Cap-and-invest offsets

In 2020, the Washington Legislature committed our state to becoming carbon neutral by 2050. Upholding this commitment will require that businesses invest in better processes and use cleaner energy to reduce their own emissions, but it can also help to invest in projects designed to combat global emissions outside of any one particular factory or industry – and that's where offset projects come in.

Sometimes just called "offsets," these are projects or programs designed to reduce the amount of greenhouse gases (GHGs) in the atmosphere. In Washington’s cap-and-invest program, offset projects must also provide direct environmental benefits to our state. You can learn more about the program's offset requirements below.

Images showing examples of forestry, livestock, and urban forestry offset projects

Offset projects include things such as reforestation, planting trees in urban areas, and capturing methane on dairy farms. And because greenhouse gas emissions affect the entire atmosphere, even projects in another country can help us fight climate change here in Washington.

a graphic representation of removing, reducing, or avoiding greenhouse gas emissions, represented by grey clouds.

Offset projects reduce, remove, or avoid greenhouse gas emissions. In the cap-and-invest program, emitters can use credits earned by investing in these projects to cover a small portion of their emissions. This encourages them to fund projects that help our shared environment.

Icons representing offset qualities: real, permanent, quantifiable, verifiable, and enforceable.

Offset projects must meet strict criteria to ensure they're actually providing environmental benefits. The CCA requires that offset projects must result in greenhouse gas reductions that are real, permanent, quantifiable, verifiable, and enforceable.

How do offsets work?

You may have seen offers from airlines and other businesses to "offset" the carbon footprint of a product you're about to purchase. Typically, this means you pay a little extra at checkout, and, in turn, the company invests those funds in a project that reduces the overal amount of GHGs in the atmostphere by the same amount that would be generated in the production of your purchase — whether that's a new handbag or a fraction of the emissions from a flight to Hawaii — meaning the net change in global GHGs is zero.

The business isn't directly reducing its own emissions — that flight would still generate the same amount of pollution even if you cancelled your trip. Instead, the airline is balancing out the negative impacts of its emissions by funding a project that benefits the environment.

For a project to offset greenhouse gas emissions, it needs to do one or more of the following things:

Reduce the emissions of a process, such as improving the energy efficiency of a manufacturing operation.
Avoid emissions altogether. For example, by switching from using natural gas to a zero-emissions energy source.
Remove existing GHGs from the atmosphere, such as through capturing methane produced by livestock to use as a renewable energy source.

Of course, not all offset projects are created equal. If you "offset" a purchase as described above, for example, the business you are purchasing from is responsible for ensuring those funds are going to projects with verifiable results.

When it comes to offset credits that can be used in a regulatory system — such as Washington's cap-and-invest program, or similar programs in California and Québec — the agency responsible for administering the regulation is tasked with quality control. For cap-and-invest, the law provides sets several safeguards to ensure the integrity of offset projects, and it's our job to implement and uphold those standards.

Offsets under cap-and-invest

The CCA requires that offset projects must result in greenhouse gas reductions that are real, permanent, quantifiable, verifiable, and enforceable. And the reductions must be in addition to those already required by law. All offsets used for compliance in Washington’s cap-and-invest program must demonstrate direct environmental benefits to the state.

In addition, offset projects registered in the cap-and-invest program must be verified by an independent third party before credits can be issued.

You can read more about the requirements for offset projects under the CCA in the cap-and-invest program rule.

To launch our program using the best available offset resources, we adopted four offset "protocols" from California's program. You can think of a protocol as a guidebook for a project developer to show that their project meets regulatory standards.

These four protocols were developed by the California Air Resources Board over several years, with peer review by an extensive team of forestry and carbon experts, and have been reviewed and refined over more than a decade.

The four protocols adopted from the California program are:

U.S. Forestry
- Reforestation, avoided conversion (conserving a forest under threat), and improved forest management projects (geared toward working forests).
Urban Forestry
- Planting and maintaining trees in urban areas.
Livestock Projects
- Capturing methane on dairy or swine farms by installing specialized "digester" tanks.
Ozone Depleting Substances
- Extracting and destroying certain GHGs that are no longer being produced because of how damaging they are to the environment, such as hydroflurocarbons, which are typically found in commercial and industrial air-conditioning units and refrigerators.

We will consider developing new protocols or revising these existing protocols in the future. Any new or revised protocols would be adopted through a rulemaking process, with opportunities for public input.

Generally speaking, our offset program mirrors the California Air Resources Board’s program, especially for how we register, verify, and monitor offset projects. However, there are some important differences, including:

Our program requires that all offset projects provide direct environmental benefits to the state, while California only requires that 50% of the offset credits used to cover business emissions come from projects that provide direct environmental benefits.
Offset credits in Washington are "under the cap," meaning we reduce the number of allowances we issue by the number of offset credits used, keeping us on track to meet our statutory commitment to reduce emissions by 95% by 2050.
We have the ability to reduce the number of offset credits that can be used by a business if we determine that it contributes substantially to air pollution in an overburdened community.

Questions about offsets?

Please contact our Offsets Team at CCAOffsets@ecy.wa.gov with any questions about project registration and verification or for information about how to purchase and use credits.

For all other questions about the cap-and-invest program, or for media requests, please use the contact information at the bottom of this page.

Using offsets to cover emissions

Unlike allowances, offset credits are not bought nor sold at quarterly auctions. Instead, credits are bought and sold directly between program participants.

You must have an approved account in the Compliance Instrument Tracking System Service to purchase offset credits, and, once your account is approved, you can buy them directly from project developers or from other market participants, just like stocks and bonds.

In the first four-year compliance period, January 2023 through December 2026, emitters can generally cover 5% of their emissions with offset credits and an additional 3% with credits from projects on federally recognized tribal lands.

These percentages are reduced to 4% and 2%, respectively, during the six remaining compliance periods during 2027 to 2049.

Details about these limits can be found in Section 600 of the cap-and-invest program rule.

At this time, credits cannot be transferred. Only credits issued in Washington can be used to cover Washington emissions from Washington businesses.

If Washington's program were to link with the shared market in California and Québec, then we would expect to have more opportunities for transferability of credits between programs. However, the law directs us to undergo a robust, criteria-based public process to determine whether linkage would be beneficial. This process is currently underway, and you can learn more about linking and what the law directs us to consider on our Linkage webpage.

Tribal offset projects

Offset projects on tribal lands are developed in the same way as non-tribal projects: they must be listed with an approved offset-project registry, follow one of the four adopted offset protocols, and be verified by an approved third party.

We offer a Tribal Carbon Offset Assistance Grant program to help federally recognized tribes in Washington assess the feasibility of a carbon-offset project.

Project developer and registry resources

If you are looking for an offset form that is not linked in one of the tabs below, please reach out to CCAOffsets@ecy.wa.gov.

Project listing applications

Please note that an entity's CITSS registration process must be completed prior to listing an offset project with an Ecology-approved offset project registry.

Approved registries

We will add new forms to this tab as they are developed. If you have any questions about these forms or listing requirements, please contact our Offsets team at CCAOffsets@ecy.wa.gov.

We will add new forms to this tab as they are developed. If you have any questions about these forms or registration requirements, please contact our Offsets team at CCAOffsets@ecy.wa.gov.

You can find a list of approved offset verifiers and verification bodies here.

Forms

If you do not see the form you are looking for in these tabs, please email CCAOffsets@ecy.wa.gov.

Resources

In 2021, the Legislature appropriated funding for an independent study about the potential for carbon removal projects in Washington. The study was commissioned and funded outside of the cap-and-invest program. We've posted the report here to provide additional information and analysis to potential offset project developers. If you have questions about this report, please contact Bill Drumheller.

CO₂ Removal Project Standards Analysis - SCS Global
Some content in this document may not be ADA accessible because it was done by a third party. To request this information in a different format or to request an ADA accommodation, please call us at 360-407-6800, email at ecyadacoordinator@ecy.wa.gov, or visit ecology.wa.gov/accessibility.

The following trainings were held in May 2023. To request a link to the recording and a copy of the slides, please email us using the links below.

Using offset credits for compliance in the cap-and-invest program

This training walks through the process and considerations for using offset credits for compliance in the cap-and-invest program. We cover the basic requirements for offset projects under the program, as well as the offset credit usage limits for covered entities. Considerations for offset credit procurement, such as invalidation, reversal, and direct environmental benefits to Washington are also discussed.

Request the Using Offset Credits for Compliance training

Developing offset projects in the cap-and-invest program

This training walks through the process, timeline, and requirements for developing an offset project in the cap-and-invest program. We discuss the four offset protocols adopted by Ecology, as well as the process to determine whether or not an offset project provides direct environmental benefits to Washington. Third-party verification requirements and the first steps to begin listing an offset project in the cap-and-invest program are also covered.

Request the Developing Offset Projects training

Please remember that offset project developers must have active accounts in the Compliance Instrument Tracking System Service (CITSS) in order to sell offset credits in the cap-and-invest marketplace. You can find all the information, trainings, and other resources needed to complete this process on our Auctions trainings and resources page.

For questions about your CITSS application process, please contact RegistrarCCA@ecy.wa.gov.

Contact information

Claire Boyte-White
Cap-and-Invest Policy Relations
CCAQuestions@ecy.wa.gov