On 15 December 2020 Governor Jay Inslee of Washington State announced a comprehensive climate policy package that includes a proposed ETS.

The plan, titled the Climate Commitment Act, would authorize the Washington Department of Ecology to administer a cap-and-trade program covering the industry sector.

Proceeds from the allowance auctions would be directed to a new climate investment account. The funds from the account would be put towards clean transportation, natural climate resilience solutions, clean energy transition and assistance, and other mitigation projects. An environmental justice and equity panel would advise on funding decisions. Funding proposals would need to undergo an environmental justice analysis to ensure they are being directed towards eliminating environmental harm as well as economic and health disparities for vulnerable populations.

The policy package aims to meet the statewide GHG targets enacted into law in the 2020 legislative session. They include a 45% reduction below 1990 levels by 2030, a 70% reduction by 2040, and a 95% below 1990 levels by 2050.Drawing on revenues from the general budget, the Climate Commitment Act would invest USD 428 million over a two-year budget period to meet these targets and implement programs through three pillars: clean transportation, healthy homes and clean buildings, and clean energy. The Act would also establish a clean fuel standard, set requirements for new buildings to be zero-carbon by 2030, eliminate fossil fuels from existing buildings by 2050, and invest in a series of clean energy initiatives, including grid modernization, R&D, and electrifying the state’s maritime and transportation sectors, amongst other initiatives.

The climate policy package was announced as a part of the governor’s new two-year budget proposal as Washington State lawmakers prepare to convene in January for the 2021 legislative session. Democrats currently control both the executive and legislative branches of government in the state. Washington legislators have attempted to pass an ETS previously but have not been successful. The state attempted to regulate GHGs through the Washington Department of Ecology in 2016 through the Clean Air Rule (CAR). The CAR, a baseline and credit system  covering industrial sources, petroleum fuel producers and importers, and natural gas distributors, is currently suspended after being struck down by legal challenges in 2018 and 2020.