The state of Washington’s second cap-and-trade Allowance Price Containment Reserve (APCR) auction raised almost $259.5 million, the state’s Ecology Department said Nov. 15.
The auction held on Nov. 8 cleared all 5 million carbon emissions allowances put up for bid at a Tier 1 price of $51.90, which represents the soft cap price that triggers the need for the secondary APCR auction. August’s quarterly auction blew through the cap when it cleared at $63.03. (See Wash. Allowance Prices Surge Again in 3rd Cap-and-trade Auction.)
The APCR auction is a mechanism intended to keep carbon prices in check by releasing a reserve of allowances only to “compliance” entities — those organizations that need to cover direct emissions. The APCR is not available to financial traders of allowances.
Thirty entities participated in the second APCR auction, including oil refiners, natural gas companies, electric utilities and the state’s two largest public universities.
The state’s first APCR auction took place in August, raising $62.5 million. (See Wash. Raises $62.5M from Cap-and-trade Reserve Auction.)
That take from the latest auction translates into more than $1.72 billion collected so far in 2023, the first year of Washington’s cap-and-invest program. Most of the money will go to climate change-related projects.
The state legislature last spring appropriated roughly $300 million from the state’s first auction in February. Gov. Jay Inslee (D) next month likely will unveil his proposals for the funds in preparation for the 2024 legislative session scheduled to begin in January.
Washington has one auction left to conduct for 2023, which will occur in December.
Conservative critics of Washington’s cap-and-trade program have blamed it for the state’s high gasoline prices. When the program was approved in 2021, Inslee’s administration contended it would add only a few pennies per gallon to prices at the pump. This has prompted intense criticism from Republicans.
Washington this month said it tentatively will seek to link its cap-and-trade system with the California-Quebec market in an effort to reduce the impact on gas prices. (See Wash. Looks to Join California-Quebec Cap-and-Trade Market.) In its last auction, the California-Quebec program cleared allowances at roughly $36.