WA Legislature reviews joining CA, Quebec carbon pricing program
Gas prices in Washington state were the highest in the nation this past summer. (Genna Martin/Crosscut)
A proposal to link Washington’s cap-and-invest system with California’s and Quebec’s combined program drew no opposition, but did collect several requests for technical tweaks during a hearing Friday before the Senate Energy & Environment Committee.
Senate Bill 6058 is intended to create a larger carbon-pricing market to bring down bidding allowances, and is supposed to shrink the impact on gas prices of Washington’s cap-and-invest program.
Washington’s year-old cap-and-invest program has added 21 to 50 cents per gallon at the pump, depending on how the calculations are done. The quarterly settlement prices in 2023 — $48.50 to $63.03 per allowance, representing one metric ton of emissions — were much higher than state experts predicted in 2021. By comparison, California’s settlement auction prices began in 2012 at $10 per allowance, reaching slightly above $36 in 2023.
‘“This will help bring down costs for customers,” said Matt Miller, a lobbyist for Puget Sound Energy, at the hearing.
Committee Chairman Sen. Joe Nguyen, D-White Center and sponsor of SB 6058, said joining the larger California/Quebec market would shrink and stabilize auction prices. He hoped that the larger markets would encourage other states to join the coalition to further shrink auction prices. Currently, New York is designing its own cap-and-trade program and New England has a limited program for some utilities.
The earliest this linkage could take place is 2025. However, a public referendum on repealing the entire cap-and-invest program is likely going to Washington voters in November.
Most of the proposed changes in the bill are highly technical, involving how many allowances an individual bidder could buy.
Both business and environmental speakers at the hearing were largely in favor of SB6058, but Sept Gernez of the Washington Sierra Club expressed concerns that lowering auction prices would also decrease the amount of money going to climate-change mitigation efforts – the “invest” part of the system.
Even the Washington Policy Center, which supports eliminating the program entirely due to gas price hikes, spoke in favor of linking with California and Quebec. However, Todd Myers, the WPC’s environmental issues director, wondered if a wider cap-and-trade market would bring outside political and economic pressures into the Washington system.