Washington’s second carbon auction sold pollution for over $500M

Washington’s second carbon auction at the end of May sold pollution for more than $500 million. The first auction of pollution allowances raised almost $300 million in February.

The Washington Department of Ecology announced this week that the May auction sold nearly 8.6 million 2023 allowances and another 2.5 million 2026 allowances. Each unit represents one metric ton of greenhouse gas emissions.

The price on carbon was also higher at the May auction, where bids were received almost entirely from energy companies and utilities. A few other kinds of organizations also were listed as qualified bidders, including the city of Ellensburg, Washington State University and Morgan Stanley Capital Group Inc., a private equity firm.

During the 2023 legislative session, lawmakers made decisions about how to spend the money raised through these auctions, focusing on projects to slow or adapt to climate change. Those investments include money to electrify buses and ferries and build a charging infrastructure, restore salmon habitat, accelerate clean-energy projects and help ease the burden of pollution on vulnerable communities.

This is the first year of implementing the state’s new Climate Commitment Act, which passed in 2021. Businesses generating more than 25,000 metric tons of carbon emissions must participate in the program or face fines up to $10,000 per violation per day.