Editorial: Carbon credit auction is a perilous experiment

Anyone who maintains that Washington’s carbon credit mandate will have a minimal impact on consumers need only look at the results of the first auction. The take — $299.7 million — was 50% higher than the state had estimated.

Some 6.18 million carbon allowances sold for $48.50 each, the Department of Ecology announced one week after the auction. Ecology had estimated in January allowances would sell for about $32.

Ecology will hold three more auctions this year. If allowances stay at the current price, the auctions will take in nearly three times as much money this year as Ecology predicted in 2021. …

While eliminating Washington’s carbon emissions would have only a symbolic influence on global climate, the auctions are likely to have a significant impact on state coffers and energy prices in Washington.

Energy generators and suppliers must acquire one allowance for every ton of carbon they emit. But, the auctions are open to anyone with the means, and private investors who hope to resell the credits at a profit on the secondary market were big players.

Each year the state will offer fewer credits for sale as it moves steadily to zero emissions. As the credits become more scarce, they will become more expensive on every market. …

While it wouldn’t be accurate to say every dollar the state collects will come out of the pockets of Washingtonians, part of this effort to attach a cost to carbon pollution will filter down to consumers.

It is an economic experiment that will be difficult to unwind if all does not go as planned.

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