(The Center Square) – The price for CO2 emissions allowances for the final quarter of 2024 was set in an auction last week, settling at $40.26 per allowance-the highest so far this year.
The last auction price was $29.88 per MT (metric ton) of CO2.
“That price is likely to continue to go up because the way prices are set is an auction of allowances and the number of allowances that are available will go down next year,” said Vice President for Research at Washington Policy Center Todd Myers.
“If you reduce the supply of something, prices are going to go up, so that’s probably what we’ll see next year,” said Myers.
The new auction price came one month after voters rejected a measure (I-2117) that sought to repeal the state’s cap-and-invest program.
Under the Climate Commitment Act of 2021 – which went into effect at the beginning of 2023 – emitters are required to obtain “emissions allowances” equal to their covered greenhouse gas emissions at quarterly auctions hosted by the state Department of Ecology. One carbon credit permits the emission of one ton of carbon dioxide or the equivalent of other greenhouse gases. Carbon credits are also known as carbon offsets. While emitters bid on the credits, others can register to bid on them as well. Climate activists and trading firms outside the state are registered to place bids.
Myers explained CO2 emissions will need to go down by about 12% per year between now and 2030, in order to meet the targets set by the Climate Commitment Act.
“That is not doable without severe economic pain and that’s what’s going to end up happening. You’re going to see prices go up significantly,” said Myers.
There is some good news, at least in the short term for drivers.
“The increase (in the auction prices) was less than expected, with the private market putting the price at $59 per metric ton, so the increase was already built into prices at the pump so we are not likely to see a big jump at the pump in the near term,” said Myers.
The average price per gallon in Washington on Thursday was $3.95, which is 93 cents higher than the national average, but well below where prices were one year ago at $4.26 per gallon on average.
Myers told The Center Square their focus now is on making sure CCA money is spent as promised.
“There are multiple problems with the way CCA money is spent, with a lot of it simply wasted on political agendas, not on actually helping the environment,” he said. “Now that voters have said they want to spend this money, let’s make sure it’s spent well and there’s a lot of room for improvement.”
As Washington Policy Center reported, during The Seattle Times editorial board debate on I-2117, which sought to repeal the CCA, members of the board raised concerns about the lack of transparency and accountability for how the CCA money was being spent, pointing out, “There is no exact tracking of the effectiveness of spending on initiatives paid for by the act.”
The Department of Ecology did not respond to a request for comment in time for publication.
