Cap-and-Invest Program. Generally. The Cap-and-Invest Program (Program) requires the Department of Ecology (Ecology) to set a limit—or cap—on statewide greenhouse gas (GHG) emissions, which declines over time consistent with statutory GHG emissions limits. Covered entities must obtain compliance instruments—allowances or offset credits—equal to its covered emissions during each Program compliance period. The Program currently operates within compliance periods that span four-years. The first compliance period is 2023-2026; the second is 2027-2030; and so on, until 2050. Compliance periods may change if Washington enters into a linkage agreement with other jurisdictions operating a joint carbon market. Ecology anticipates entering into a linkage agreement in late 2026.
Covered Entities in the Second Compliance Period. Beginning in 2027, the second compliance period, an owner or operator of a waste-to-energy facility (WTE Facility) utilized by a county and city solid waste management program whose facility emissions equal or exceed 25,000 metric tons of carbon dioxide equivalent is a covered entity in the Program and as such, has a compliance obligation.
No-Cost Allowances. In addition to natural gas utilities and emissions-intensive, trade-exposed (EITE) facilities, certain electric utilities receive no-cost allowances in the Program. Ecology determines the amount of no-cost allowances allocated to each electric utility based on forecasts of the utility's retail electric load and resource supply to estimate the Program's cost burden associated with serving Washington's retail electric load.
The Program contains provisions to prevent double-allocation of no-cost allowances to electric utilities, for example, when an electric utility is supplying electricity to an EITE facility and no-cost allowances for the electricity-related emissions have already been allocated to the EITE facility.
Electric utilities may not sell no-cost allowances to other Program entities but they may, among other actions, consign no-cost allowances to auction, the proceeds of which must be used to benefit the utility's ratepayers.
No-Cost Allowances. Beginning January 1, 2027, and during the second compliance period, Ecology must allocate no-cost allowances to a WTE Facility that was constructed before 1992 and is in compliance with applicable laws and standards. Ecology must allocate no-cost allowances in an amount equal to the following percentages of the WTE Facility's baseline GHG emissions during the calendar years 2021-2025:
Emissions year means the calendar year in which GHG emissions occur.
Fifty percent of the allocated no-cost allowances must be consigned to auction. The WTE facility may only use proceeds from the consigned allowances for investments in projects or programs that reduce GHG emissions associated with the facility, subject to approval by Ecology.
Ecology may not allocate no-cost allowances to an electric utility for GHG emissions associated with electricity produced by a WTE Facility that receives no-cost allowances for its GHG emissions.
Decarbonization and Material Recovery Plan. By December 1, 2030, the WTE Facility must provide a two-part plan to Ecology and the Department of Commerce, including a proposed GHG emissions reduction plan and a waste reduction and material recovery plan.
The GHG emissions reduction component of the plan must outline how the WTE Facility will achieve emissions reductions consistent with the statewide GHG emissions limits in 2040 and 2050.
The waste reduction and material recovery component of the plan must be consistent with the state's waste management hierarchy, take into account state policies regarding organic materials management and extended producer responsibility for packaging and paper products, and align with the county's local solid waste management plan.
In developing the plan, a WTE Facility must consult with local municipally created stakeholder and community advisory bodies formed to advise on climate and sustainability decisions.
Ecology, in consultation with the Department of Commerce, must complete a review of the plan within 90 days of receiving it. Then, within 90 days of receiving Ecology's comments, a WTE Facility must address any comments and finalize the plan. A WTE Facility must take reasonable steps toward implementation of the plan and operate the facility consistent with the plan.
Other. The bill provides legislative intent language.