Everything you need to know about Washington State's "Cap-and-Invest" carbon market

Photo by Caleb Riston on Unsplash

The second state-wide carbon trading scheme in the United States is scheduled to start on 1st January 2023.

California was the first state-wide carbon trading scheme, launched in 2013 it covers ~85% of the states emissions. Although the Regional Greenhouse Gas Initiative (RGGI) was the first emissions trading scheme in the US, it only covers the power sector (see The green light from the Golden State AND Everything you need to know about the RGGI carbon market).

At $600bn, Washington State’s economy is one-fifth the size of California, and with almost 100 Mt CO2e it emits around one-quarter of California’s GHG emissions. Around 45% of Washington’s emissions arise from transportation, 25% from buildings and industry, the electricity generation sector contributes 15%, and 15% are nonenergy/non-CO2 emissions.

The carbon trading scheme is the cornerstone of the 2021 Climate Commitment Act. Under the Act, Washington State is legally required to reduce its greenhouse gas (GHG) emissions by 45% by 2030, 70% by 2040 and 95% by 2050 compared with 1990 levels. The state is required to eliminate the last 5% through carbon reduction or removal, resulting in net zero.