These six Whatcom businesses eligible for climate change allowance auction Tuesday
Whatcom County oil businesses and other emitters of greenhouse gasses may place bids Tuesday, Feb. 28, in Washington state’s first cap-and-invest auction. It’s part of the Washington Climate Commitment Act, which came into effect this year.
Businesses that emit more than 25,000 metric tons of carbon dioxide or equivalent greenhouse gasses are automatically entered into the program.
There are three ways for these companies to follow the rules set by the Climate Commitment Act. They can reduce emissions to below 25,000 a year, obtain carbon offset credits by investing in climate change projects or purchase emission allowances from the Department of Ecology at auctions like the one Tuesday.
There are six locations in Whatcom County that emitted more than 25,000 metric tons of carbon dioxide in 2021, according to the Environmental Protection Agency. They are BP Cherry Point, Phillips 66 oil refinery, PSE Ferndale generating station, the Encogen generating station, Puget Sound Energy across various locations and the Northwest Pipeline in Sumas.
The program is starting with 6,185,222 allowances to be sold in February, each worth one metric ton of greenhouse gas emissions, Clair Boyte-White, cap-and-invest policy relations spokesperson with the Washington Department of Ecology, told The Bellingham Herald.
Allowances will be sold in a sealed-bid auction.
Each year, the number of allowances sold will be decreased. The idea is the demand for allowances will go up, increasing the price and making it more expensive each year for businesses to emit greenhouse gasses.
“Not like the classic highest-bidder-take-all auctions we see in the movies. Instead, participants can choose to submit a single bid for all their desired allowances or a series of bids for groups of allowances at different prices. The bids are then automatically sorted in order of bid price, starting with the highest bid, and allocated to each bidder in that order. Once all the allowances are accounted for, the lowest bid that successfully won allowances is the price that all bidders pay,” according to the Department of Ecology.
There is a price floor and ceiling for the price of the allowances to ensure they are not sold at too high or low a price. The floor, or the lowest they can be sold, is set at $22.20 and the ceiling is $81.47.
The largest emitter of greenhouse gas emissions in Washington is the Centralia power plant that emitted 3,484,305 metric tons of carbon dioxide equivalent emissions in 2021, according to the Environmental Protection Agency. The second largest emitter is the BP Cherry Point Oil Refinery in Whatcom County, which in 2021 emitted 2,210,450 metric tons of carbon dioxide.
The revenue gained from the sale of these allowances will be used to fund climate change projects across the state. A minimum of 35%, with a goal of 40%, of the revenue will be invested into “projects that provide a direct benefit to vulnerable populations within overburdened communities,” according to the Department of Ecology
Under the same act, at least 10% of the money raised will fund tribal programs in the state.
Results of the first 2023 auction are likely to be announced March. 7. Other auctions are to be held throughout the year on May. 31, Aug. 30 and Dec. 6.
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