Pacific Northwest
This April 2, 2010 file photo shows a Tesoro Corp. refinery, including a gas flare flame that is part of normal plant operations, in Anacortes, Wash. The Washington Department of Ecology is releasing its report on the first-ever state carbon auction. (Ted S. Warren/AP Photo)

WA - Washington’s first carbon auction sold pollution for $300 million

Under the Climate Commitment Act, the money will go toward funding climate solutions and investing in communities that face environmental injustice.

When the Washington State Department of Ecology opened its first carbon auction in February that put a price on pollution, bids flew in for three hours from the state’s largest oil refineries, manufacturers, natural gas companies and energy providers.

“It’s not like in a James Bond movie or an art action, where somebody is, like, ‘Look at this vase,’ and it’s for whoever is the richest person in the room,” said Claire Boyte-White, the Department of Ecology’s cap-and-invest policy relations manager. “It’s actually the opposite of that.”

In its first year of implementation, under the Climate Commitment Act, passed in 2021, businesses convene through an online platform and propose how much they want to pay for each allowance, which is equal to one metric ton of carbon emissions. Facilities generating more than 25,000 metric tons each year must participate in the program or face fines of up to $10,000 per violation per day for noncompliance.

The Department of Ecology aims to cap emissions by offering a limited number of allowances at each auction. While awarded to the highest bidders, it is the lowest bid — before the allowances sell out — that sets the price. This round, the price for each allowance was set at $48.50.

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The state sold more than six million allowances, totaling $300 million. The act requires that this revenue fund climate solutions, like electric vehicles, and invest in communities facing environmental justice concerns, like those overburdened by poor air quality. With three more auctions scheduled for later this year, the vitality of a new economic market will begin to unfold for businesses working to comply with the new law and local leaders hoping to put these dollars to work.  

Paula Sardinas, founder of Washington Build Back Black Alliance, notes that because businesses can no longer pollute for free, people who live in communities near fossil fuel facilities could finally see investments in their health and livelihoods.

“They deserve to have a good environment with clean air and clean water, and they should be allowed to stay in their community with their familial relationships, their church, their school,” Sardinas said. She speculated that the money from the carbon auctions could be used for air monitoring, decarbonized affordable housing and electric school buses.

The law specifies that funds should be allocated toward “overburdened communities,” but which areas actually get the money for these environmental projects won’t be known until the Legislature makes its allocation decisions.

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While the Department of Ecology has projected a multimillion-dollar cap-and-invest program – for example, they estimated $511 million in 2023 – Boyte-White can’t predict how engaged future auctions will be.

“We’re excited to see the program working so effectively with robust participation and demand, but it’s one data point,” said Boyte-White. “We anticipate both participation and prices to ebb and flow. It’s important to not get carried away with the narrative of how much it's going to be because each auction is unique.”

‘Only the beginning’  

Washington’s new law aims to aggressively lower carbon emissions, the main culprit behind manmade climate change. The Department of Ecology created an emission reduction target — “the cap.” Each year, the state lowers the cap and reduces the amount of allowances available, with the goal of slashing emissions by 95% in 2050.

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