(The Center Square) – Washington state’s third quarterly auction of emissions allowances under the cap-and-trade program established by the Climate Commitment Act brought in more than $541 million, according to a Wednesday summary report put out by the Department of Ecology.
That dollar figure is derived by multiplying the $63.03 allowance price at the Aug. 30 auction by the 8.585 million allowances that were sold.
Per the Climate Commitment Act passed by the state Legislature and signed into law by Gov. Jay Inslee in 2021, Washington’s cap-and-trade program requires emitters to obtain “emissions allowances” equal to their covered greenhouse gas emissions. Similar to stocks and bonds, these allowances can be obtained through quarterly auctions hosted by the Department of Ecology.
This most recent quarterly auction is “the first opportunity for entities to consign allowances to auction,” according to a Department of Ecology news release announcing the preliminary sale results.
This means that 5.66 million of the total 8.585 million credits – $356.6 million – sold will go directly to the Department of Ecology to be invested into communities in Washington via programs that emphasize climate resilience, improved air quality and the creation of jobs.
The remaining 2.93 million allowances – or $184.5 million – are consignment shares that are given out free each year to carbon-intensive entities such as public utilities, natural gas companies and high-power usage manufacturers.
These entities can sell these shares on the open market and use the funds to, in the case of public utilities, reduce customers’ bills, or reduce their carbon emissions, in the case of natural gas companies and high-power usage manufacturers.
In addition to the three quarterly auctions held so far, on Aug. 9, the Department of Ecology held a special Allowances Price Containment Reserve auction meant to help minimize allowance price volatility. The APCR is a separate pool of allowances made available when the prices at a quarterly auction exceed a certain level.
All four auctions have brought in a total of more than $1.4 billion.
The next quarterly auction is set for Dec. 6.
