Washington Carbon Auction Raises $394 Million as Prices Surge

The Washington Department of Ecology on Dec. 10 completed the fourth quarterly sale of allowances for the state’s Cap-and-Invest program, producing strong demand that is projected to raise $394 million for community investments and climate resilience initiatives. The result marks the twelfth consecutive sold out auction and reinforces the program’s trajectory as Washington prepares for potential linkage with the joint California and Quebec market.

The department offered 7.4 million current vintage allowances and all were purchased at a settlement price of $70.86, which exceeded the $25.85 price floor and surpassed the state’s prior auction price of $64.30. The department also offered 1.9 million future vintage allowances and all were purchased at $29.40, which remained well above the floor price while tracking closer to recent allowance prices in California. A detailed revenue report will be released later in December.

The Cap-and-Invest system requires major emitters to secure one allowance for each ton of greenhouse gases released, with the statewide cap tightening each year. The mechanism limits total emissions while creating a financial signal that rewards companies that reduce output over time. Washington’s first full program year in 2023 produced similarly strong demand, though 2024 saw price volatility while a statewide ballot measure sought to repeal the program. The latest results close the year with an average 2025 settlement price of $60.91 across all quarterly auctions, indicating renewed stability as participants compete for a constrained supply of allowances.

The return of higher settlement prices suggests growing confidence in the long-term structure of the program as participants compete for a declining supply of allowances. The latest results position Washington at a pivotal point as it finalizes the rules that would enable market integration and broaden the scope of the state’s climate framework.