Washington state’s first-ever auction of carbon allowances has generated $300M to invest in our transition to a clean energy economy

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 exciting news marks Washington’s opening opportunity to implement a robust investment program that will ultimately yield significant benefits for state residents.

“The ‘invest’ portion of the Climate Commitment Act is as important as the ‘cap’,” said Michael Mann, executive director of Clean and Prosperous Washington. “It’s these investments that are going to help us achieve our carbon reduction goals. This auction generates the money that is the fuel for our state to transition to cleaner and cheaper ways to energize our economy.”

Projecting these results forward, 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 current settlement price also offers significant market motivation for entities receiving no-cost allowances.  These include natural gas distribution companies, electric power utilities, and emissions-intensive trade-exposed facilities.  Innovation and opportunity, spurred by this carbon pollution price signal, can unlock new technologies and strategies to reduce emissions from these facilities to more economically reduce carbon pollution across the state.