On Wednesday the department of ecology reported the results of its first regular auction of Cap-and-Invest Program allowances for 2024, which was held on March 6 (link). The settlement price for current (2024) vintage allowances was just $25.76. This is down significantly from the prices paid at last year’s auctions, which averaged $55.12 per metric ton.

This sharp decline was not a surprise. In a March 6 post (link), I noted that futures prices for allowances have fallen dramatically since the beginning of the year. The reason for this decline is Initiative 2117, which will be on the November ballot. If this measure passes, the Climate Commitment Act (CCA) would be repealed, and the allowances sold in the March 6 auction would have no value. The price bidders are willing to pay for allowances is discounted by the probability that the CCA will be repealed.

Based upon the March 6 auction price, the expected compliance cost for emissions from a gallon of gasoline would be 26.4 cents, while expected compliance cost for emissions from a gallon of diesel would be 24.3 cents. My calculations are based on carbon dioxide emissions coefficients from the Energy Information Administration (link). I assume that gasoline consumed in Washington includes 10 percent ethanol, and that diesel fuel includes 4 percent biodiesel.