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In 2021 lawmakers passed the Climate Commitment Act, which led to the creation of Washington’s Cap-and-Invest Program. Cap-and-Invest is the centerpiece of Washington’s strategy to reduce greenhouse gas emissions by 95% by 2050—a requirement set in state law.
Cap-and-Invest combines the power of supply and demand with strong environmental justice provisions, creating a solution that works for businesses and our most vulnerable communities.
Putting an economy‑wide price on emissions is widely seen as the best climate policy, and carbon markets are the most affordable way to do it.
In this market-based system, the state sets an overall limit on emissions that declines each year, but it does not set the price of emissions. Instead, the price is set through auctions where companies compete to purchase allowances for every metric ton of greenhouse gases they release into the atmosphere. The price can easily adapt to market conditions, and companies get to choose what works for them — reducing emissions or buying allowances.
To set the declining limit on emissions, we issue fewer and fewer allowances over time. In response to the shrinking supply of allowances, companies that can reduce emissions at the lowest cost move first.
Building a sustainable market
In 2027, Washington will join the world’s largest subnational carbon market run by California and the Canadian province of Québec. Together, we’ll put a price on greenhouse gas emissions across an economy that would rank as the fourth largest in the world if combined.
The Washington-California-Québec carbon market is expected to lead to greater total emissions reductions across the three jurisdictions. In a linked market, each jurisdiction will contribute their supply of allowances to joint auctions, creating a single carbon price across all three. In a linked market, Washington businesses would be able to use allowances issued by California and Québec to cover their emissions, and vice versa. Market participants will also be able to trade across jurisdictions, adding extra liquidity to the system.
This unprecedented partnership will move climate policy forward in the United States and beyond while benefiting market participants. Washington’s involvement provides a roadmap for like-minded states, like New York and Oregon, to follow.
The CCA aligns with the requirements of the Healthy Environment for All (HEAL) Act and includes provisions to ensure communities in Washington that are disproportionately impacted by climate change and air pollution benefit from cleaner air.
In addition to the greenhouse gas reductions that will result from the Cap-and-Invest Program, the CCA also directs us to reduce "criteria" air pollutants — such as ozone and particulate matter — in overburdened communities highly impacted by air pollution.
Funding allocation and accountability
The CCA directs the Environmental Justice Council to make recommendations to the Legislature on how auction revenue should be used, and requires agencies using funding from CCA accounts to report their progress toward environmental justice goals to the Council.
Investing in the future
Under the law, proceeds from the CCA allowance auctions must be invested in critical climate projects focused on improving clean transportation options — increasing climate resilience in ecosystems and communities — and addressing issues of environmental justice and health inequity in Washington.
Importantly, the CCA requires that at least 35% of funds be invested in projects that benefit overburdened communities, and a minimum of 10% go to projects with Tribal support.
The Tribal Consultation Grant provides funding for eligible Tribes to consult on CCA spending and clean energy siting decisions and to pursue other climate-related activities. The Tribal Carbon Offset Assistance Grant provides funding for Tribes to plan, design, and assess the feasibility of carbon offset projects on federally recognized Tribal lands in Washington.
Both grants are available only for federally recognized Tribes with lands and territories in Washington state.
