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 foster a more prosperous and resilient Washington. In 2020, Washington State legislated limits on greenhouse gases (GHGs) emitted in the state to align with the best scientific guidance. The limits are 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 adopted a comprehensive program that caps and reduces emissions from large emitters (those with over 25,000 metric tons of GHGs per year). The cap & invest program will fund investments consistent with the transition to an equitable, prosperous, and resilient net-zero emissions state by 2050. In fact, Washington is now the only state to have a mechanism in place to achieve net-zero GHG emissions by 2050.

What the Climate Commitment Act Accomplishes

  • Provides greater certainty of outcome in meeting legislated GHG limits by capping and reducing the vast majority of emissions;
  • Maintains integrity of the cap on emissions through periodic review and adjustment of budgets, carbon pollution-reducing investments, an emissions containment reserve, and the use of offsets under the cap rather than in addition to the cap;
  • Improves productivity of Washington’s economy by ridding our state of costly energy waste, creating good jobs, and improving public health;
  • Accelerates the clean transportation shift with $5.2 billion in non-highway transportation spending through 2037, harnessing our clean and improving power system for an electrified future, plugging the economic drain of imported fuels, and delivering cleaner, safer infrastructure;
  • Puts forward a clear signal for businesses to innovate, cooperatively and competitively, to cost-effectively reduce carbon pollution to legislated limits;
  • Invests in rural communities, natural lands, clean air, clean water and marine natural resources, to stimulate local economies while equitably improving environmental health;
  • Prioritizes recommendations of the Environmental Justice Council at least 35% of investments in the most vulnerable and impacted communities, including tribal nations, while also mitigating initial costs for these groups;
  • Addresses local air pollution concerns in overburdened communities, developed alongside the HEAL Act, through air quality monitoring, high priority emitter designation, investments, and enhanced regulatory authority of Ecology and local clean air agencies;
  • Treats the most vulnerable, but high-performing, businesses and potential new manufacturing fairly by recognizing trade-exposure and emission-intensity, and considering the relative efficiency of production compared to industry standards and growth.

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. Contains numerous provisions, including an emission containment reserve and smart use of offsets, to ensure the integrity of the cap;
  • Includes both a price floor and a price ceiling, together known as a price collar, in order to ensure revenue availability, encourage innovation, and insulate from price shocks;
  • Invests substantial revenues raised through auctions to accelerate climate pollution reduction related priorities, including through the transportation-specific Carbon Emissions Reduction account and the broader Climate Investment Account (for climate commitment and natural climate solution priorities), while also consigning revenues to utilities available for specific, targeted use;
  • Empowers the Environmental Justice Council and local clean air agencies to evaluate and provide priority guidance on investments and program design; 
  • Identifies, in concert with the HEAL Act (Senate Bill 5141), trends in criteria pollution emissions from high priority facilities in overburdened communities, and grants authority for additional regulatory authority to ensure those emissions are decreasing; ;
  • Enables secondary trading, outside of auctions, between large emitters to unlock cost-effective achievement of emissions limits and incentivize innovation;
  • Integrates smoothly with other critical GHG legislation, such as the Clean Energy Transformation Act that already establishes a pathway to zero emission for the power sector;
  • Permits a limited use of offset credits, emphasizing in-state projects, for program compliance that incentivize reductions from non-covered emissions sources. These offsets displace allowance use, rather than adding to allowances, providing both cost-containment and the upside for additional net emissions reductions below the cap;
  • Invests in capacity development and activities for tribal relocation and offsets on tribal land, small forestland owners, sustainable farms and fields, forest riparian easements, and air quality and health disparities improvements.
  • Allows program-linking, but only under certain conditions that protect the authority of Washington and the integrity of achieving emissions limits, with other similarly motivated jurisdictions. Linking can generate additional program efficiencies and opportunities to harness Washington’s culture of innovation;

 

Updated May 6th to reflect the final bill as passed by the Legislature and submitted to the Governor as ENGROSSED SECOND SUBSTITUTE SENATE BILL 5126

Clean & Prosperous Washington is a project of the Washington Business Alliance, a 501(c)(4).
Contact us at info@cleanprosperouswa.com