The Washington Climate Commitment Act is a 2021 state law that puts a shrinking cap on greenhouse gas emissions from Washington’s largest polluters, requires them to buy permits for every ton of carbon dioxide they release, and spends the auction proceeds on transportation electrification, clean energy, and pollution reduction in the communities hit hardest by dirty air. Voters affirmed the program in November 2024, rejecting a repeal measure by roughly 62 percent to 38 percent.
What the Law Requires
The Act sets legally binding emission limits, measured against Washington’s 1990 greenhouse gas levels:
- 45 percent below 1990 levels by 2030
- 70 percent below by 2040
- 95 percent below by 2050, reaching net-zero statewide
These targets are written into state statute, not set as goals a future legislature can quietly drop.1Washington State Legislature. RCW 70A.45.020 – Greenhouse Gas Emissions Reductions – Reporting Requirements To get there, the Department of Ecology sets a cap on total emissions from all covered sources and ratchets it down every year.2Washington State Legislature. RCW 70A.65.060 – Greenhouse Gas Emissions – Limits – Department Duties If a compliance-period review shows the state is falling short, Ecology has to tighten future budgets to close the gap.
Each unit under that cap is an emissions allowance, and one allowance lets its holder release one metric ton of carbon dioxide equivalent.3Washington State Legislature. RCW 70A.65.100 – Allowance Distribution Because the pool of allowances shrinks over time, polluters face steady financial pressure to cut emissions rather than just keep buying permits.
Who Has to Participate
Any facility, electric utility, or fuel supplier that releases 25,000 metric tons or more of carbon dioxide equivalent in a year is automatically a covered entity. That brings in refineries, large manufacturers, power generators, and the companies that distribute gasoline and natural gas. Starting in 2031, the threshold drops to 10,000 metric tons, pulling in a wider range of mid-size emitters.4Washington State Legislature. RCW 70A.65.080 – Covered Entities
Smaller businesses can join voluntarily as opt-in entities if it suits them, typically because they want to sell surplus allowances or get ahead of future rules.5Washington State Legislature. Chapter 70A.65 RCW – Greenhouse Gas Emissions – Cap and Invest Program
About 40 Washington facilities get a special category: emissions-intensive, trade-exposed industries. These are manufacturers in sectors like steel, aluminum, cement, paper, semiconductors, and transportation fuels that compete against producers in places without carbon pricing.6Washington State Department of Ecology. Emissions-Intensive, Trade-Exposed Industries (EITEs) They receive free allowances on a declining schedule, so the program doesn’t just push the same emissions across the state line while taking the jobs with them.
How the Auctions Work
The Department of Ecology holds quarterly auctions where registered entities bid on allowances. No single bidder can take home more than 10 percent of what’s offered in any auction, which is meant to prevent market manipulation.7Washington State Legislature. RCW 70A.65.110 – Allowance Distribution
Prices are bounded on both ends. A floor price keeps allowances from selling so cheaply that they stop driving real reductions. A ceiling, set at $80 per allowance for 2026 and 2027, protects covered entities from runaway costs; if demand would push prices higher, Ecology issues additional units at the capped rate.8Washington State Legislature. RCW 70A.65.160 – Price Ceiling
In the first quarterly auction of 2026, allowances settled at $65.26 per metric ton and generated an estimated $183 million in revenue. Since the program launched in 2023, state agencies have put over $1.5 billion in cumulative auction revenue to work across dozens of programs.9Washington State Department of Ecology. Auction Revenue
Where the Money Goes
The law routes auction proceeds into several dedicated accounts, each limited to specific uses.
The Carbon Emissions Reduction Account funds transportation projects only: transit, active transportation, alternative fuels, vehicle electrification, ferries, and rail. The money is barred from general highway construction.10Washington State Legislature. RCW 70A.65.240 – Carbon Emissions Reduction Account
The Climate Investment Account is the first stop for general auction receipts. After administrative costs (capped at 5 percent), 75 percent of the remainder goes to the Climate Commitment Account and 25 percent to a Natural Climate Solutions Account that supports land-based carbon storage.11Washington State Legislature. RCW 70A.65.250 – Climate Investment Account
A separate Air Quality and Health Disparities Improvement Account targets pollution monitoring and reduction in communities identified through environmental health mapping as disproportionately affected by poor air quality.5Washington State Legislature. Chapter 70A.65 RCW – Greenhouse Gas Emissions – Cap and Invest Program A portion of total spending has to benefit tribal nations and overburdened communities, and the Department of Commerce administers grant programs open to local governments, schools, nonprofits, tribes, and private businesses.12Washington State Department of Commerce. Climate Commitment Act Dollars at Work – Community Decarbonization Commerce provides technical help through contracted consultants for applicants who don’t have experience competing for state grants.
What It Costs You
Fuel suppliers are covered entities, and their allowance costs don’t stay at the refinery. They flow through to the pump and the utility bill.
Estimates of the per-gallon impact on gasoline have varied with allowance prices and methodology. Early analyses pegged the increase at roughly 25 cents per gallon above historical price differentials. More recent 2025 estimates placed the figure in the 52 to 58 cent range as allowance prices climbed. The actual pass-through shifts quarter to quarter with auction settlement prices, refinery margins, and competitive conditions.
To cushion lower-income households, the state used CCA revenue to create the Washington Families Clean Energy Credits program. In 2024, it provided a one-time $200 energy bill credit to eligible electricity customers at or below 80 percent of area median income. Customers already enrolled in utility assistance programs like LIHEAP generally received the credit automatically; others had to apply. The program targeted roughly 675,000 households, about 20 percent of the state’s residential electricity customers.
The 2024 Repeal Vote
Initiative 2117, on the November 2024 ballot, would have prohibited carbon tax credit trading and repealed the cap-and-invest program outright. Voters rejected it, roughly 62 percent to 38 percent. The result settled the most immediate political challenge to the law and gave it a layer of democratic backing that a legislative vote alone doesn’t carry.
What’s Next: Linking With California and Québec
Washington’s program was built with the option of connecting to other carbon markets. In March 2026, Washington, California, and Québec released a draft agreement to merge their markets into a single linked system, with public feedback accepted through May 1, 2026.13Washington State Department of Ecology. Washington, California, and Quebec Take the Next Step Towards Linking Carbon Markets by Releasing Draft Agreement If the remaining steps stay on schedule, a linked market could begin operating as early as 2027.
A combined market would bring a larger pool of buyers and sellers, which should steady prices and reduce the risk of cost spikes in any one jurisdiction. Washington entities would be able to buy allowances or offsets generated in California or Québec, and vice versa. The $80 Washington ceiling would need to be synchronized with California and Québec’s own cost-containment mechanisms; the statute lets Ecology adjust the ceiling to align with linked jurisdictions but doesn’t let it drop below the current level unless the change is necessary for linkage.8Washington State Legislature. RCW 70A.65.160 – Price Ceiling