Compare ETS
Use this function to compare the design elements and characteristics of up to three ETSs from around the world.
USA - Regional Greenhouse Gas Initiative (RGGI)
General Information
The Regional Greenhouse Gas Initiative (RGGI) launched in 2009 and is the first mandatory GHG ETS in the United States. It started operating with ten states (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont). RGGI’s development was based on the “2005 RGGI Memorandum of Understanding” (MOU) and on the “2006 RGGI Model Rule”. Through statutes or regulations based on the Model Rule, each state then established individual CO2 budget trading programs. New Jersey withdrew from RGGI at the end of the first phase, or “control period” (see
‘Compliance’ section), in December 2011 and later rejoined in 2020. Pennsylvania formally joined RGGI in 2022 but was prevented from participating in auctions or enforcing compliance due to court injunctions, and it formally withdrew in 2025. Virginia joined RGGI in 2021 but left in 2023. In February 2026, Governor Abigail Spanberger signed a budget bill (House Bill 29) requiring the Virginia Department of Environmental Quality (DEQ) to file regulations to rejoin RGGI within 90 days.
RGGI covers power sector emissions in participating states. In 2022, it covered around 14% of the aggregate participating states’ emissions; in 2024, 222 facilities were covered by the state regulations. The aggregate cap will decrease by about 8.5 million tons per year between 2027 and 2033, which is about 10.5% of the 2025 budget. It will decline by about 2.4 million tons per year from 2034 to 2037, which is about 3% of the 2025 budget.
Under the ETS, covered entities must surrender allowances for all their covered emissions. Entities obtain most of their allowances through regular auctions, while some states have “set-aside” accounts from which they may transfer a limited number of allowances to entities’ compliance accounts.
RGGI has undergone three review processes that updated the Model Rule and enshrined tighter caps and adjustments to system design.
In July 2025, the ten participating RGGI states released the results of the Third Program Review, which had been initiated in summer 2021. The review introduced a package of reforms to take effect from 2027, including a tightened emissions cap (reduced to about 69.8 million short tons CO₂ in 2027, declining by an average of about 8.5 million short tons CO₂ annually from 2027 to 2033, and by about 2.4 million short tons annually from 2034 to 2037), an expanded two-tier cost containment reserve (CCR) of about 11.75 million allowances per tier with trigger prices of USD 19.50 and USD 29.25 respectively in 2027, an increased minimum reserve price (rising to USD 9.00 in 2027 with 7% annual increases thereafter), and a phase-out of new offset credits from 2027 onwards. Each participating state has committed to amend its regulations to meet the updated Model Rule requirements by January 2027.
Virginia repealed its CO2 Budget Trading Program following executive action started by the state’s administration in 2022 and thus stopped participating in RGGI in December 2023. However, in February 2026, Governor Abigail Spanberger signed House Bill 29 mandating the implementation of regulations to rejoin within 90 days.
In November 2025, Pennsylvania formally ended its participation in RGGI following the passing of its fiscal code bill (House Bill 416) which included the repeal. Governor Josh Shapiro signed it into law but has called on the State Legislature to advance his energy plan, which would create Pennsylvania’s own state-level program.
Emissions & Targets
717.7 MtCO2e (2022)[1]
[1] This value includes Virginia but not Pennsylvania. Values presented here are taken from the “Inventory of U.S. Greenhouse Gas Emissions and Sinks by State” by the Environmental Protection Agency (EPA, available here), aggregated for the RGGI states. While each state publishes official inventory data and the values published by the EPA should not be viewed as official state data, the EPA estimates are presented here to ensure the methodological consistency of data collection and aggregation for inventory categories across RGGI states, as well as to ensure a common reporting year in the data. There may be differences between the EPA estimates and the official state inventories.
By 2037: Regional power sector emissions cap reduced to just under 10 million short tons CO₂, representing a 60% to 87% reduction[1] compared to the 2025 cap (depending on cost containment reserve activation) ("2025 Model Rule")
[1] The range in this reduction is dependent on if one or both tiers of the CCR were to be released.
Average auction price (2025): USD 19.52
Size & Phases
PHASE 1: Three years (2009 to 2011)
PHASE 2: Three years (2012 to 2014)
PHASE 3: Three years (2015 to 2017)
PHASE 4: Three years (2018 to 2020)
PHASE 5: Three years (2021 to 2023)
PHASE 6: Three years (2024 to 2026)
An absolute cap limits the total emissions allowed in the system and is fixed ex-ante. A cap trajectory until 2030 has been set.
Phases in RGGI are also known as “control periods”.
PHASE 1: 564 million short tons CO2 or 512 MtCO2 (188 million short tons CO2 or 171 MtCO2 per year)
PHASE 2: 413 million short tons CO2 or 374 MtCO2
2012 and 2013: 165 million short tons CO2 or 150 MtCO2 per year
2014: 83 million short tons CO2 or 75 MtCO2
PHASE 3: 194 million short tons CO2 or 176 MtCO2
2015:67 million short tons CO2 or 61 MtCO2
2016:65 million short tons CO2 or 59 MtCO2
2017:62 million short tons CO2 or 57 MtCO2
PHASE 4: 193 million short tons CO2 or 175 MtCO2
2018:60 million short tons CO2 or 55 MtCO2
2019:58 million short tons CO2 or 53 MtCO2
2020:74 million short tons CO2 or 67 MtCO2
PHASE 5: 291 million short tons CO2 or 264 MtCO2
2021:101 million short tons CO2 or 91 MtCO2
2022:97 million short tons CO2 or 88 MtCO2
2023:93 million short tons CO2 or 85 MtCO2
PHASE 6:[1]
2024: 69 million short tons CO2 or 63 MtCO2
By 2012, verified emissions under RGGI were more than 40% below the cap, so the states tightened the cap in 2014. There was a 2.5% annual reduction factor from 2015 through 2018. The revised regulations extended the 2.5% annual reduction factor through 2020.
The RGGI states further adjusted the caps between 2014 and 2020 to account for banked allowances from the first and second phases. The annual reduction factor between 2021 and 2030 as set out in the “2017 Model Rule” is ~3% of the 2020 cap.
The caps above include New Jersey from 2020 and Virginia from 2021, but the latter only until 2023.
The cap will decline by about 8.5 million tons per year between 2027 and 2033, and about 2.4 million tons per year between 2034 and 2037.
[1] These values do not include Pennsylvania nor Virginia.
SECTORS: Fossil fuel electric generating units (i.e., fossil fuel-fired stationary boilers, combustion turbines, or combined cycle systems). Sources include governmental, institutional, commercial, or industrial structures, installations, plants, buildings, or facilities that emit or have the potential to emit any air pollutant that include one or more units.
INCLUSION THRESHOLDS: Most RGGI states cover units with capacity equal to or greater than 25 MW.
In New York, since January 2021, the program applies to power plants that have nameplate capacity equal to or above 15 MW and reside at a covered generating unit or near two or more units of the same source.
Point source (power sector)
222 entities (2024)
Allowance Allocation & Revenue
Auctioning: CO2 allowances issued by each RGGI state are distributed through quarterly auctions. States hold a limited amount in “set-aside” accounts and distribute them according to state-specific regulations.
Of the 66.6 million 2025 allowances (after the adjustment for banked allowances), 91% were sold at auction. The remainder were either transferred from state set-aside accounts, retired, or remained in set-aside accounts. No offset allowances were awarded. Additionally, 8.1 million allowances were sold from the cost containment reserve (see ‘Market Stability Provisions’ section).
USD 10.1 billion since the beginning of the program
USD 1.5 billion in 2025
Revenues from the quarterly auctions are returned to the RGGI states and have been primarily invested in the following consumer benefit programs: energy efficiency, direct bill assistance, beneficial electrification, GHG abatement, and clean and renewable energy. A report released in July 2024 found that the direct lifetime benefits of RGGI investments made in 2022 are projected to avoid 7.5 million short tons of CO2 (6.8 MtCO2) and return approximately USD 1.8 billion in lifetime energy bill savings to 246,000 households and over 2,600 businesses that participated in programs funded by RGGI proceeds.
The distribution of RGGI investments in 2022 was: energy efficiency (49%); direct bill assistance (21%); beneficial electrification[1] (14%); clean and renewable energy (7%); and GHG abatement and climate change adaptation[2] (3%).
[1] Programs implementing or facilitating replacement of fossil fuel use with electric power.
[2] Diverse programs, including the promotion of technology, research, and development programs, climate change policy research, coastal resilience, and flood preparedness programs.
Flexibility & Linking
Banking is allowed without restrictions. Current regulations include provisions to adjust the cap to address the aggregate bank, so that allowances available for auction are reduced by the number of allowances not used for compliance in previous control periods (see also ‘Cap’ section above). The RGGI states are currently implementing the third adjustment for banked allowances, which runs until 2025. As part of the RGGI review process, the states are considering whether to address or adjust for banked allowances into the future if a bank of surplus allowances remains in circulation after 2025.
Borrowing is not allowed.
The use of offsets is allowed. However, beginning in 2027, RGGI offset allowances will no longer be awarded.
53,506 offset allowances have been awarded during RGGI’s time of operation, all of which were from a 2017 landfill methane capture and destruction project.
QUALITATIVE LIMIT: Currently, the program allows offset credits from three offset types located in RGGI states:
- landfill methane capture and destruction;
- sequestration of carbon due to reforestation, improved forest management, or avoided conversion; and
- avoidance of methane emissions from agricultural manure management operations.
Some states have discontinued specific offset protocols, but all accept offset allowances issued by any participating state. To date, only one offset project (landfill methane capture and destruction) has been approved under RGGI.
QUANTITATIVE LIMIT: 3.3% of an entity’s liability may be covered by offset credits. This share will remain unchanged between 2021 and 2030. These limits on offset usage will still apply to already awarded offsets even after they cease to be awarded in 2027.
Between the first and the fourth control periods (2009 to 2020), no CO2 offset allowances were deducted. As of the 2022 interim compliance summary report, no CO2 offset allowances had been deducted in the fifth control period (2021 to 2023).
RGGI is a cooperative effort between participating states. Each state establishes an individual CO2 budget trading program based on the RGGI Model Rule. Covered sources in each participating state can surrender allowances issued by any participating state for compliance and participating states use joint auctions.
State-level ETS: Massachusetts Limits on Emissions from Electricity Generators.
State-level ETSs are also being considered or developed in the following RGGI states: Maryland, New York, Vermont
Domestic crediting mechanism: RGGI Crediting Mechanism
Compliance
Three years.
Compliance is evaluated at the end of each three-year phase (control period). From the third phase, covered entities must surrender allowances corresponding to 50% of their verified emissions in each of the first two years of a phase. They must cover 100% of the remaining allowances at the end of the three-year phase.
FRAMEWORK: Emissions data are recorded in the US EPA’s Clean Air Markets Division database in accordance with state CO2 budget trading program regulations and agency regulations. Provisions are based on the US EPA monitoring provisions. Data are then automatically transferred to the electronic platform of the RGGI CO2 Allowance Tracking System (COATS), which is publicly accessible.
MONITORING: Operators must comply with all monitoring and recordkeeping requirements laid out in the Model Rule.
REPORTING: CO2 monitoring reports must be submitted quarterly.
VERIFICATION: Emission data reports and their underlying data are required to undergo periodic quality assurance and quality control procedures in accordance with US EPA regulations.
In cases of excess emissions (i.e., if entities do not surrender all required allowances by the deadline), allowances equivalent to three times the amount of excess emissions must be surrendered. Furthermore, covered entities may also be subject to specific penalties imposed by the RGGI state where it is located.
Market Regulation
MARKET PARTICIPATION: Compliance entities, non-compliance entities (domestic and international), and individuals can participate if they provide a financial security.
MARKET TYPES:
Primary: Most CO2 allowances issued by each RGGI state are distributed through quarterly regional auctions. The RGGI COATS records and tracks data for each state’s CO2 budget trading program, including the transfer of allowances offered for sale by the states and purchased by the winning qualified bidders in the quarterly auctions. Auctions are open to all parties with financial security, with a maximum bid of 25% of the volume on offer per sale. There is no allowance holding limit. Auctions are managed by Enel X.
Secondary: The secondary market for RGGI CO2 allowances comprises the trading of physical allowances and financial derivatives, including futures, forwards, call options, and put options. RGGI COATS facilitates participation in the secondary market and enables the public to view and download RGGI data and CO2 allowance market activity reports. Financial derivatives are traded on the ICE platform.
Potomac Economics, an independent market monitor, monitors the performance and efficiency of the RGGI CO2 allowance auctions and the secondary CO2 allowance market.
LEGAL STATUS OF ALLOWANCES: The RGGI Model Rule specifies that allowances are limited authorizations by the participating state’s regulatory agencies to emit up to one short ton of CO2.
AUCTION PRICE FLOOR
Instrument type: Price-based instrument
Functioning: Auctions have a price floor of USD 2.62 per short ton in 2025, increasing by 2.5% per year (to reflect inflation). The price floor will rise to USD 9.00 in 2027, increasing by 7% per year thereafter.
COST CONTAINMENT RESERVE (CCR)
Instrument type: Price-based instrument
Functioning: Since 2014, RGGI has operated with a CCR, consisting of a number of allowances in addition to the cap held in reserve and only released to the market if certain trigger prices are reached. Beginning in 2021, allowances provided within the CCR are equal to 10% of the regional cap. The trigger price is USD 17.03 in 2025 and increases by 7% per year. It had previously increased by 2.5% annually between 2017 and 2020, from a starting value of USD 10.
From 2027, the CCR will be enlarged to about 11.75 million allowances per year (up from 10 million in the previous single-tier structure) and split into two price tiers, each with its own trigger price. In 2027, the trigger prices of the two tiers will be set at USD 19.50 and USD 29.25 respectively, before rising incrementally to USD 38.36 and USD 57.53 by 2037.
The CCR was triggered in 2014 and 2015, when all 15 million allowances it contained were sold. The CCR was also triggered in the last quarterly auction of 2021, where 3.9 million of the available 11.9 million allowances were sold. It was triggered again in the final auction of 2023, with 5.6 million of the 11.2 million CCR units on offer sold. The CCR was also triggered in March 2024, when all 8.4 million allowances it contained were sold.
EMISSIONS CONTAINMENT RESERVE (ECR)
Instrument type: Price-based instrument
Functioning: In 2021, RGGI started implementing an ECR, which withholds allowances from auction if certain trigger prices are reached, up to an annual withholding limit of 10% of the emission budgets (i.e., the share of each state in the regional cap) of participating states. Allowances withheld will not be re-offered for sale, effectively adjusting the cap downward. In 2025, the trigger price is USD 7.86, increasing by 7% per year. Maine and New Hampshire are not participating in the ECR.
Beginning in 2027, the ECR will be removed and replaced with the increased minimum reserve price outlined above.
Other Information
Statutory and/or regulatory authority of each RGGI state: Each state implements the program under its particular statutory authority.
Environmental and energy agencies for each RGGI state: Agencies implementing the respective CO2 budget trading programs.
RGGI Inc.: Non-profit cooperative supporting RGGI’s development and implementation. This includes engaging contractors for various tasks such as allowance and emissions tracking, market monitoring, and management of the auctions.
Potomac Economics: Monitors the conduct of market participants in the auctions and in the secondary market to identify indications of anti-competitive conduct.
Enel X: Manages the auctions.
The RGGI participating states periodically review the ETS to consider program successes, impacts, and design elements. The first program review process (known as the 2012 Program Review) was completed in early 2013. A second review process was completed in 2017, resulting in the 2017 Model Rule. Program reviews were accompanied by stakeholder meetings and the submission of comments from interested parties.
The RGGI states announced the results of the Third Program Review in July 2025, resulting in the 2025 Model Rule, with agreement to begin a Fourth Program Review no later than 2028.
As of 2024, CO₂ emissions from power plants in the ten fully participating states have fallen to 43% below a 2006 to 2008 baseline since RGGI’s inception, a faster decline than the US as a whole.[1]
[1] This reference excludes Virginia emissions.
USA - Washington Cap-and-invest Program
General Information
Washington’s Cap-and-Invest Program began operating in January 2023. It covers around 70% of the state’s emissions, and its cap trajectory is consistent with the long-term target to reduce statewide emissions to 95% below 1990 levels by 2050.
The program covers emissions from 96 entities in the mining, energy, industrial, buildings, and transport sectors. Many of the Cap-and-Invest Program’s design elements are similar to those of California’s Cap-and-Invest Program. Covered entities must surrender allowances for all their covered emissions. Allowances are distributed through auctioning and free allocation, with the latter based primarily on benchmarking. The program has a cost containment reserve and auction reserve price to support market stability and moderate covered entities’ compliance costs.
The Cap-and-Invest Program was established by the “Climate Commitment Act” (CCA), signed into law by then-Governor Jay Inslee in May 2021. Washington is the second state in the United States to pass a law requiring such an economy-wide program, after California. Launched as a standalone system, the CCA directed the Department of Ecology to pursue linkage with California and Québec. “Senate Bill 6058”, which is designed to facilitate linkage, went into effect in January 2025.
Washington’s Cap‑and‑Invest Program saw significant changes in 2025, with the Legislature enacting “HB 1975” (Chapter 320, Laws of 2025; effective July 27, 2025). The bill directs Ecology to analyze and model the program’s allowance and other compliance‑instrument markets, including scenarios with potential linkage, to support market-dynamics assessment and future design adjustments. Though price ceiling units were already in effect as a backstop to offer additional units issued at the price ceiling if Allowance Price Containment Reserve (APCR) supply is exhausted, HB 1975 established the fixed price ceiling of USD 80 for 2026 to 2027.
Ecology expanded its “Program Updates and Linkage” rulemaking (CR‑101 refiled March 31, 2025), published draft rule language through spring and summer 2025, and set a timetable to propose linkage rules in spring 2026, with a view to adopting them in autumn 2026 to enable potential linkage with California and Québec.
Ecology also concluded an offsets rulemaking, adopting an updated Ozone Depleting Substances protocol from Aug 2025. In parallel, Ecology advanced a separate US forest protocol update. On January 9, 2026, Ecology submitted a statutory report to the Legislature on no-cost allowance allocation for emissions-intensive, trade-exposed industries (EITEs) for 2035–2050.
Ecology held a planned pre-compliance APCR auction in October. The September quarterly auction cleared above the APCR Tier 1 trigger, prompting an additional reserve auction on November 12 at the fixed reserve price of USD 60.43. The final auction of the year (and 12th auction since the start of the Cap-and-Invest Program) took place on December 3. All 7,424,390 current vintage allowances offered for sale by Ecology and consigning entities were sold at a settlement price of USD 70.86 apiece. All 1,945,905 future vintage allowances were sold in the advance auction at a settlement price of USD 29.40 each.
Emissions & Targets
96.1 MtCO2e (2021)
By 2030: 45% reduction from 1990 GHG levels (“Greenhouse Gas Emission Limits – Amendment 2020”)
By 2040: 70% reduction from 1990 GHG levels (Greenhouse Gas Emission Limits – Amendment 2020)
By 2050: 95% reduction of total GHG emissions below 1990 levels and achievement of net-zero emissions (Greenhouse Gas Emission Limits – Amendment 2020)
- Average auction price (current vintage): USD 60.95
- Average secondary market price: USD 61.36
Size & Phases
FIRST COMPLIANCE PERIOD: Four years (2023 to 2026)
SECOND COMPLIANCE PERIOD: Four years (2027 to 2030)
THIRD COMPLIANCE PERIOD: Four years (2031 to 2034)
Under Senate Bill 6058, the Department of Ecology may be required to revise the definition of “compliance period” through rulemaking to align with a linked jurisdiction. However, the length of the first compliance period will not change.
An absolute cap limits the total emissions allowed in the system and is fixed ex-ante.
FIRST COMPLIANCE PERIOD: The cap for 2023 was set at 63 MtCO2e, which is equal to 93% of average emissions levels of covered entities between 2015 and 2019. The cap declines annually by 7%, to reach 49 MtCO2e in 2026.
SECOND COMPLIANCE PERIOD: The cap for 2027 will be set at 93% of the sum of the 2026 cap and emissions from new entities entering the program for the second compliance period. The cap declines by 7% annually through 2030.
THIRD COMPLIANCE PERIOD AND BEYOND: The cap for 2031 will be set at 98.2% of the sum of the 2030 cap and emissions from new entities entering the program for the third compliance period. In the period from 2032 to 2042, the cap declines annually by 1.8%.
In the period from 2043 to 2049, the cap declines annually by 2.6%, reaching a 95% reduction from 1990 emissions levels by 2050.
FIRST COMPLIANCE PERIOD: All facilities with emissions over 25,000 tCO2e, including industrial facilities, electricity generators, importers of electricity, fuel distributors, and natural gas suppliers. Excludes emissions from waste-to-energy and solid waste management. Starting in emissions year 2025, electric power entities (EPEs) which meet the 10,000 tCO2e emissions reporting threshold and have over 0 tCO2e emissions from unspecified sources, also have to participate in the Cap-and-Invest Program.
SECOND COMPLIANCE PERIOD: Waste-to-energy facilities with emissions over 25,000 tCO2e in at least one year between 2023 and 2025 will be added.
THIRD COMPLIANCE PERIOD: Railroad companies with emissions over 25,000 tCO2e in at least one year between 2027 and 2029 will be included.
VOLUNTARY OPT-IN PARTICIPATION: Any facility that is already covered by the mandatory MRV system but with emissions below the 25,000 tCO2e Cap-and-Invest Program inclusion threshold may voluntarily participate as an opt-in entity. Other facilities, including federal power marketing administrations (FPMA), can also participate as opt-in entities. Opt-in entities become covered by the mandatory MRV system and must follow the same MRV requirements as other covered entities.
Upstream (building, power [imported electricity] transport); point source (mining, industry, power).
96 covered entities, covered sources, or opt-in entities.
Allowance Allocation & Revenue
Proportion of auctioned allowances: 35% (2025)
Allowances are distributed via free allocation, free allocation with consignment, and auction.
FREE ALLOCATION: Emissions-intensive, trade-exposed facilities receive free allowances to mitigate the risk of carbon leakage. Allocation is done using facility-specific benchmarks, based on their average carbon intensity over the period between 2015 and 2019. Facilities could request free allocation based on their average emissions (i.e., grandparenting) only in a few instances where they were unable to calculate the emissions intensity of their production over this period. The reduction schedule that is applied to the allocation of no-cost allowances to eligible facilities will be based on four-year periods that are specified in the statute, instead of compliance periods.
FIRST COMPLIANCE PERIOD: Set at 100% of the benchmark multiplied by actual production, or historical emissions level.
SECOND COMPLIANCE PERIOD: Set at 97% of the benchmark multiplied by actual production, or historical emissions level.
THIRD COMPLIANCE PERIOD: Set at 94% of the benchmark multiplied by actual production, or historical emissions level.
FREE ALLOCATION WITH CONSIGNMENT: Electricity utilities receive free allowances based on forecasts of the electricity supply and administrative costs associated with complying with the Cap-and-Invest Program. During the first compliance period, they can choose to consign up to 100% of their allowances to auction. Natural gas facilities received an initial free allocation equal to 93% of their average emissions in the period from 2015 to 2019. The amount reduces annually in line with the cap decline factor. In 2023, 65% of free allowances must have been consigned for auction. This amount increases by 5% each year, reaching full consignment in 2030. Freely allocated allowances that are not consigned for auction may only be used for surrender and cannot be traded. Whether consigned or not, the allowance value allocated to electricity utilities and natural gas suppliers is required to be used for ratepayer benefit.
AUCTIONING: Auctions occur four times a year. Unsold allowances are held for future auctions and only sold if the settlement price is above the auction floor price for two consecutive auctions. Any that remain unsold within 24 months are transferred to an emissions containment reserve (see ‘Market Stability Provisions’ section).
USD 4.3 billion of state revenue since the beginning of the program (USD 5.6 billion including consigned allowances)
USD 1.7 billion in 2025 (USD 2.3 billion including consigned allowances)
USE OF REVENUE FROM FREE ALLOWANCES CONSIGNED FOR AUCTION: Revenues raised from the auctioning of free allowances on behalf of electricity utilities and natural gas facilities must be used to benefit ratepayers or customers, prioritizing those from low-income groups. In most cases the state’s Utilities and Transportation Commission determines how the revenues are used.
USE OF REVENUES FROM ALLOWANCES AUCTIONED BY THE DEPARTMENT OF ECOLOGY: Proceeds from auctions are split into five accounts:
- Carbon Emissions Reduction Account (CERA);
- Climate Investment Account (CIA);
- Climate Commitment Account (CCA);
- Natural Climate Solutions Account (NCSA); and
- Air Quality and Health Disparities Improvement Account (AQHDIA).
Each account is intended for different environmentally beneficial activities. Not all projects funded from these accounts are intended to reduce GHG emissions. Funds in each of these five accounts are to be appropriated for specific types of climate, environmental justice, and ecological projects. The CCA requires that a minimum of 35%, with a goal of 40%, of money from CCA accounts be used for projects that provide a direct and meaningful benefit to vulnerable populations within overburdened communities. At least 10% of CCA account funds are required to be used for projects formally supported by the resolution of a Tribe.
Prior to June 2025, the CERA included two additional accounts, the Climate Active Transportation and Climate Transit Program Accounts. The Legislature repealed these accounts in Chapter 417 Laws of 2025 (ESSB 5801, Sec 801). All residual funds in the two accounts were deposited back into CERA.
For the 2023 to 2025 Biennium, the Legislature appropriated a total of USD 2.75 billion across all budget types (operating, capital, and transportation) and total spending for the same period reached USD 1.5 billion or 55% of legislative appropriations. During fiscal year 2025 (July 1, 2024 through June 30, 2025), approximately USD 1 billion was spent.* Of the amount already spent during the Biennium, approximately USD 375 million was through CTPA, USD 650 million through CCA and USD 220 million through NCSA
*The annual report titled “Distribution of Funds from CCA Accounts” for Fiscal Year 2025 is available here.
Flexibility & Linking
Unlimited banking is allowed between periods; however, covered entities are subject to general holding limits, which depend on the cap level. Allowances held in a compliance account to be used for compliance or that are to be consigned for auction do not count towards the holding limit.
Borrowing is not allowed.
The use of offset credits is allowed.
QUALITATIVE LIMITS: Washington has adopted – with modifications – the following offset credit protocols developed under the California Cap-and-Trade Program:
- Livestock projects;
- Ozone depleting substance projects;
- US forest projects; and
- Urban forestry projects.
Ecology adopted amendments updating the ozone depleting substances protocol on July 21, 2025 (effective August 21, 2025), and is separately advancing a US forest protocol update, with draft language released in July and September 2025 and a proposal (CR‑102) slated for January 2026.
QUANTITATIVE LIMITS:
First compliance period: Up to 8% in aggregate. Up to 5% of an entity’s compliance obligation from projects not located on federally recognized tribal land. An additional 3% can be met from projects located on federally recognized tribal land.
Second compliance period: Up to 6% in aggregate. Up to 4% of an entity’s compliance obligation from projects not located on federally recognized tribal land. An additional 2% can be met from projects located on federally recognized tribal land.
Third compliance period and beyond: Up to 6% in aggregate. Up to 4% of an entity’s compliance obligation, including from projects located on federally recognized tribal land. An additional 2% can be met from projects located on federally recognized tribal land.
In the event of a link to another trading system, at least 50% of offset credits must provide direct environmental benefits to the state (DEBS) in the first compliance period, rising to 75% from the second compliance period. Without a link, all offset credits must provide DEBS.
Entities surrendered 26,280 offset credits in 2023, corresponding to 0.13% of total instruments surrendered for compliance.
The Washington Cap-and-Invest Program is not currently linked with any other system. However, in November 2023, the Department of Ecology announced that it would pursue linkage with the cap-and-trade programs of California and Québec. In March and September 2024, joint statements from the governments of Washington, California, and Québec affirmed their commitment to explore potential linkage. The state’s linkage-related rulemaking and Environmental Justice Assessments are ongoing. The state anticipates full linkage occurring by 2027. Quarterly status updates on linkage are posted on the Ecology Linkage Website.The most recent update occurred in December 2025.
Compliance
Four years
Except for the year following the last year of a compliance period, compliance instruments equal to at least 30% of the previous year’s verified emissions must be surrendered annually, by the start of November (or the first business day thereafter). Compliance instruments equal to all remaining emissions must be surrendered by the start of November (or the first business day thereafter) of the year following the last year of a compliance period.
FRAMEWORK: The MRV framework was established by the regulation “Reporting of Emissions of Greenhouse Gases” (WAC 173-441).
MONITORING: Reporters must follow the calculation, monitoring, quality assurance, missing data, recordkeeping and reporting procedures specified in the applicable sections of the rule.
A written GHG monitoring plan is mandatory for reporters required to report under WAC 173‑441‑030, and must identify roles, data collection methods, quality assurance, maintenance, and repair procedures for meters/continuous monitoring systems, and include simplified block diagrams for facilities.
Calibration and accuracy requirements apply to meters and measurement devices at facilities, with different initial calibration dates for emissions and product data monitoring, and subsequent recalibrations per rule, manufacturer, or industry standards (WAC 173-441-050).
MRV thresholds: mandatory GHG reporting at ≥10,000 tCO2e/year for facilities, fuel suppliers, and electric power entities; facilities report from 2012 onward; suppliers and electric power entities report beginning with the 2022 emissions year reported in 2023 (WAC 173-441-030).
REPORTING: Annual reporting is required; the emissions report is due by March 31 for most reporters, and by June 1 for electric power entities (WAC 173-441-050).
VERIFICATION: Third‑party verification is required from the 2023 emissions year (reported in 2024) for any reporter emitting ≥25,000 tCO2e/year, or any reporter with a mandatory or voluntary compliance obligation under the cap‑and‑invest law.
For reporters subject to third‑party verification, full verification is required at least once every three reporting years (the first year must be full), with less‑intensive verification allowed in the other two years if conditions are met. The verifier’s report is due by August 10 for the prior calendar year (WAC 173-441-085). Verifiers must be certified by Ecology, including active accreditation/recognition under California ARB’s Mandatory Reporting program (WAC 173-441-085).
If a covered or opt-in entity lacks sufficient compliance instruments to cover its annual and final compliance obligations at the relevant deadlines, it must, within six months, submit four penalty allowances for every missing compliance instrument. If the entity fails to submit the penalty allowances, Ecology must issue an order or a civil penalty of up to USD 10,000 per day per violation; each tonne of CO2e not covered by a compliance instrument constitutes a separate violation (WAC 173-446-610).
Market Regulation
MARKET PARTICIPATION: Compliance entities, including opt-in entities; non-compliance entities, including offset project participants; individuals with primary residence in the United States.
MARKET TYPES:
Primary: Auctions are held four times per year, with a calendar giving dates and volumes published in January of each year. Participants must have an account in the Compliance Instrument Tracking System Service (CITSS). Auctions are delivered through the Western Climate Initiative, Inc.
Secondary: Futures and options contracts for allowances are traded on the Intercontinental Exchange and Nodal Exchange. Allowances can be traded over the counter directly between market participants.
LEGAL STATUS OF ALLOWANCES: Allowances are not explicitly defined as “financial instruments” or “securities”, but, alongside offset credits, are treated as “compliance instruments” created and administered by Ecology for compliance purposes, and are subject to specific rules on creation, trading, holding, banking and retirement.
AUCTION PRICE FLOOR
Instrument type: Price-based instrument
Functioning: The auction price floor is set at USD 27.92 for 2026. It increases by 5% plus inflation annually, as measured by the nationwide Consumer Price Index for All Urban Consumers (CPI-U) identified by the US Bureau of Labor Statistics.
ALLOWANCE PRICE CONTAINMENT RESERVE (APCR)
Instrument type: Price-based instrument
Functioning: The APCR is a separate account managed by the Department of Ecology, from which allowances can be auctioned at pre-defined prices in the event of unexpectedly high allowance costs. Ecology places a percentage of each annual allowance budget into the APCR (currently 5% in the first and second compliance periods, 2023 to 2030), rather than a one-time frontload at program outset. The APCR has two price tiers, which in 2026 are set at USD 65.26 and USD 83.84 for Tiers 1 and 2 respectively.* Prices increase annually by 5% plus inflation, as measured by the CPI-U.
APCR auctions are held following any quarter in which the auction settlement price reaches or exceeds the Tier 1 price level, and a pre‑compliance APCR auction is also held before each annual compliance deadline. Only covered and opt-in entities can participate. Sales occur at the fixed tier prices. Purchased allowances are deposited directly into entities’ compliance accounts and cannot be traded on secondary markets. Any unsold allowances are carried over to future APCR auctions. Ecology publishes schedules and results for APCR auctions each year.
PRICE CEILING UNITS
Instrument type: Price-based instrument
Functioning: If there are no units remaining in the APCR, price ceiling units are made available to covered entities with insufficient allowances to meet their compliance obligations. Price ceiling unit sales only occur at the end of a compliance period and following the request of a covered entity, with advance notice as specified in rule. The ceiling price is set at USD 80.00 for 2026 to 2027 under HB 1975. Subsequent adjustments are determined by Ecology consistent with statute and rulemaking to facilitate potential linkage.
EMISSIONS CONTAINMENT RESERVE (ECR)
Instrument type: Price-based instrument
Functioning: Allowances can be withheld from an auction and placed in the ECR if auction settlement prices fall below the ECR trigger price. The trigger price is currently suspended, and this provision is therefore not operational.
*Until a linkage agreement is signed, APCR auctions only include allowances at the Tier 1 price.
Other Information
Department of Ecology: Responsible for the program rules and implementation of the Cap-and-Invest Program.
Western Climate Initiative Inc.: Non-profit organization responsible for administering auctions, the CITSS registry, and conducting market surveillance.
Other partner jurisdictions utilizing WCI, including California, Québec, and New York State.
By December 2027, and every four years thereafter, the Department of Ecology is required to submit a comprehensive review of the program to the legislature.
Investments made during the 2023 to 2025 biennium are expected to directly reduce GHG emissions by nearly 9 MtCO2e, at an estimated cost of USD 40 per tonne.*
*See the report Distribution of funds from CCA accounts Fiscal Year 2025. Note the disclaimer on the cover page.