The Washington State Department of Ecology (DOE) announced Thursday it will pursue linking the state’s cap-and-trade program with the California-Quebec market in an effort to lower prices for carbon dioxide emissions allowances. 

Rep. Keith Goehner, R-Dryden, a member of the House Environment and Energy Committee, issued a statement following the department’s announcement:

“Linkage of Washington’s cap-and-trade program with the state of California and the province of Quebec will not reduce carbon emissions or consumer costs in Washington state. Buying credits from the other entities does not curb pollution or guarantee to improve air quality. We are basically buying permission to continue what we are currently doing.

“Businesses will continue to pass along the cap and trade costs on to consumers further increasing fuel and energy prices. California is not a good example to follow with the highest fuel prices in the nation and among the most expensive retail electricity rates.”

Background:

Washington’s cap-and-trade program (Climate Commitment Act) puts a price on carbon dioxide emissions by setting a declining annual cap on the emissions of covered businesses (such as utilities, refineries, etc.) and forcing them to buy state-issued allowances at quarterly auctions for any emissions above the cap.

When the Climate Commitment Act (CCA) was pushed through the Washington State Legislature in 2021 by Democrats, Gov. Jay Inslee and other supporters claimed it would cost only “pennies” for Washington consumers. However, the three quarterly carbon auctions and two Allowance Price Containment Reserve auctions held so far this year, have brought in more than $1.4 billion – about three times more revenue than expected. As a result, Washington gasoline prices rose sharply relative to Oregon, whose gas prices have historically aligned with Washington state. In addition, Washington fuel prices climbed to more than $5 a gallon, and for a short time this summer, surpassed California for the highest gas prices in the nation.

The California-Quebec market, established in 2014, is approximately six times the size of Washington’s total emissions allowance market. DOE officials claim that linking Washington’s program with the California-Quebec market would increase the number of allowances available and result in lower prices for carbon allowances. However, DOE is seeking legislative changes to the CCA in 2024 to align Washington’s emissions reduction policies with California, which is evidence that tying our programs together requires a loss of sovereignty for Washington. DOE’s forecast of 2023 auction market prices were wildly inaccurate, understating compliance costs by 75%, and doubts exist about the accuracy of DOE’s new prediction that linkage to California and Quebec would lower prices.