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Washington’s cap-and-trade take tops $900 million for year

Washington, (Qnnflash) – Last week, Washington state generated a substantial $62.4 million through an emergency cap-and-trade auction, further bolstering its revenue from carbon emissions taxation to a total of $919.5 million for the current year. These figures, disclosed by the Department of Ecology on Wednesday, highlight the success of the state’s endeavors in carbon pricing.

The auction saw the acquisition of over 1 million allowances at predetermined prices, with a split of half sold at $51.90 each and the remaining half at $66.68 per allowance. Factoring in the carbon content of fuel, it is estimated that allowances priced at $66.68 could potentially contribute an approximate 53 cents per gallon of gasoline, according to a formula referenced by the California Air Resources Board. It is important to note that this calculation does not account for specific decisions made by individual fuel producers, which may influence the final pricing. In contrast, California, a pioneer of cap-and-trade, saw allowances sell for $30.33 in May.

Washington’s cap-and-trade auctions have demonstrated strong competitiveness, with the most recent auction stemming from unexpectedly high bids in May. Investors secured 10% of the allowances in that auction.

The cap-and-trade framework shifts the burden of carbon emissions to fossil fuel suppliers, who must either absorb the associated costs or pass them on to consumers. Additionally, this approach creates a tradable commodity, known as allowances, which can be exchanged in a secondary market.

Notably, allowances attained an all-time peak of $67.50 in early August, as reported by Aegis Hedging. In an effort to provide energy suppliers an opportunity to acquire allowances without competing against investors, the recent auction was restricted from investor participation.

A total of 32 energy suppliers, encompassing oil companies and municipal natural gas utilities, engaged in the specialized auction. While the Department of Ecology does not disclose successful bidders, it is evident that the auction’s outcomes could have an impact on energy pricing and potentially influence natural gas costs. Some energy suppliers have signaled their intent to recuperate the expenditures from ratepayers, as documented in filings with the Securities and Exchange Commission.

Ecology’s forthcoming initiatives include an auction of 8.5 million more allowances scheduled for August 30. The final auction for the year is slated for December 6. The state has significantly exceeded its 2023 revenue expectations, as legislated during the implementation of cap-and-trade in 2021, having already amassed more than double the anticipated revenue.

For More Information :

https://www.capitalpress.com/climate_changed/washingtons-cap-and-trade-take-tops-900-million-for-year/article_24e5e602-3c77-11ee-8eb0-37ffcc9b67b7.html

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