Cap-and-invest auction proceeds

The quarterly auctions that are the linchpin of Washington's cap-and-invest program generate substantial revenue that must, by law, be invested in critical climate projects throughout the state.

Among other things, these proceeds will be used to increase climate resiliency, fund alternative-transportation grant programs, and help Washington transition to a low-carbon economy.

Investment and appropriation reports

In 2023, cap-and-invest auctions raised $1.8 billion dollars and the Climate Commitment Act (CCA) funds are being reinvested across our state. We share a report annually to the Legislature on the distributions of funds from the CCA Accounts. Washington state also shares how funds are appropriated by the legislature every two years.

Resources on the investments:

Funds appropriated from the CCA accounts for the 2023-25 Biennium: Governor’s Office Biennium report
CCA investments directed to overburdened communities and Tribes: Office of Financial Management's report estimates 43% of the CCA investments are directed to overburdened communities and 7.3% of the investments directed to benefit Tribes
Ecology’s report to the Legislature: Distribution of Funds from the CCA Accounts Fiscal Year 2023 (July 2022 through June 2023)

Account structure

The Climate Commitment Act (CCA) established three primary accounts and two sub-accounts to house cap-and-invest auction proceeds until they are appropriated for specific projects by the Legislature. During the 2022 legislative session, ESSB 5974 established two additional sub-accounts under the Carbon Emissions Reduction Account. Funds in each of these seven accounts are earmarked for specific types of climate, environmental justice, and ecological projects.

A chart of the three accounts and four subaccounts created to house funds from CCA auctions (read more below) — Click to enlarge.

Project types eligible for CCA funding

While all auction proceeds must be appropriated by the Legislature, there are some specific project types that are eligible for this funding by law.

Carbon Emissions Reduction Account (CERA)

The funds deposited in this account must be used for projects that focus on:

Reducing transportation emissions
Investing in alternatives and reductions to single occupancy passenger vehicles
Investing in emissions reduction programs for freight, ferries, and ports

Eighty percent of CERA funds are annually transferred to two sub-accounts, which each focus on a more specific aspect of decarbonization within the transportation industry:

This sub-account focuses on school and alternative transportation projects, including:

Safe Routes to Schools
School-based bike programs
Bicycle and pedestrian grants
Complete Streets grant program
Connecting Communities grant program
Pedestrian, bicycle, or other active transportation projects
Other transit projects identified in an omnibus transportation appropriations act

This sub-account focuses on specialized transit projects, including:

Transit support grants
Tribal transit mobility grants
Transit coordination grants
Special needs transit grants
Bus and bus facility grant programs
Green transit grants
Transportation demand management grants
Other transit projects identified in an omnibus transportation appropriations act

Climate Investment Account (CIA)

Auction proceeds deposited in the Climate Investment Account (CIA) are first used to fund the administration of the cap-and-invest program, but these expenses cannot exceed 5% of total auction revenue.

Once administrative costs are covered, the remaining proceeds are allocated to two sub-accounts focused on projects that support increasing climate resiliency in Washington communities and ecosystems:

This sub-account focuses on projects that support Washington's transition to a low-carbon economy, improve air quality, and increase access to clean energy for Washington residents:

Implementing the working families tax rebate
Reducing greenhouse gas emissions in overburdened communities
Strengthening the air quality monitoring network
Supporting renewable energy technology and infrastructure
Investing in energy efficiency for industry and agriculture
Increasing building energy efficiency and supporting electrification
Supporting appliance energy efficiency
Assisting affected workers during the transition to a clean energy economy
Capturing methane and diverting organics at landfills
Deploying carbon dioxide removal
Supporting efforts to mitigate and adapt to the effects of climate change affecting Tribes

This sub-account focuses on projects that protect fish and wildlife habitats, improve aquatic ecosystems and water quality, and protect against floods:

Restoring and protecting estuaries, fisheries, and marine shoreline habitats
Increasing carbon storage in the ocean or aquatic and coastal ecosystems
Remediating and adapting to the impacts of ocean acidification
Reducing flood risk and restoring natural floodplains
Increasing the sustainable supply of water and improving aquatic habitat
Investing in stormwater infrastructure
Preserving or establishing carbon sequestration in forests and agricultural soils
Protecting or planting trees in marine shorelines and freshwater riparian areas to promote climate resilience
Increasing resilience to wildfires, improving forest health, or preserving natural lands

Air Quality & Health Disparities Improvement Account (AQHDIA)

Funds deposited in this account must be used for projects that address issues of environmental justice and health inequity in the state, such as:

Funding the expansion of Ecology's air monitoring network in overburdened communities highly impacted by air pollution
The development and implementation of strategies to reduce health disparities in those communities

Funding environmental justice

While the Legislature is responsible for selecting which projects are funded with auction proceeds, the CCA does include some specific requirements that ensure the benefits of this powerful program are enjoyed by all of Washington. In fact, the law specifically directs the Environmental Justice Council to provide recommendations to the Legislature on which projects receive funding.

The CCA also requires that a minimum of 35%, with a goal of 40%, of auction-generated revenue be used for projects that provide a direct benefit to vulnerable populations within overburdened communities. In addition, 10% of auction funds must be used for projects with Tribal support.

We are required to provide the Legislature and the public with an annual report detailing how auction funding is used. In addition, any agency receiving CCA funding must provide a report to the Environmental Justice Council documenting progress toward environmental justice and health equity goals.