State eyes $300M haul from first-ever carbon emission auction

More than 6 million pollution allowances were snapped up in a three-hour bidding window.

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OLYMPIA — The state’s first-ever auction of pollution allowances generated roughly $300 million for programs to reduce greenhouse gas emissions and combat the effects of climate change in Washington.

In the three-hour auction Feb. 28, the 6.18 million available allowances were sold at a settlement price of $48.50 each, the state Department of Ecology reported Tuesday. Each allowance is equal to one metric ton of carbon dioxide.

The proceeds would work out to just under $300 million for spending on clean energy projects, transportation and programs to help communities hard-hit by air pollution. Lawmakers earmarked $5.4 billion in future revenue in the 16-year Move Ahead transportation package approved last year.

The 2021 Climate Commitment Act created a cap-and-trade program aimed at getting the state’s largest polluters to reduce emissions. Under the program, the state places a limit on the amount of carbon pollution that can be emitted by certain industries, requiring businesses with high emissions to purchase allowances to cover their carbon output.

The number of allowances available will be gradually reduced, encouraging companies to invest in cleaner technologies and processes, according to the state Department of Ecology. Allowances will be sold in quarterly auctions. The next one is in May.

“The costs of climate change are coming to bear on families and communities, and industry plays an important role in the transition away from carbon,” Gov. Jay Inslee said in a statement Tuesday. “This cap-and-invest system is crucial to our approach to addressing climate change, and we are very encouraged to see this program starting off so well.”

Once financial transactions for successful bids are completed, the total amount of revenue raised will be reported by the department. That information is expected to be made public March 28.

Jerry Cornfield: 360-352-8623; jcornfield@heraldnet.com; Twitter: @dospueblos.

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