State Emission Limits. 
The United States Environmental Protection Agency (EPA) and the Department of Ecology (Ecology) identify carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride as greenhouse gases (GHGs) because of their capacity to trap heat in the Earth's atmosphere.  According to the EPA, the global warming potential (GWP) of each GHG is a function of how much of the gas is concentrated in the atmosphere, how long the gas stays in the atmosphere, and how strongly the particular gas affects global atmospheric temperatures.  Under state law, the GWP of a gas is measured in terms of the equivalence to the emission of an identical volume of carbon dioxide over a 100-year timeframe (carbon dioxide equivalent or CO2e).

Since 2008 state law has established limits on the emission of GHGs in Washington.  Ecology is responsible for monitoring and tracking the state's progress in achieving these emissions limits.  In 2020 additional legislation was enacted to update the statewide emissions limits to the following:

• by 2020, reduce overall emissions of GHGs in the state to 1990 levels, or 90.5 million metric tons of carbon dioxide equivalents (MMT CO2e);
• by 2030, reduce overall emissions of GHGs in the state to 45 percent below 1990 levels, or 50 MMT CO2e;
• by 2040, reduce overall emissions of GHGs in the state to 70 percent below 1990 levels, or 27 MMT CO2e; and
• by 2050, reduce overall emissions of GHGs in the state to 95 percent below 1990 levels, or 5 MMT CO2e, and achieve net-zero GHG emissions. 

The law establishing state emission limits includes various codified legislative findings and statements of intent.  One such legislative finding is that Washington should continue its leadership on climate change policy by creating accountability for achieving the emissions reductions established in the statewide emission limits.

Greenhouse Gas Emission Reporting by Sources of Emissions. 
Under the federal Clean Air Act, GHGs are regulated as an air pollutant and are subject to several air regulations administered by the EPA.  These federal Clean Air Act regulations include a requirement that facilities and fuel suppliers whose associated annual emissions exceed 25,000 metric tons of CO2e report their emissions to the EPA.  At the state level, GHG reporting is regulated by Ecology under the state Clean Air Act.  This state law requires facilities and fuel suppliers whose emissions exceed 10,000 metric tons of CO2e each year to report their annual emissions to Ecology.  As a result of legislation enacted in 2024, Ecology's rules may also require electric power entities to report GHG emissions from all electricity sold, imported, exported, or exchanged in Washington.

State Greenhouse Gas Emissions Inventory.

By December 31 of even-numbered years, Ecology and the Department of Commerce (Commerce) must report to the Governor and the appropriate committees of the Legislature the total emissions of GHGs for the preceding two years, and totals in each major source sector (Greenhouse Gas Inventory).  The most recent Greenhouse Gas Inventory was published in January of 2025, and reported emissions from 1990 through calendar year 2021.  The next Greenhouse Gas Inventory is scheduled to be published by December 1, 2026;  Ecology has stated it will include data through calendar year 2023.

Climate Commitment Act.

Under the 2021 Climate Commitment Act (CCA), in order to ensure that GHG emissions are reduced consistently with the state's 2030, 2040, and 2050 emissions limits, Ecology must implement a cap on GHG emissions from covered entities.  Ecology must also implement a program to track, verify, and enforce compliance through the use of compliance instruments, which include allowances or eligible offset credits.  The Cap-and-Invest Program (Program) commenced on January 1, 2023.
 
The Program:

• establishes annual allowance budgets that limit emissions from covered entities;
• defines those entities covered by the Program (covered entities), those entities that may voluntarily opt into coverage under the Program (opt-in entities), and other persons that participate in auctions or allowance markets by purchasing, holding, selling, or voluntarily retiring compliance instruments (general market participants);
• provides for the distribution of emissions allowances at no cost to certain covered entities, or by purchase at auction;
• provides for offset credits as a method for meeting compliance obligations;
• defines the compliance obligations of covered entities;
• provides for the transfer of allowances and recognition of compliance instruments, including those issued by jurisdictions with which Washington may have linkage agreements in the future; and
• provides monitoring and oversight of the sale and transfer of allowances. 

Natural gas utilities with qualifying levels of emissions are among those entities required to comply with the CCA beginning in the first compliance period (2023 through 2026).  Ecology rules adopted to implement the CCA, establish the methods and procedures for allocating allowances to natural gas utilities at no cost during the first and second compliance periods.  Ecology's rules provide that, relative to a baseline level of emissions set based on calendar year 2015 to 2019 emissions data, Ecology distributes no-cost allowances to natural gas utilities equal to 93 percent of baseline emission levels in 2023, declining by an additional 7 percent each year until 2030.  From 2031 to 2042, the rate of decline of no-cost allowances relative to baseline levels decreases by 1.8 percent each year.  Further no-cost allowance allocation rate decreases are prescribed for years 2043 through 2049. 

Beginning in 2023, 65 percent of the no-cost allowances allocated to natural gas utilities must be consigned to auction for the benefit of customers, including at a minimum eliminating any additional cost burden to low-income customers from the implementation of the Program.  Rules adopted by Ecology increase the percentage of allowances consigned to auction by 5 percent each year until a total of 100 percent is reached.  Revenues from allowances consigned to sale at auction must be returned to the utility's customers by providing nonvolumetric credits on ratepayer utility bills, prioritizing low-income customers, or being used to minimize cost impacts on low-income, residential, and small business customers through activities such as weatherization and bill assistance. 

In order to receive no-cost allowances, natural gas utilities were required to provide copies of their GHG emission reports filed with the EPA for 2015 through 2021.  To continue receiving no-cost allowances, natural gas utilities must provide their annual GHG emission reports filed with the EPA. 

As compared to the original, the amended bill:

• restores, through 2030, the current biennial GHG emissions reporting timeline for Ecology and Commerce, and specifies that the report must rely on most recent two years of data available;
• makes the GHG inventory biennial report an annual report, beginning December 31, 2031;
• requires Ecology and Commerce to provide notification to the Governor and the Legislature by December 31 of 2027 and 2029 summarizing the GHG emissions data for the most recent year available, and the GHG emissions totals of major source sectors;
• requires Ecology and Commerce to post and maintain the biennial GHG emissions report and summary notification on Ecology's website;
• amends the codified statement of legislative findings with respect to the importance of the GHG inventory; and
• authorizes natural gas utilities to submit annual GHG emissions reports that are required under the state Clean Air Act in order to receive no-cost allowances under the CCA, rather than requiring such utilities to submit a specific GHG emissions report that is also submitted to the EPA.