Washington’s Cap-and-Trade Program: A Costly and Badly Flawed Climate Mandate that Needs to be Fixed

Program is on track to be over 3x more costly than predicted

Washington’s Cap and Trade climate mandate continues to grow more expensive. The Department of Ecology reports this program has already collected about $3 Billion in compliance costs through December 2024.1  This is over 3 times more expensive than originally predicted when the program was passed by the legislature.2

Many experts are highly skeptical about the long-term feasibility of this program. In Washington’s rush to become the “greenest” state in the nation, the program doesn’t consider whether there is even a realistic way to comply with the aggressive goals that have been set by the program or what the cost impacts will be for Washington’s economy and consumers.3

The program needs to be fixed to make it work as intended in meeting climate goals without placing regressive cost burdens on Washington families and businesses.

Proposed Changes to Washington’s Low Carbon Fuel Standard will be Costly and Regressive

Changes proposed by the Legislature to increase the stringency of this fuel mandate will increase fuel costs without significant emissions reductions.  LCFS aims to lower the carbon content of fuels by blending them with increasing amounts of biofuels or by the adoption of more electric vehicles. Fuel suppliers who do not meet the mandate’s requirements must purchase compliance “credits” from suppliers of lower carbon transportation fuels.

Industry experts predict that the proposed changes to the mandate could add up to 25 cents per gallon to the cost of gasoline and up to 30 cents per gallon to the cost of diesel within the next few years.4

Higher fuel costs mean increased costs to the region’s businesses that manufacture and transport consumer products which could be passed on to consumers in the form of higher prices.  The consumers who ultimately get hurt the most are those that can least afford to pay more for the higher costs of fuels, goods and services.

  1. Washington Department of Ecology, Cap and Invest Auction and Market Reports for 2023 and 2024.
  2. Washington Office of Fiscal Management, Fiscal Note, E2SSB 5126, May 21, 2021 (based on the originally projected allowance proceeds of $888M for 2023 and 2024).
  3. Carr Bon-Neutral Consulting, “Concerns Regarding Washington’s Cap-and-Invest Program,” April 2022.
  4. “Impacts of the Proposed Washington HB-1409 CFS Changes,” Stillwater Associates, LLC, March 5, 2025.  Modeling assumed a 15% reduction in carbon intensity of fuels in 2028 as required by changes to the state’s Low Carbon Fuel Standard proposed in HB 1409.