Washington has fallen short of its original predictions of how much money its cap-and-invest program would raise in the first half of 2024; the actual total for the first half of the year is about $324.5 million.
Late last year, state officials predicted that carbon pricing auctions would raise $941 million in the first half of this year. But auction prices have dropped dramatically.
Carbon-emitting corporations, including oil companies, bid every three months on state allowances for their pollution emissions.
During 2023, quarterly auction prices ranged from $48.50 for roughly one metric ton of carbon in the first quarter to $63.03 in the third. Those prices were significantly higher than expected, and were blamed for adding 21 to 50 cents per gallon to Washington’s traditionally high gas prices.
In 2024, the first-quarter auction price was $25.76 per allowance, which raised $135.5 million. The second-quarter auction price — publicly announced Wednesday — was $29.92 per allowance, raising roughly $189 million.
Reasons for auction price decreases are unknown, but there has been speculation. One theory is that bidders are unwilling to spend money on a program that could disappear at the end of 2024, when voters decide on a state initiative to repeal the cap-and-invest program. Others believe Washington’s carbon market is stabilizing and that bidders are becoming more savvy about the way they approach the quarterly auctions.
While larger auction prices have been linked to higher gasoline prices, too many extra factors cloud any precise correlations. Numerous economic, geographic and other factors affect the rise and fall of Washington’s prices at the pump. For decades, Washington’s gasoline prices have been among the highest in the nation. On Wednesday, Washington’s average price for regular gas was $4.38 per gallon, compared to a national average of $3.45, according to AAA.
