The Department of Ecology estimates that carbon emission allowance auction proceeds will total $2.248 billion in 2023–25, $1.643 billion in 2025–27, and $1.248 billion in 2027–29. Compared to Ecology’s Nov. 2023 forecast (on which enacted appropriations from Climate Commitment Act accounts were based), the December 2024 forecast is $330.2 million lower for 2023–25 and $129.8 million lower for 2025–27.

Compared to Ecology’s June 2024 forecast, auction proceeds are now expected to be $16.3 million lower in 2023–25, $9.2 million higher in 2025–27, and $194.5 million lower in 2027–29. According to Ecology, the forecast is so much lower in 2027–29 because of lower state-owned allowance supply.

As we wrote last year, the prospect of passage of I-2117, which would have repealed the Climate Commitment Act (CCA), likely depressed auction prices leading into November. The December 2024 revenue forecast incorporates the impacts of the December 2024 allowance auction, which took place after I-2117 was rejected. Prices at the December auction were higher than they had been the rest of the year.

However, the settlement price at last week’s auction was higher than anticipated in the forecast. Revenues from the March 2025 allowance auction are $230.0 million, which is $34.7 million higher than assumed in the forecast.

CCA revenues are appropriated across the operating, capital, and transportation budgets. The amount that goes to the transportation budget is specified in statute as a dollar amount; thus, all the upside or downside of changes in forecasted revenues applies to the CCA appropriations in the operating and capital budgets. (For more on the distribution of CCA funds, see this report.)