Understanding the cap-and-invest law that Washington Initiative 2117 would repeal.

In 2021 Washington enacted the Climate Commitment Act, becoming only the second US state (after California) with an economy-wide cap-and-invest program. With the passage of the Climate Commitment Act, Washington also put in place its primary enforcement mechanism for achieving the state's greenhouse gas reduction goals. The law went into effect in January 2023.

In November 2024, Initiative 2117 on Washington's ballot puts to voters the option to keep the program or repeal it. (The initiative also prohibits Washington from enacting a new carbon tax or cap-and-invest program). By way of education about the policy, Sightline answers frequently asked questions about the Climate Commitment Act's cap-and-invest program and how it has worked to date.

How does the Climate Commitment Act cap greenhouse gas emissions?

Washington law, originally enacted in 2008 and updated in 2020, mandates that the state cut its greenhouse gas emissions roughly in half by 2030 and by 95 percent by 2050. Put another way, the state emitted more than 100 million metric tons of greenhouse gas pollution in 2019 (the most recent year data is available); by 2030, Washington must shrink that figure to 50 million metric tons and to 5 million metric tons by 2050.

The Climate Commitment Act is the primary policy Washington has to attain these statewide emissions targets. The 2021 law directed the Washington State Department of Ecology to set a declining cap on pollution for companies that emit more than 25,000 metric tons of greenhouse gases annually. This cap set by the Climate Commitment Act covers roughly 75 percent of the state's total greenhouse gas emissions.

Washington counts about 160 facilities that emit more 25,000 metric tons of greenhouse gases annually, including the state's five oil refineries, several utilities, and manufacturing companies, such as steel and cement factories.

To enforce the emissions cap, the Climate Commitment Act requires the state's top polluters, known in the law as "covered entities," to acquire one allowance for each metric ton of carbon dioxide equivalent (CO2e) they release into the atmosphere. (The Climate Commitment Act exempts pollution from combusting certain fuel types, such as jet fuel and biofuels, from emissions calculations.) Each year, the Department of Ecology gradually ratchets down the number of allowances available, according to a declining allowance budget (shown below) that tracks Washington's overall greenhouse gas emissions targets. As allowances become scarcer over time, they rise in price, incentivizing polluters to reduce their emissions rather than buy allowances.

It's still too early to know whether Washington's Climate Commitment Act cap has lessened the state's climate pollution. For one, Washington has not released data on the state's greenhouse gas emissions since the Climate Commitment Act went into effect.

In addition, the law's first compliance deadline has not yet occurred. On November 1, 2024, covered entities will have to submit their first set of compliance instruments (i.e., allowances or offsets - more on offsets below) equal to 30 percent of their prior year's emissions. (Emissions are counted in aggregate per four-year compliance period. There are seven compliance periods between 2023 and 2050.) By the end of each compliance period, covered entities must have submitted compliance instruments for all their emissions over the prior four years. That means the emissions impact of the Climate Commitment Act will not become clear until at least 2026.

How do polluters get allowances?

All polluters covered under the Climate Commitment Act (those emitting more than 25,000 metric tons of greenhouse gases annually) must obtain allowances equal to their emissions, whether by buying them in an auction or receiving them for free from the state. Washington provides free allowances to three types of businesses:

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