And we’re back! You may have noticed we skipped a month, but rest assured — Ecology's work implementing the Climate Commitment Act never stops! In fact, the reason we took a break in June was to announce important developments around the CCA auctions and our proposed language for the Chapter 173-446 WAC rule.
We’ll dive into a recap of those updates shortly, but first let’s talk about all the other amazing things that have been happening at Ecology as we work to bring this landmark program to life.
Prepping the platform
With the January 2023 launch of the cap-and-invest program fast approaching, the CCA team is working to quickly develop and fine-tune the auctions and trading platform that will be used by participating businesses and individuals to buy, sell, and trade allowances and offset credits.
We know that covered entities are eager to learn more about how they can participate effectively in this new program, and we want to make sure everyone has access to as much information as possible prior to next year’s launch.
Starting in August, we will be rolling out trainings covering emissions reporting requirements, third-party verification, and how to use the auction and trading platform. There will be multiple trainings for these topics and direct assistance will be available for anyone with questions.
Prioritizing data transparency
As part of our rulemaking on Chapter 173-446 WAC — which outlines the structure and parameters of the cap-and-invest program — Ecology contracted a third-party economics firm, Vivid Economics, to conduct a thorough analysis of our anticipated auction structure. This analysis was used to inform the auction floor and ceiling prices in our proposed rule language.
In June, Ecology released a draft report, provided by Vivid Economics, summarizing their findings. Vivid also provided a short video summary explaining some of the key takeaways. Ecology requested these materials specifically to share more information with the public about our rulemaking process and the information we used to guide it. While the report represents Vivid’s independent analysis, we did provide an explanatory foreword to give some context for how we used this data in the current rulemaking.
The most critical takeaway was the impact on allowance prices of ‘linkage.’ In Vivid’s ‘linked’ scenario, it was assumed that Washington would combine its market with the much larger markets in California and Québec (which are themselves already linked) by 2025. In this scenario, initial allowance prices were forecast at $41. The report also noted that, once our markets actually link, it is likely that the Washington allowance price would fall more closely in line with prices in the California and Quebéc market, which is roughly five times the size of Washington’s. Current allowance prices in that shared market sit right around $31.
The law requires that we explore linking through a separate process and seek public input on any proposed linkage agreement. However, given the significant impact linking would have on allowance prices, we accelerated our timeline and will begin the public process in the fall.
Making offset projects accessible to Tribes
As we’ve discussed before, the CCA was written with a commitment to environmental justice at its heart. As part of that commitment, the Legislature included specific provisions designed to ensure Washington Tribes benefit from this powerful program. One way the law seeks to do this is by allocating $5 million in 2022 for a Tribal Carbon Offset Assistance grant program. This program is designed to assist Tribes with the development of carbon offset projects on Tribal lands, which can then generate revenue as covered entities invest in those projects to ‘offset’ a portion of their emissions.
This grant program opened on June 30 and is accepting applications until Aug. 31, 2022. Ecology recently hosted a webinar for Tribes to go over the details and application process. You can review those slides and learn more about the program on the grant webpage.
Ecology also launched the Tribal Consultation grant program providing funding for Tribes to assist with their participation in the enhanced consultation process established in ESHB 1753. While not a part of the CCA, this enhanced consultation framework is designed to elevate the input of Tribes on spending decisions regarding CCA auction revenue.
Going beyond greenhouse gases
While the cap-and-invest program focuses on greenhouse gas reductions, the CCA also contains specific provisions requiring Ecology to work to reduce 'criteria air pollutants', such as particulate matter and ozone, in overburdened communities highly impacted by air pollution.
The team working on the Improving Air Quality in Overburdened Communities initiative is in the process of developing the indicators that will be used to identify these communities. Initially, we anticipated releasing a set of draft indicators in June. However, an important part of this work is hearing and incorporating feedback from diverse communities and environmental justice organizations, including the Environmental Justice Council, which was not fully empaneled until mid-March.
The Council is tasked with providing input on a number of different environmental policies so, to honor their capacity, we have elected to extend the process of developing the draft indicators to allow more time for the Council to engage meaningfully with the process and provide feedback.
After providing this time for additional consultation with the Council, we anticipate releasing our draft indicators in early fall. At that time, we will begin our full public process, providing opportunities for stakeholders, Tribes, and community members to review and give input on our draft.
To receive more info on this public process and upcoming engagement, you can check our webpage for updates or sign up for email alerts.
Building our online resources
The CCA is major piece of legislation with a lot of moving parts, and we want everyone to have as much information as possible as we get closer to our January launch.
To make sure that participating businesses and individuals have the guidance they need to effectively participate in the cap-and-invest program, we've just launched a CCA Auctions and Trading webpage! This page will house all the information needed to register for the platform, sign up for trainings, and track upcoming auctions. Once the program launches, this page will also be your hub for past auction and market data, upcoming auction schedules, and information about compliance violations.
This page is currently live and will continue to be updated with more information and resources. You can keep tabs on resource updates and other cap-and-invest market news by signing up for our CCA Auctions and Trading Updates email list.
This page is just one part of a much larger website build-out, and we’re also working on creating a number of other online resources, so stay tuned for more updates!