Major emissions-intensive industries that are subject to foreign or out-of-state competition, dubbed “Emissions-Intensive Trade-Exposed” industries (EITE), receive specific statutory protections to prevent “leakage” of GHG-intensive industries to non-regulated regions, primarily a grant of GHG credits at no charge through 2035, with a declining cap on free allowances after that. The auction mechanism includes limits intended to ensure that GHG credits remain affordable, that prices are high enough to provide incentives for investments in decarbonization, and that prices are not distorted by market manipulation.įollowing a “cap-and-invest” model, auction funds will be deposited into accounts that pay for transportation and climate projects, with approximately 50% of auction revenues going to each account. The Washington Department of Ecology (Ecology) will establish an annual auction mechanism for the sale of GHG emissions credits, with the level established based on a benchmark established from recent emission levels, and with declining caps tied to the state’s GHG reduction goals. Key Takeawaysīeginning on January 1, 2023, Washington will adopt a cap-and-trade system for reducing GHG emissions economy-wide, with a declining cap on GHG emissions and a system for trading emissions credits that will tie into existing trading regimes in California, Quebec, and elsewhere.Įntities that emit more than 25,000 metric tons of carbon dioxide-equivalents will be subject to the cap, including industrial sources, in-state electric generation, natural gas utilities, and fuel suppliers. In combination with the Clean Energy Transformation Act, enacted in 2019, and the newly-enacted Clean Fuel Standard, the legislation sets a course for the state to decarbonize its economy by 2050. Jay Inslee signed the Washington Climate Commitment Act (CCA), which will create an economy-wide cap on greenhouse gas (GHG) emissions and create a system in which GHG credits are auctioned and can be traded. Public Services, Infrastructure, Transportation.
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