Statement from Rep. Mary Dye regarding Washington state linking its carbon market to California and Quebec

The Washington State Department of Ecology (DOE) announced today (Thursday) it will seek an agreement to link the state’s cap-and-trade program with the California-Quebec market in an effort to lower prices for carbon dioxide emissions allowances. Rep. Mary Dye, R-Pomeroy, ranking Republican on the House Environment and Energy Committee, issued this statement following the announcement:

“California has the highest gas prices in the country and the third highest retail electricity rates in the country.  California also is the state that has the most unaffordable housing market and second highest cost of living overall. Everything California policymakers touch related to energy markets ends in disaster for consumers.

“Energy is central to the affordability of your commute, the food you buy, and home heating and cooling. I am concerned how this linkage could affect Washington consumers. Moving forward, the burden will be high to convince me that beginning to tie our state’s energy markets together—which is what happens when you link the market for emissions from that same energy—would not hurt affordability for Washington families and competitiveness for our employers.”

Background:

Washington’s cap-and-trade program (Climate Commitment Act) puts a price on carbon dioxide emissions by setting a declining annual cap on the emissions of covered businesses (such as utilities, refineries, etc.) and forcing them to buy state-issued allowances at quarterly auctions for any emissions above the cap.

When the Climate Commitment Act (CCA) was pushed through the Washington State Legislature in 2021 by Democrats, Gov. Jay Inslee and other supporters claimed it would cost only “pennies” for Washington consumers. However, the three quarterly carbon auctions and two Allowance Price Containment Reserve auctions held so far this year, have brought in more than $1.4 billion — about three times more revenue than expected. As a result, Washington gasoline prices rose sharply relative to Oregon, whose gas prices have historically aligned with Washington state. In addition, Washington fuel prices climbed to more than $5 a gallon, and for a short time this summer, surpassed California for the highest gas prices in the nation.

The California-Quebec market, established in 2014, is approximately six times the size of Washington’s total emissions allowance market. DOE officials claim that linking Washington’s program with the California-Quebec market would increase the number of allowances available and result in lower prices for carbon allowances. However, DOE is seeking legislative changes to the CCA in 2024 to align Washington’s emissions reduction policies with California, which is evidence that tying our programs together requires a loss of sovereignty for Washington. DOE’s forecast of 2023 auction market prices were wildly inaccurate, understating compliance costs by 75%, and doubts exist about the accuracy of  DOE’s new prediction that linkage to California and Quebec would lower prices.

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Washington State House Republican Communications
houserepublicans.wa.gov