that can be emitted. Utilities must buy allowances on behalf of the people that use natural gas for warmth, cooking and hot water in their homes and businesses. Industries with high emissions are required to purchase allowances directly to cover their carbon output.
Each year the state will offer fewer credits for sale as it moves steadily to zero emissions. As the number of available carbon credits decline according to the trajectory defined in the CCA, those credits will become more and more expensive. One way or another, every dollar the state collects will come out of the pockets of Washingtonians.
Anyone who maintains that Washington’s carbon credit mandate will have a minimal impact on consumers need only look at the results of the inaugural auction. During a three-hour bidding window, all 6.18 million allowances available were sold at a settlement price of $48.50. The state’s total take? $300 million that will be invested by the Legislature in a variety of climate-related projects and programs. If allowances stay at the current price, the auctions will take in nearly three times as much money this year as Ecology predicted when the CCA was being debated in 2021.
More information on Washington's cap-and-invest program and quarterly allowance auctions can be found here.