The Washington Department of Ecology released on Wednesday the results of its tenth quarterly Cap-and-Invest auction of emissions allowances. All allowances sold, pushing the total revenue raised for climate initiatives to over $3 billion since the program started.
The state’s flagship climate policy is clearly demonstrating what state leadership can achieve, said Washington Governor Bob Ferguson.
“The successful Cap-and-Invest auction shows that the Climate Commitment Act is working as designed,” Ferguson said. “As the federal government is abandoning critical climate protections, Washington’s leadership is needed now more than ever.”
Washington’s Cap-and-Invest Program cost-effectively reduces climate pollution by setting an annual cap on greenhouse gas emissions and giving businesses the choice to compete for a limited number of allowances to cover every metric ton of carbon dioxide they release into the atmosphere or reduce their emissions. Over time, Ecology lowers the cap by auctioning fewer allowances.
Major greenhouse gas emitters purchased all available allowances during the quarterly auction, putting Washington on track to meet state limits on greenhouse gas emissions and generating revenue for investments in clean transportation, making communities more resilient to climate impacts like extreme heat and flooding, and reducing carbon pollution.
With Washington’s program on solid footing, the next step is partnering with like-minded governments to build a larger market and scale the impact of the policy, said Casey Sixkiller, Ecology’s director.
“We’re seeing strong participation and price stabilization. We expect that trend to continue as we move toward linking markets with California and Québec,” Sixkiller said. “By forming a larger shared market, we can show others how states and local leadership can have a global impact.”
If Washington links with California and Québec, the three programs would hold joint auctions, giving businesses access to a larger pool of allowances. Typically, larger markets are less susceptible to price swings. Washington expects to be able to link in 2026 or 2027.
In a market-based program like Cap-and-Invest, prices adjust according to supply and demand. In the quarterly auction, both “current vintage” emissions allowances were sold – that can be used immediately to cover a business’s emissions – and “future vintage” allowances, that can’t be redeemed until later. The settlement price for current vintage allowances was $58.51. The future vintage allowances sold at this auction settled at $26.61.
This auction raised an estimated $322 million for the state, bringing the total state revenue close to $3.2 billion since the Cap-and-Invest Program took effect at the beginning of 2023. An additional $126 million was raised by utilities through this auction, pushing the total revenue raised to support ratepayers to almost $960 million.
This milestone comes at a time when other states are following in Washington’s footsteps. Oregon is currently considering its own a cap-and-invest program, and New York is in the process of developing a cap-and-invest program.