Washington State Environmental Justice – Climate Commitment Act and Healthy Environment for All Act

In 2021, Washington state legislature passed the Healthy Environment for All Act (HEAL Act), as a coordinated effort to prioritize environmental justice (EJ) and to identify and address environmental health disparities in overburdened communities and for vulnerable populations. Additionally, Governor Jay Inslee signed the Climate Commitment Act (CCA) to set climate policy standards and implement a cap-and-invest program aimed at reducing carbon emissions over time.

HEAL Act Regulatory Background

The HEAL Act was developed based on recommendations from the Environmental Justice Task Force in Washington and it implements EJ goals through empowering various agencies within the state to collaborate and ensure equitable investing in communities regarding environmental and health burdens in the State of Washington. These agencies include the Washington State Department of Health (DOH), state departments of Agriculture, Commerce, Ecology, Natural Resources, and Transportation, and the Puget Sound Partnership, while also allowing for other state agencies to opt in. Several key elements implemented as part of the HEAL Act include incorporating EJ in agency work and strategic planning, promoting equitable investments across communities, creating a voice for disproportionately affected communities, creating tools and processes to evaluate and track EJ metrics, and conducting EJ assessments for significant regulatory actions.

CCA Regulatory Background

Washington has committed to greenhouse gas (GHG) emissions reduction goals for the upcoming decades across the state. The CCA aims to cap and reduce GHG emissions in some of the state’s largest emitting industries and sources by creating a cap-and-invest program to incentivize businesses to cut their emissions. The CCA also aligns with the requirements of the HEAL Act to incorporate and evaluate EJ and to ensure that communities disproportionately affected by climate change can also benefit from a healthier environment. Furthermore, the CCA includes the possibility of “linking”, which gives Washington state the ability to link its climate program with California and Québec’s programs, as well as other states in the future, to potentially help lower compliance costs. California and Québec connected their carbon market programs in 2014 to create a singular shared carbon market, and all three programs have expressed mutual joint interest in linking for a shared carbon market.

How does the CCA cap-and-invest program work?

The goal of the CCA cap-and-invest program is to promote the development and implementation of clean technology and to drive down GHG emissions. The revenue that is raised by this program would be redistributed to Washington communities in the form of climate resilience programs, healthier air quality, and clean energy. The CCA imposes a cap on all major sources of GHG with enforceable and decreasing limits to meet Washington’s GHG reduction goals for 2030, 2040, and 2050. Facilities subject to the cap-and-invest program would need to hold one “allowance” per ton of GHG emitted. The state only creates as many allowances as the cap allows for that year, so the carbon price would be auctioned, and allowance prices set by the market.

The first CCA compliance deadline for facilities is November 1, 2024, at which point businesses will need to have obtained allowances to cover at least 30% of their 2023 GHG emissions. Auctions will be held quarterly for facilities to bid and obtain those allowances through sealed-bid auctions. Failure to comply with the program can lead to fines from Washington’s Department of Ecology (DOE) for fines up to $50,000 per violation, per day.

Who is subject to the cap-and-invest program?

With the exception of waste to energy facilities used by a city or county solid waste management program, businesses that generate carbon dioxide equivalent (CO₂e) emissions of 25,000 metric tons or more are subject to this program. Several other businesses and industries are also subject to the program, including fuel suppliers, natural gas and electric utilities, and starting in 2027 and 2031, waste-to energy facilities and railroads, respectively. A complete applicability list can be found at WAC 173-446-030.

Proposed Rulemaking Updates and Public Comment

Washington state is proposing to update the CCA program rules, making amendments to address new and revised cap-and-invest offset protocols. The DOE is planning to hold public meetings and has recently announced an extension to the informal comment period for this proposed rule update. The comment period has been extended to September 27, 2024, at 11:59 pm. Comments can be submitted online. A record of upcoming meetings and past public meeting documents and records are available on the DOE’s website.

The DOE is holding an online linkage EJ listening session on July 22, from 9-11 am Pacific Time to discuss the cap-and-invest carbon market and the potential linkage with the joint California-Quebec carbon market. As mandated by the HEAL Act, an EJ assessment is required to be conducted prior to making a decision on a joint carbon market, to evaluate the potential EJ impacts this action may have. This listening session will also evaluate the potential impact on Tribal communities, and other communities disproportionately affected by EJ issues.

Other Similar State Programs

Several other states have similar cap-and-invest programs and proposals in place. For example, Pennsylvania Governor Josh Shapiro has proposed to enroll Pennsylvania in a multi-state cap-and-trade program as part of his proposed energy plan. The Pennsylvania Climate Emissions Reduction Act (PACER) would help create such a program to incentivize the reduction of GHG emissions and help provide funding to support cleaner energy for the state. A similar program exists in neighboring New Jersey, which is the multi-state Regional Greenhouse Gas Initiative (RGGI) program to establish a regional cap on CO₂ emissions and require allowances for CO₂ emissions, and includes power plants and businesses in Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont. The New York state Climate Leadership and Community Protection Act (CLCPA) has a similar cap-and-invest program, and more and more states are in the process of developing such programs and looking to create regional and linked programs across the nation.

Next Steps

ALL4 will continue to monitor the proposed CCA rule revisions and updates for a final rule. If your facility is potentially subject to one of the cap-and-invest programs, ALL4 recommends reviewing the applicability regulations and gathering more information on the upcoming auctions to ensure compliance by the November 1, 2024, compliance deadline, and registering online for the July 22 listening session to learn more about the proposed joint market.

For inquiries about ALL4’s services or follow-up questions regarding the CCA or Heal Act, please contact ALL4’s ESG and Sustainability Managing Consultant, James Giannantonio, at jgiannantonio@all4inc.com and/or Project Engineer Corey Prigent at cprigent@all4inc.com.