(The Center Square) – Washington State Department of Ecology Director Laura Watson will announce at 10 a.m. on Thursday, Nov. 2, her decision on whether to link the state’s cap-and-trade program with the joint California-Quebec market.
A component of the state’s Climate Commitment Act, cap-and-trade puts a price on emissions in the form of carbon auctions, which the state hopes will motivate large industrial polluters – oil refineries and energy utilities, for example – to reduce their emissions.
The California-Quebec market, established in 2014, is approximately six times the size of Washington’s total emissions allowance market.
“The CCA requires Ecology to connect, or ‘link,’ Washington’s carbon market to similar programs in other areas if specified criteria are met,” a Tuesday Ecology media advisory states. “These criteria include considering how linkage might impact Washington’s communities, economy, and climate goals.”
The advisory goes on to note, “Such an agreement is expected to produce more stable allowance prices, which would help businesses make long-term plans to reduce emissions.”
Watson will base her decision on information in an Oct. 12 Ecology report examining linkage criteria.
The 97-page report says being part of a larger climate market should result in companies paying lower prices for emissions allowances.
“Linkage would likely improve the cap-and-invest program’s economic durability, longevity, and efficacy,” the report states. “In a larger, more liquid market with a greater number of participants, allowance prices would likely be lower and change more predictably. Predictable prices can foster greater investments in decarbonization.”
The report warns that not pursuing linkage could be a mistake.
“Therefore, Washington continuing as a standalone program and rejecting linkage could lead to the program being curtailed or even repealed, making it significantly more difficult for our state to meet its GHG [greenhouse gas] emission reduction mandates.”
Three quarterly carbon auctions and one Allowance Price Containment Reserve auction have been held so far this year, bringing in more than $1.4 billion meant to go to programs to fight climate change and improve the environment.
Cap-and-trade critics contend that companies are passing the cost to consumers, resulting in higher gas and energy prices.
