Washington Legislature Amends Climate Commitment Act to Facilitate Linkage and Mitigate Price Volatility
In a significant move to enhance Washington State's climate policy, lawmakers passed Second Substitute House Bill 1975 (HB 1975-S2), a reform package aimed at improving the Climate Commitment Act (CCA). Passed on May 17, 2025, the bill introduces a series of measures to increase transparency, market stability, and regulatory flexibility in the state’s cap-and-invest program. The bill passed with broad bipartisan support and was sponsored by Representative Joe Fitzgibbon (D‑34th District) and co-sponsored by Representatives Mary Dye (R‑9th District) and Lisa Parshley (D‑22nd District).
Enhanced Market Forecasting and Modeling
The bill mandates the Department of Ecology to expand its role in monitoring the cap-and-invest market. This includes:
Analyzing both primary and secondary markets for compliance instruments.
Tracking prices, supply and demand dynamics, and participation trends.
Publishing biennial economic modeling reports starting December 31, 2026, with scenarios covering baseline forecasts, market linkage impacts, and total program costs.
New Price Controls and Containment Measures
To mitigate cost volatility, the bill strengthens the Allowance Price Containment Reserve (APCR):
From 2027 to 2040, between 2% and 5% of each year’s allowances will be reserved.
Ecology may release future-period allowances early to address price surges.
A fixed price ceiling of $80 per allowance is established for 2026 and 2027. Adjustments can be made for market linkage but cannot fall below $80 unless required.
Improved Regulatory Flexibility and Linkage Authority
HB 1975-S2 grants Ecology broader authority to:
Modify rules to align with other jurisdictions when forming carbon market linkages.
Adjust GHG reporting and compliance deadlines if third-party data delays occur.
Administrative Updates
The bill clarifies statutory provisions to better align with existing practices, supporting long-term stability and coordination within the cap-and-invest framework.
Next Steps
The bill is set to take effect on July 27, 2025.