US ELECTIONS: Washington state carbon market survives election; regular operations continue

A ballot initiative proposing to repeal Washington state’s carbon market failed Nov. 5, according to the Associated Press, likely resulting in a carbon allowance price increase.

Ballot Initiative 2117 gave voters the choice to repeal the 2021 Climate Commitment Act and its signature compliance carbon market.

Carbon prices will likely start trading at the higher levels seen by the market before the ballot initiative was introduced, according to Matt Williams, emissions and clean energy analyst at S&P Global.

The Washington program frontloaded reserve accounts in 2023, Williams said. Prices will likely return to around the 2025 reserve tier price, which is expected to be near $60 per allowance, he said.

The introduction of Initiative 2117 to ballots caused prices in the market to fall 50% quarter on quarter to about $25/allowance. The threat of repeal also caused one auction to fall short of selling out future vintage carbon allowances. Those unsold allowances will be offered in a 2027 auction.

Prices stagnated just below the $30/allowance mark in the last auction before the election.

The program will continue its normal operations, maintaining its auction and compliance deadline schedules.

Washington’s cap-and-invest program was built with linkage in mind, specifically linking with the California-Quebec joint carbon trading program. This action would standardize carbon prices across all three jurisdictions. A formal carbon market linkage deal is expected by the end of next year, the jurisdictions said in a joint statement Sept. 23.