(The Center Square) – Washington state’s most recent carbon auction brought in an estimated $446 million, according to results released by the state Department of Ecology. As of Friday, Washington state has the highest gas prices in the nation, according to AAA.
The Sept. 3 auction sold its nearly 6.4 million allowances at a settlement price of $64.30, raising an estimated $446 million: $295 million for the state and $151 million for the benefit of utility ratepayers.
“Today’s auction results underscore the confidence that businesses and investors have in Washington’s market and our commitment to bold climate action,” Department of Ecology Director Casey Sixkiller said in a news release. “The Cap-and-Invest Program is here to stay, and businesses are making long-term investments that will assist in decarbonizing their operations.”
Since the cap-and-trade program, as it is also known, started in January 2023, Washington’s carbon auctions have generated nearly $3.5 billion in revenue.
Under the Climate Commitment Act of 2021, emitters must obtain “emissions allowances” equal to their covered greenhouse gas emissions at quarterly auctions hosted by the Department of Ecology. Washington’s carbon auctions are meant to reduce greenhouse gas emissions and achieve the state’s climate goals, while funding programs to address climate change and improve the environment.
Carbon auction critics, however, argue that the program deliberately increases fuel and utility prices as costs are passed onto consumers. They also question the program’s effectiveness in reducing emissions.
One of those critics is Todd Myers, vice president of research at the free-market Washington Policy Center.
He notes that the cap-and-trade system is designed to drive up gas, diesel and natural gas prices by gradually reducing the number of allowances.
According to the Department of Ecology, the “program sets a limit, or cap, on overall carbon emissions in the state…” and “The cap will be reduced over time to ensure Washington achieves its 2030, 2040, and 2050 emissions-reduction commitments, which means we’ll issue fewer emissions allowances each year.”
“Real people are being hurt by this,” Myers said of the resulting fuel price hikes.
According to AAA, the average price of standard, or regular grade, gas in Washington is $4.647 per gallon as of Friday morning, up from last week’s $4.401. However, prices have increased substantially compared to last year, when gas was $4.151.
California has the second-highest gas prices in the nation at $4.640 per gallon, followed by Hawaii at $4.465 per gallon.
Myers noted that at about this time last year, then-Gov. Jay Inslee was touting a statewide $200 energy rebate from local utilities, funded by CCA revenue, to more than 675,000 low-income households. The credit was intended to provide relief from rising energy costs. The program officially ended on Sept. 15, 2024.
Myers and WPC have recently been critical of the Department of Ecology, claiming the agency has failed to produce emissions data to prove whether Washington is meeting its climate goals.
Allowance prices were higher than market expectations at the Sept. 3 auction, triggering a special allowance sale to help manage costs.
On Oct. 1, the Department of Ecology will hold a regularly scheduled auction of allowances from the price containment reserve account. This will allow businesses to make up any allowance shortages in their accounts ahead of the Nov. 1 compliance deadline.
A second reserve auction, based on the September quarterly auction’s settlement price, will follow on Nov. 12. Allowance prices in both auctions will be fixed at $60.43 per allowance.
This year’s final quarterly auction will be held on Dec. 3.
