Cap-and-Invest program compliance
Under Washington’s Cap-and-Invest Program, our state’s largest emitters (those that emit the equivalent of 25,000 metric tons of CO2 annually) must acquire enough allowances to equal their emissions every four years. These “covered entities,” as well as those that opt into the program voluntarily, can choose their most cost-effective strategy for compliance, including:
- Purchasing allowances at auction
- Purchasing from other entities
- Obtaining allowances through no-cost allocation
- Earning or purchasing offset credits (limits apply)
- Reducing greenhouse gas emissions
- A combination of the above
To maintain compliance with the program, an entity must first register in the Compliance Instrument Tracking System Service (CITSS). After obtaining compliance instruments (allowances or offset credits) through the methods described above, an entity must then move a sufficient number of instruments into their compliance account to cover their compliance obligation. This transfer must occur prior to each compliance deadline.
See the CITSS compliance instrument transfer guide for more info.
When are compliance deadlines?
By 5:00pm on Nov. 1 of each year, covered and opt-in entities must submit compliance instruments equal to 30% of their covered emissions from the prior year. The first compliance deadline is Nov. 1 of 2024. In the year following each four-year compliance period, entities must submit instruments to cover their entire remaining compliance obligation. The first quadrennial compliance period deadline, covering emissions from years 2023-2026, is Nov. 1, 2027.
Where can I find my compliance obligation?
Each entity’s annual compliance obligation is equal to 30% of covered emissions from the prior year. After emissions are verified by a third-party verifier, Ecology loads that compliance obligation information into CITSS.
CITSS tracks the amount of compliance instruments in each entity’s accounts that can be used to meet the Annual Compliance Obligation. In order for them to be used towards the compliance obligation, the instruments must be in the compliance account. Account representatives will be emailed in early October once their compliance obligation information is available for review in CITSS. Because important notifications are sent to account representatives, it is extremely important that covered entities keep their account representative information up-to-date in CITSS.
By Nov. 1 of the year following the end of a four-year compliance period, businesses must submit instruments to cover the remaining 70% of their total emissions for the entire period. This compliance deadline is aggregate, meaning that emissions from all four years are considered as a group, and submitted allowances can be of any year in the current or previous compliance periods. Compliance period one covers emissions from 2023-2026, and allowances must be submitted by Nov. 1, 2027.
Which compliance instruments can be used for the Nov. 1, 2024, compliance deadline?
- Allowances with a vintage year of 2023
- Allowances without a vintage, such as those purchased at an Allowance Price Containment Reserve (APCR) Auction
- The following categories of greenhouse gas offset credits are eligible for surrender in the following amounts:
- Direct Environmental Benefits to Washington State and on Tribal Lands: up to three percent of 2023 covered emissions
- Direct Environmental Benefits to Washington State and not on Tribal Lands: up to five percent of 2023 covered emissions
- Allowances for entities which are assigned a "True-Up Quantity”. Only the allowances which are allocated for True-Up may be used for the prior year’s compliance.
Allowances in CITSS compliance accounts will be retired in a specific order to fulfill compliance obligations.
- Offset Credits providing Direct Environmental Benefits to the State and on Tribal Lands, limited to 3% of 2023 covered emissions.
- Offset Credits providing Direct Environmental Benefits to the State and not on Tribal Lands, limited to 5% of 2023 covered emissions
- APCR Allowances
- Vintaged Allowances of the current or prior year, earlier years retired first. (For the Nov 1. 2024 compliance event, only vintaged allowances from 2023 will be eligible. In 2025, vintage 2023 and vintage 2024 will be eligible).
- True-Up Allowances. In 2023 we give 2025 True-up quantity (maximum amount that can be used of this vintage).