The Washington state legislature has passed a climate policy package that includes a mandate for a cap-and-trade program modeled after the Western Climate Initiative (WCI) jurisdictions of California and Québec.

Senate Bill (SB) 5126, “An Act Relating to the Washington Climate Commitment Act”, requires the Washington Department of Ecology (ECY) to set a statewide cap on greenhouse gas emissions. Though lawmakers have approved the package, which also includes a low-carbon fuel standard (LCFS), the implementation of both programs is still dependent on the passage of a separate transportation-spending package by 1 January 2023, the mandated start date of the cap-and-trade program.

SB 5126 is currently awaiting the signature of Washington Governor Jay Inslee. SB 5126 requires ECY to introduce implementing legislation in the 2022 legislative session developed in consultation with emissions-intensive, trade-exposed (EITE) businesses, environmental advocates, and particularly impacted communities. The bill shall outline a compliance pathway for EITE firms to achieve their proportionate share of the state's emissions reduction limits through 2050.

The cap-and-trade program aligns with Washington’s statutory emissions limits of 50 million tonnes of CO2e in 2030, 27 million tonnes of CO2e in 2040, and 5 million tonnes of CO2e in 2050. It aims to contribute to reaching the state’s GHG reduction goals of 45% below 1990 levels by 2030 and 95% by mid-century. In the first compliance phase (2023-2026), the program covers transportation fuel suppliers, in-state power generators, and industrial facilities that emit at least 25,000 tonnes of CO2e per year, as well as electricity importers and natural gas suppliers whose electricity consumption corresponds to more than 25,000 tonnes of CO2e.

Guest post from ICAP