Washington’s 11th Cap-and-Invest Auction Sells Out, Raises $446 Million

The Washington Department of Ecology on Sept. 10 reported that all available emissions allowances were sold in the state’s 11th quarterly carbon auction, underscoring market confidence. The auction raised an estimated $446 million, which includes $295 million for the state and $151 million to benefit utility ratepayers. This brings the total state proceeds close to $3.5 billion since the launch of the Cap-and-Invest program in 2023.

The latest auction, held on Sept. 3, sold all 6,937,001 allowances available at a settlement price of $64.30. The auction offered current vintage allowances from 2024 and 2025 and no future vintage allowances were offered. The settlement price is nearly 10 percent higher than the June auction in which current allowances cleared $58.51 per ton. The previous auction included future allowances.

The program functions by setting a declining cap on statewide emissions and requiring major polluters to either purchase allowances to cover their emissions or cut pollution. Over time, the cap tightens as fewer allowances are released, incentivizing long-term emissions reductions. Revenue from Washington’s auctions is earmarked for a wide range of projects, including clean transportation, community climate resilience, and pollution reduction, underscoring the policy’s dual role in curbing emissions and funding statewide climate solutions.

The department will hold a regularly scheduled auction on Oct. 1 offering allowances from the price containment reserve account, providing businesses the opportunity to cover any shortfalls ahead of the Nov. 1 compliance deadline. Further, a reserve auction will take place on Nov. 12, using the September quarterly auction’s settlement price. In both auctions, allowances will be offered at a fixed price of $60.43 each.

Washington is preparing to link its market with California and Quebec. A joint carbon market would allow for combined auctions and a larger trading pool, reducing volatility and expanding compliance flexibility. The state expects to finalize the linkage process by 2026 or 2027.