WA Legislature Waives TransAlta Centralia Coal Plant Climate Commitment Act Exemptions

Key Takeaways

• Washington has passed legislation removing the Climate Commitment Act exemption for the TransAlta Centralia coal plant, creating a pathway for its emissions to be brought into cap and invest coverage. Now, any emissions from this plant starting Jan 1, 2026, will be covered in the program.
• The federal administration had passed an order last year ordering the plant to remain open till March 2026. They recently renewed this order, extending it to June 2026.
• However, latest EIA data for December 2025 suggests that the plant had already phased down, with generation being down by 72%.
• While we do not expect any significant emissions impact given that the plant has already phased down. The bill will likely make it uneconomical to run the plant given current Washington allowance costs.

TransAlta had Planned to Phase Down and Convert to Natural Gas, Before the Federal Administration Ordered it to Stay Open

TransAlta’s Centralia facility consists of two generating units. Unit 1 was retired in 2020, while Unit 2 planned to end coal operations at the end of 2025 and is the unit tied to a planned natural gas conversion. In December 2025, TransAlta signed a long-term agreement with Puget Sound Energy to convert Centralia Unit 2 into a 700 MW natural gas fired facility, with the project expected to come online in late 2028.

However, the site drew political attention after the Federal administration issued an emergency order in December 2025 to keep Unit 2 available for operation temporarily, even as Washington continued to push forward with its coal transition framework – hence delaying this transition. The administration renewed this order in March 2026 for another three months.

Washington has now passed legislation removing the Climate Commitment Act exemption among others such as sales tax for the qualifying coal facility, meaning Centralia’s emissions would no longer remain outside cap and invest coverage starting 1^st Jan 2026.

Historically, with reported emissions of 4,501,387 tCO2e in 2023 (the last reported data point), the plant represents roughly 7.5% of the current 60M tons covered emissions demand component of the WA Cap-and-Invest program.

However, the plant has already phased down and is unlikely to be restarted in any significant capacity. Latest EIA data from December 2025 suggests that the plant has already phased down. YoY Dec 25 generation is down almost 80%.

Figure 1: Washington’s Coal Electricity Generation in Q4 Annually. Source: EIA

Bringing a source of that scale into the program would sharply increase its demand and associated allowance procurement needs, while also likely contributing to stronger upward pressure on Washington Carbon Allowance prices at the margin. The program is already over the cap as per reported data from Ecology for 2023 and 2024 and as mentioned in our latest analyst note.

Relevant portion of the legislation

https://lawfilesext.leg.wa.gov/biennium/2025-26/Pdf/Bills/House%20Passed%20Legislature/2367.PL.pdf

Figure 2: Relevant portion of the legislation

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Analyst Contact

• Mitul Kaushal (mkaushal@ckinetics.com)
• Vanshika Goyal (Vgoyal@ckinetics.com)