The Cap-and-Invest Program
In 2021, Washington passed the Climate Commitment Act (CCA), establishing one of the most comprehensive carbon reduction programs in the United States. The cap-and-invest program sets a declining limit on carbon emissions from large emitters, including fuel suppliers.
How It Works
- Quarterly auctions where carbon allowances are sold
- Prices determined by market demand
- Revenue funds climate and clean energy projects
- Companies must purchase allowances for each metric ton of carbon emitted
Recent Auction Results
2023 Range
$48-$63
per allowance
Sept 2024
$29.88
per allowance
Dec 2024
$40.26
per allowance
Post-Election Price Surge
After voters rejected the repeal measure in November 2024, carbon allowance prices rebounded 35% at the December auction.
Impact on Gas Prices
| Allowance Price | Cost Per Gallon |
|---|---|
| $30/allowance | ~$0.32/gallon |
| $40/allowance | ~$0.43/gallon |
| $60/allowance | ~$0.64/gallon |
The Clean Fuel Standard
Separate from cap-and-invest, the Clean Fuel Standard (CFS) requires gradual reductions in the carbon intensity of transportation fuels sold in Washington. This program started January 1, 2023, and aims to reduce carbon intensity 20% below 2017 levels by 2034.
Compliance Options
Blend
Mix lower-carbon fuels
Purchase
Buy credits from clean fuel producers
Invest
Fund EV infrastructure
CFS credit prices in 2024 have ranged from $20 to $40 per credit, adding approximately $0.05 to $0.15 per gallon to fuel costs.
Combined Program Costs
Together, these programs currently add approximately $0.45 to $0.60 per gallon to Washington fuel prices, depending on current allowance and credit prices.
Where does the money go? Revenue from cap-and-invest funds clean transportation projects, climate resilience initiatives, and support for affected communities. In 2023-2024, the program generated over $2 billion for these purposes.
The Debate
Supporters Argue
- Programs are necessary to address climate change
- Revenue funds important environmental projects
- Costs will decrease as clean alternatives become available
Critics Argue
- Disproportionate impact on lower-income residents
- Washington's emissions are small globally
- Costs exceed initial projections
Looking Ahead
With voters rejecting repeal efforts in November 2024, these programs will continue. Consumers can expect continued price fluctuations based on allowance auctions, gradual increases in carbon intensity reduction requirements, and potential program modifications by the legislature.