Some $300 million could be coming back to Washington after its first pollution auction
Thu., March 9, 2023
OLYMPIA – The state’s largest polluters took part in their first quarterly auction last week as part of Washington’s new cap-and-trade program, possibly bringing in nearly $300 million for the state to use on projects to fight climate change.
The cap-and-trade program passed the Legislature in 2021 and went into effect this year, an effort to lower greenhouse gas emissions across Washington by requiring the state’s largest polluters to clean up their work.
Similar to a model in California, the program allows the Department of Ecology to set a cap on emissions every year.
Companies that can’t meet the cap – facilities that emit more than 25,000 metric tons of carbon dioxide – can purchase allowances from the state through quarterly auctions.
The Department of Ecology on Feb. 28 held its first auction for the program where companies could buy or sell allowances as they need. The floor price for allowances was set at $22.20, but companies involved in the auction settled the price at $48.50, according to a news release from the department. More than six million allowances were sold.
During the auction, all companies place bids on how much they want to pay for an allowance. Once all companies bids are accounted for, the lowest bidding price will be what everyone pays for the allowances, program manager Luke Martland told The Spokesman-Review in December.
The final amount that the state will get from the auction will be determined in a report released March 28, but the first auction alone is likely to give the state almost $300 million .
The department will have three more auctions this year, likely generating hundreds of millions more for the state to use to fight climate change and help those who are more likely to be affected by it.
Critics of the program say the added cost to companies to comply could result in higher costs of gas for the average Washington resident, though exactly how much of the cost a company passes onto their customers is up to the business. Supporters, on the other hand, say it is a necessary program to help the state reach its goal of curbing emissions by 95% by 2050.
Gov. Jay Inslee said in a statement Tuesday that the cap-and-trade program is crucial to addressing climate change.
“This is truly historic for Washington and for the global movement toward a low-carbon future,” Inslee said. “The costs of climate change are coming to bear on families and communities, and industry plays an important role in the transition away from carbon.”
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