Prices in Washington’s carbon market have continued to tick upward in recent months, after the state’s Climate Commitment Act survived a hard-fought repeal effort in November.
The state’s two most recent auctions in March and June raised just over $552 million by selling over 11 million carbon emission allowances. One allowance represents 1 metric ton of emissions.
Allowances cost $58.51 in the June auction and $50 in March, signaling a rebound since the program faced a recall in November.
In 2024 allowance prices in the first three quarterly auctions fell below $30 compared with the previous year when prices were above $48 an allowance, with some so high they triggered special additional auctions.
Initiative 2117, which sought to repeal the state’s landmark climate change law, was defeated in a landslide in November. Allowance prices rebounded in the following December auction and the recent prices have fallen slightly above Ecology’s “high bounding” forecasts.
The Climate Commitment Act requires the state’s most polluting businesses to reduce their emissions or purchase allowances to cover them. Over the course of seven three-year periods, state officials will reduce the number of allowances sold, ramping up pressure on the industries to lower their emissions.
The money goes toward funding hundreds of programs like electric school buses, solar and heat pump installations, battery research, electric vehicle rebates and energy credits. Money from the program also makes up a third of Washington’s 16-year transportation plan.
In the two most recent auctions, around $263 million went to utilities, which sold nearly 4.9 million allowances they receive for free as part of the program. The revenue from those allowances must be used for the benefit of ratepayers. So far, the auctions have raised around $3.2 billion.
Washington aims to cut emissions nearly in half by 2030, and become a mostly carbon-free state by 2050, while using the carbon market’s revenue for efforts to reduce greenhouse gas emissions. Critics of the carbon market have portrayed it as a cash grab by the state and say that it has led to higher prices for utilities, fuel and other consumer goods.
