As part of our ongoing work to cut carbon pollution and achieve greenhouse gas limits set in state law, we're sharing independent economic analyses of the Climate Commitment Act and the Clean Fuel Standard.
We commissioned these reports to better understand the costs to businesses, industries, and consumers in Washington when these new climate initiatives begin Jan. 1, 2023.
The Climate Commitment Act will limit greenhouse gas emissions from the state’s largest sources through a cap-and-invest program. The economic report shows that linking Washington’s program to California’s and Québec’s programs would create the most cost-effective option.
The Clean Fuel Standard will reduce greenhouse gas emissions by reducing the carbon intensity of transportation fuels, like gas and diesel. The economic report shows the standard will have little impact on gas prices over the next few years, and that it will eventually result in lower energy costs and significant health benefits.
These independent reports confirm that new climate regulations play a minor role in the overall price of gasoline and diesel. Studies show — as do current events — that national and global events play the dominant role in fuel prices.
Clean Fuel Standard
Economic report shows little impact on gas prices
Washington’s new Clean Fuel Standard will mean less than a 1-cent per gallon difference in the price consumers pay at the gas pump in 2023, according to estimates in a third-party economic analysis. Prices could rise up to 2-cents in 2024, and 4-cents in 2025, the report shows.
Ecology commissioned Berkeley Research Group to evaluate the Clean Fuel Standard’s impact on the retail cost of gas and diesel fuels, and the electricity for electric vehicles. Berkeley is an independent, globally-recognized consultant with a long track record of providing high-quality reports across a wide range of markets and industries.
Research shows regulations like the Clean Fuel Standard play a minor role in gas prices compared to the shifts in the U.S. economy and disruptions to crude oil supply and demand caused by global events, such as the pandemic and Russia’s invasion of Ukraine.
Legislators passed the Clean Fuel Standard in 2021. It will take effect in 2023. It requires fuel suppliers to gradually reduce the “carbon intensity” of transportation fuels 20% by 2038, enough to cut Washington’s statewide greenhouse gas emissions by 4.3 million metric tons per year. Transportation is the largest source of greenhouse gas emissions in Washington, accounting for 45% of total emissions.
The analysis shows price impacts vary over the next 12 years, and then drop to nearly zero as the number of electric cars increase and there's a shift to cleaner energy.
We plan to propose draft regulations for the Clean Fuel Standard later this summer.
The Clean Fuel Standard is designed to accelerate the transition to clean fuels and make zero-emission vehicles and other low-carbon technologies more affordable and accessible. The report shows how big these impacts will be in its projections for the electricity used to “fuel” electric vehicles: Electricity used to charge batteries in electric cars and trucks is expected to become cheaper by as much as $1.83 per gallon equivalent.
Reducing the use of gas and diesel would also bring significant health benefits. By 2038, the report predicts that the reduction in air pollution from the Clean Fuel Standard, combined with other transportation initiatives, would mean an estimated $1.8 billion in economic benefit from better health.
Read the report on the Clean Fuel Standard webpage.
Climate Commitment Act
Economic report highlights most cost-effective option for new cap-and-invest program
Linking Washington’s new cap-and-invest program to other carbon markets in California and Québec would create the most cost-effective option for participation, according to an independent market analysis.
Ecology contracted Vivid Economics to assess the economic effects of different approaches to establishing an emissions marketplace for Washington. Vivid Economics is an internationally-recognized firm with deep experience in analyzing carbon markets around the world.
The report showed the expectation of a linked cap-and-invest program would produce an initial emissions allowance price of $41 per metric ton of carbon dioxide equivalent when the Washington program begins in 2023, while other scenarios produced prices up to 65% higher.
The Legislature envisioned connecting Washington's carbon market when it passed the Climate Commitment Act and directed Ecology to pursue linkage if it benefits Washington businesses and communities.
In a linked market, auctions would be held jointly with California and Québec, and all three jurisdictions would share a common allowance price. Currently, allowance prices in the California-Québec market are about $31. The report indicated it would be most likely Washington’s price would align more closely with theirs once a linkage agreement is in place.
We used Vivid Economics’ findings to inform key aspects of our rulemaking for the cap-and-invest program, which is open for public comment until July 15, 2022.
By law, the decision to link Washington’s program with the other jurisdictions requires a separate public process to evaluate potential costs and benefits. Given the impact that linkage is projected to have on allowance prices, Ecology will begin this exploratory process in the fall of 2022.
The full draft report outlining Vivid Economics’ findings and a video summary are on our Climate Commitment Act webpage.
State climate policies essential for protecting Washington communities
Today’s extreme gas prices clearly demonstrate why we need to quickly transition away from fossil fuels. Over time, Washington’s new climate initiatives will make the economy less vulnerable to sudden fuel price swings, and put manufacturers at the forefront of the global clean energy economy.
Washington is a proud leader in driving the kind of climate policies that will lower greenhouse gas emissions and protect the environment and economy for future generations. The Supreme Court's June 30 ruling in West Virginia v. the Environmental Protection Agency dealt a major blow to federal efforts to address the global climate crisis. The decision makes our state plans for quickly transitioning away from fossil fuels even more essential.