Ecology details Climate Commitment Act cap-and-invest progress, revenue distribution and linkage talks

Joel Creswell, climate pollution reduction program manager at the Washington Department of Ecology, briefed the Environment & Energy committee on the state’s Climate Commitment Act and its cap-and-invest program, outlining how the market works, how revenue is distributed and steps underway to link Washington’s carbon market with California and Quebec.

The CCA establishes a cap on greenhouse gas emissions from large sources, requires covered entities to obtain allowances equal to their emissions and auctions allowances quarterly. “The CCA creates a market based system for holding the state's largest polluters accountable and ensures that they minimize their pollution,” Creswell said. Ecology issues allowances, some are allocated for free as directed by statute and others sold at auction; each allowance permits one metric ton of carbon dioxide equivalent.

Why it matters: auction proceeds fund statewide climate, transportation and air-quality programs and are intended to provide direct benefits to overburdened communities and tribes. Creswell told the committee the program’s revenue supported a $3.2 billion set of appropriations for the 2023–25 biennium and that agencies reported roughly 335,170 metric tons of CO2e reduced from CCA-funded activities in fiscal year 2024.

Key facts and mechanics

- Covered emissions equal about 70% of Washington’s total; smaller sources and certain fuels (some agricultural, some marine fuels, aviation) are not covered. - Entities emitting at least 25,000 metric tons CO2e typically must purchase allowances; those emitting at least 10,000 metric tons must report emissions. - Allowances trade on a secondary market; prices have fluctuated since program launch. Creswell showed auction-price movement: 2023 auctions ranged roughly $48–$60 per allowance; 2024 prices fell into the $20 range for much of the year and rebounded to just over $40 at a December auction.

Revenue, distribution and environmental-justice commitments

- Ecology reported approximately $1.8 billion in public proceeds in 2023 and about $811 million in 2024 (rough total $2.6 billion). - The CCA establishes three primary accounts (carbon emissions reduction, climate investment, air quality and health disparities improvement) that fund decarbonization, ecosystem resilience, air-quality monitoring and other projects across the state. - The statute directs that at least 35% (with a 40% goal) of appropriations provide direct, meaningful benefits to vulnerable populations within overburdened communities; agencies reported that 61% of FY24 spending met that goal. - The law also directs 10% of appropriations to projects supported by a tribal resolution; Creswell said tribes have reported that the tribal‑resolution requirement can create administrative burden and Ecology plans to discuss alternative ways tribes can indicate support. - Ecology has a $10 million grant program (launched 2024) to help community organizations, municipalities and tribes reduce criteria air pollution in identified overburdened communities.

Air-quality monitoring and community selection

Creswell said Ecology is expanding monitoring in 16 communities identified for higher pollution burdens and is engaging tribes, Environmental Justice Council members and residents on monitor siting. In committee questions, legislators from rural districts (naming George, Mattawa and Ellensburg) asked why low‑traffic communities were selected. Creswell said the selection methodology and per‑community writeups are published and offered to follow up with members’ offices to explain the selection process.

Offsets, linkage and next steps

- The CCA permits limited use of offsets in compliance. Ecology requires Washington offsets to provide direct environmental benefits to Washington and has stricter requirements than some other jurisdictions. - Ecology is pursuing linkage with California and Quebec so allowances could be pooled in joint auctions. Creswell said SB 6058 (2024) addressed statutory barriers to linkage and that rulemaking under WAC 173‑446 was initiated in 2024 and expected to conclude this fall. After rulemaking, Ecology must negotiate a linkage agreement with California and Quebec, hold a public hearing on the draft agreement, issue findings against CCA linkage criteria, and complete an environmental‑justice assessment before a final decision. Creswell said the timing is uncertain.

Questions from committee members touched on whether linkage would reduce in‑state environmental benefits and whether market linkage would disadvantage Washington businesses; Creswell said Washington’s offsets and protocols are designed to ensure direct benefits in state and that Washington would retain control over its emissions cap.

What Ecology will do next

Creswell said Ecology will continue the cap‑and‑invest rulemaking, post quarterly linkage updates as required by SB 6058 and provide additional information to legislators about the selection of overburdened communities and the agency’s monitoring and grant programs.

Ending

Creswell closed the CCA portion of his presentation before shifting to an update on the Clean Fuel Standard. He told members Ecology will keep the Legislature informed as the linkage process and related rulemaking proceed.