Washington has collected $2.149 billion to date from carbon emission allowance auctions. That’s $1.484 billion more than was expected when the Climate Commitment Act (CCA) was enacted in 2021, as the actual auction prices were higher than anticipated. The windfall, combined with the possibility that the CCA will be repealed in November if voters approve Initiative 2117, made for a challenging budget exercise for legislators this year. (If I-2117 is approved, the state would retain auction revenues collected before the election but there would be no future auctions.)

Auction proceeds are distributed to seven accounts and appropriated in all three state budgets (operating, transportation, and capital).

In fiscal year 2023, the state spent $54.2 million from CCA accounts. (The first auction occurred in February 2023, just four months before the end of FY 2023.) Revised appropriations from CCA accounts for 2023–25 are $3.250 billion. To address the possibility of repeal, the Legislature made $704.5 million (21.7%) of its 2023–25 appropriations contingent on the rejection of I-2117. At the time the 2024 supplemental budgets were enacted, these amounts balanced within expected revenues.

However, revenues have come in below forecast so far this year. The state will be able to spend the revenues collected before the election regardless of the election results, but unless future auction proceeds come in higher than expected or the state doesn’t spend all appropriations, the CCA accounts would be out of balance regardless of the election results.

Generally, CCA revenues must be used to reduce carbon emissions in transportation and other sectors, to mitigate the impacts of carbon emissions on communities, to deploy renewable energy, to increase building energy efficiency, and to increase climate resilience. The Legislature’s appropriations include grants for programs that are expected to reduce carbon emissions, direct funding for specific projects, and funding for policy coordination and data collection.

Transportation was supposed to be the main beneficiary of auction proceeds. However, the amount that is distributed to transportation is fixed by dollar amount in statute, so all the upside from the higher-than-expected collections automatically flows to other uses (unless the Legislature makes policy changes).

The accompanying spreadsheet shows exactly which policies are funded with CCA revenues. It also provides descriptions of the policies, how much is appropriated (from which account and in which budget), and how much of the appropriation is contingent on voters rejecting I-2117.

Read the report here.