Climate Commitment Act (SB 5126) Bill Summary

The Climate Commitment Act is designed to deliver emissions reduction with certainty while achieving critical co-benefits that create a more prosperous and more resilient Washington.  In 2020, the Washington State Legislature increased ambition for limiting Greenhouse Gases (GHGs) emitted in the state to align with the best scientific guidance.  The updated limits are now 45% below 1990 levels by 2030, 70% below 1990 levels by 2040, and 95% below 1990 levels by 2050.  In order to meet these limits, the Legislature seeks to initiate a comprehensive program that Caps and Reduces emissions from large emitters (those with over 25,000 metric tons of GHGs per year).  The program would fund investments consistent with the transition to an equitable, prosperous, and resilient net-zero emissions state by 2050.   

What the Climate Commitment Act Does

• Provides much greater certainty of outcome in meeting legislated GHG limits by capping and reducing the vast majority of emissions;
• Improves productivity of Washington’s economy by ridding our state of costly energy waste, creating good jobs, and improving public health;
• Puts forward a clear signal for businesses to innovate and compete while cost-effectively reducing carbon pollution to legislated limits;
• Invests in rural communities, clean air, and natural lands to stimulate local economies while improving environmental health for all;
• Empowers the most vulnerable and impacted communities and businesses, prioritizing investments and mitigating initial costs in order to create a more just and equitable Washington;
• Accelerates the clean transportation shift, harnessing our clean power system for an electrified future, plugging the economic drain of imported fuels, and delivering cleaner, safer infrastructure;
• Treats the most vulnerable, but high-performing, businesses fairly.

How the Climate Commitment Cap & Invest Program Works

• Annually distributes and auctions a capped and decreasing amount of “allowances” starting in 2023 and aligned to the state’s 2030, 2040, and 2050 GHG limits.
• Invests substantial revenues raised through auctions to accelerate climate pollution related priorities.
• Establishes an Environmental Justice Analysis & Advisory Panel to evaluate and provide guidance on investments and program design.
• Enables cost-effective achievement of emissions limits and innovation through the trading of allowances between large emitters.
• Provides special considerations for prioritization and fair treatment of high-risk and low-income communities, and trade-exposed businesses.
• Includes both a price floor and a price ceiling in order to ensure revenue availability, encourage innovation, and insulate from price shocks.
• Protects low-income rate-payers while incentivizing more efficient provision of essential energy services.
• Integrates smoothly with other critical GHG legislation, such as the Clean Energy Transformation Act.
• Permits a limited use of offset credits that incentivize reductions from non-covered emissions sources  and provide additional compliance options for businesses.
• Links the program with other similarly motivated jurisdictions, generating additional program efficiencies and opportunities to harness Washington’s culture of innovation.