Auction results are in

Based on the Climate Commitment Act’s Auction Summary Report,  $300 million dollars have been raised through capping emissions on large greenhouse gas emitters in Washington state.  These funds are now available to invest in cleaner, more resilient communities and businesses. This milestone marks Washington’s opening opportunity to implement a robust investment program that will ultimately yield significant health and economic benefits for state residents.

The Seattle Times quotes our executive director Michael Mann saying, “It demonstrates the strength of the cap in Washington state. We also shouldn’t read too much into the first auction… But I think it’s a good measure of a point of time. It’s the investments that are going to get us to reach our carbon reduction goals. This auction generates the money that’s going to be the fuel for our state to transition to cleaner and cheaper ways to move around and to energize.”

The ‘invest’ portion of the Climate Commitment Act is as important as the ‘cap’. The settlement price was $48.50 and generated $300 million in new funding for our transition to a clean energy economy. Our internal analysis shows that at this settlement price, there may be $3.4 billion dollars ($1.1 billion dollars more than projected as of October 2022) available through Fiscal Year 2025 (the 30 months starting in January 2023) to accelerate the transition to cleaner air, more efficient energy use, natural climate solutions, resilience and environmental justice. These results are from one auction with a limited allowance supply, so must be extrapolated with caution. Allowance price containment mechanisms will be used in upcoming auctions – such as future vintage and consigned-entity allowances – that increase the volume of allowances offered. The potential linkage to California and Quebec carbon markets in coming years offers an opportunity to increase the size of the CCA compliance market.

The innovation and opportunity spurred by this carbon pollution price signal can unlock new technologies and strategies to reduce emissions to more economically reduce carbon pollution across the state.

As well, this provides a great opportunity for other sectors of the economy to leverage their solution set and accelerate solutions beyond what would otherwise happen:  EITEs and utilities can now mobilize technology and innovation to decrease their emissions and sell their no cost allowances back into the marketplace. This feedback mechanism should help further moderate prices over the long-term.