Washington Carbon Allowances Rally $10/mt; Cap-and-Invest Program to Continue
Washington Carbon Allowance (WCA) secondary market prices spiked $10/mt Wednesday morning following state voters’ decision Tuesday night to maintain the Cap-and-Invest Program.
Ballot measure Initiative 2117 failed with 61.69% or 1.57 million votes “no” and 38.31% or 973,000 votes “yes,” according to preliminary state results published Tuesday. The measure sought to repeal parts of Washington’s Climate Commitment Act (CCA) including the Cap-and-Invest Program.
The program will continue to operate as scheduled.
On Wednesday morning, V24 WCAs for December 2024 delivery reached a year-to-date high of $61.75/mt. Trades done at that level on the Intercontinental Exchange were followed by trades at $58/mt and $59/mt, as of 1 p.m. ET. OPIS on Tuesday assessed WCA V24 December 2024 at $50.85/mt.
WCA prices began a steep descent in mid-January when the initiative was validated by the Secretary of State. On that day, Jan. 16, WCA V24 December 2024 was assessed at $50/mt. On March 15, the assessment reached a record low of $29.50/mt.
Meanwhile, On March 6, the WCA auction settlement plummeted in the first quarterly event to $25.76/mt, close to the 2024 auction reserve price of $24.02/mt.
Leading up to the election, the price recovered ground on positive sentiment for the longevity of the program.
OPIS Carbon Policy Analyst Kate Haerizadeh said Tuesday that the vote reinforced Washington’s position as a climate leader and “could catalyze similar action across the nation; therefore, making Washington an important voice in the broader climate policy landscape.”
Other states may use “Washington’s Cap-and-Invest framework as a benchmark for achievable climate policy,” she said.
The fourth-quarterly auction on Dec. 4 will offer 10.2 million WCAs. The state Department of Ecology is scheduled to release auction results on Dec. 11.
In opposition of the Cap-and-Invest Program, State Representative Jim Walsh (R) filed Initiative 2117 in November 2023. That campaign was further funded by Let’s Go Washington Republican donor Brian Heywood.
Future Linkage in Focus
In September, California and Québec and Washington lawmakers said a deal to link the state’s emissions trading programs could be finalized as early as Spring 2025.
California and Québec linked Cap-and-Trade Programs in 2014.
“This linkage would expand Washington’s carbon market, allowing for increased trading opportunities and stabilizing allowance prices,” Haerizadeh said. “A link would amplify Washington’s climate leadership by aligning it with other regions committed to ambitious climate action, creating a more unified cap-and-trade system across the U.S. West Coast.”
Reporting by Slade Rand, srand@opisnet.com
Editing by Bridget Hunsucker, bhunsucker@opisnet.com
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