Washington raised $370.6 million in the Department of Ecology’s final quarterly carbon auction of 2023, bringing in a total of approximately $2 billion in the first year of the state’s cap-and-trade program aimed at substantially decreasing carbon emissions by 2050.
The cap-and-trade portion of the Climate Commitment Act, which went into effect at the beginning of the year, requires emitters to obtain "emissions allowances" equal to their covered greenhouse gas emissions at quarterly auctions hosted by the Department of Ecology.
The $2 billion figure includes all four quarterly auctions held this year – the last one held on Dec. 6 – and two Allowance Price Containment Reserve auctions. The APCR is a separate pool of allowances that can be released into the market when increased demand at a quarterly auction pushes prices above a certain level.
Auction settlement prices – the price announced by Ecology at the conclusion of each auction that all successful bidders pay for each allowance – had gone up during the second quarter and third quarter auctions, but went down during the fourth quarter auction.
The settlement price for the first quarter of 2023 for one metric ton of carbon was $48.50; $56.01 for the second quarter; $63.03 for the third quarter; and $51.89 for the fourth quarter.
Todd Myers, director of the Center for the Environment at the free market Washington Policy Center think tank, pointed out something interesting about the final settlement price for the most recent auction.
“The most notable thing about the allowance price is that it is one penny below the threshold of $51.90 that triggers a special auction of CO2 allowances from the credit reserve,” Myers observed in a Monday blog. “If the settlement price had been one cent higher, Ecology officials would have held a special auction to put more emission credits on market in an effort to drive prices down.”
He explained his reasoning: “In the first special [APCR] auction, Ecology offered just over one million allowances split between $51.90 and $66.68. In the second special auction, Ecology offered another five million credits at $51.90.”
