SEATTLE – Washington’s latest auction of carbon-emission allowances raised an estimated $260 million.
The state Department of Ecology announced Wednesday the results of its second special auction held last week because the previous quarterly auction in August exceeded a “trigger” price of $51.90 per allowance. It was the second time a special auction was triggered by the high allowance prices.
In all, about 31.9 million carbon allowances have been sold this year, hauling in more than $1.5 billion. Each allowance represents one metric ton of emissions from the state’s biggest greenhouse-gas polluters.
The carbon-pricing program is the cornerstone of the 2021 Climate Commitment Act, requiring the state’s biggest polluting businesses to reduce their emissions or purchase allowances to cover their emissions. Over the course of seven three-year periods, state officials will reduce the number of allowances sold, ramping up pressure on the industries to lower their emissions.
The aim is to be mostly carbon free by 2050, in an effort to meet the targets of the Paris Agreement, which sets out an international framework to limit global warming to 1.5 degrees Celsius (or 2.7 degrees Fahrenheit).
Lawmakers this year budgeted about $2 billion in anticipated revenue from the auctions for projects intended to reduce emissions and improve air quality over the next two years.
The recent special auction, intended to act as a pressure-relief valve for a volatile market, is one facet of the new carbon-pricing program. Allowances were sold at a preset price: $51.90.
Officials are pursing merging Washington’s carbon-pricing market with another operated by California and Quebec. This, if successful, could help settle the high prices of pollution, but relief would take time. Assuming Washington, California and Quebec agree to merge their markets, the earliest the process could be finished is 2025, according to state officials.
Members of the state Environmental Justice Council have cautioned pursuing linkage until more is known about how the larger market would affect efforts to make meaningful pollution reductions in Washington.
There were 30 qualified bidders in the latest auction, including oil companies like BP and Marathon, methane gas utilities like Northwest Natural Gas and Cascade Natural Gas, as well as public universities, including the University of Washington and Washington State University.