Emissions Trends and Compliance Impacts in Washington’s Cap-and-Invest Program

This analyst note explores Washington’s Covered Emissions for the first year of the program, analyzing different sectoral trends to understand the decarbonization rate. The note evaluates key drivers of decarbonization, including the Clean Energy Transformation Act (CETA), and the role of renewable diesel and EV uptake under the WA Clean Fuel Standard (CFS).

Executive Summary

• Ecology recently released the 2024 version of its Mandatory Reporting Regulation. The entities and their covered emissions in 2023 and 2024 can be checked here.
• The state’s covered emissions in 2024 totalled ~59.83 MMT of CO2e,which is ~66.20% of the state’s total emissions.
• Metals & Pulp and Paper saw an increase in emissions in 2024. Power and fuel suppliers (Transportation) contributed the most to decarbonization, decreasing their emissions by 4.31M YoY.
• Fuel Suppliers are anticipated to continue to lead abatement efforts, primarily driven by the adoption of renewable diesel and the uptake of electric vehicles (EVs) due to the WA CFS, while broader emissions reduction initiatives for natural gas may take longer to materialize.
• We expect the Clean Energy Transformation Act (CETA) to drive progress in the electricity sector, as it commits to achieving net-zero emissions in the sector by 2045.
• Natural gas remains difficult to abate due to technological and cost challenges. Additionally, EITEs lack near-term incentives to invest in decarbonization due to free allocations.
• However, the fact remains that covered entities will have to increase the pace of decarbonization to stay aligned with WA’s 7% cap reduction factor through 2030.

Key Takeaways

• Washington’s total covered emissions totaled~59.83 M in 2024, a 6.52% decrease from 2023, but still over the program budget of ~58.52 M in 2024.
• In absolute terms, the transportation (fuel suppliers) sector comprised the highest share of emissions with 44.95%, followed by the Power sector and Natural Gas.
• On YoY basis, the reductions were primarily driven by Transportation (-2584.47K) and Power Sector (-1730.31K).
• Decarbonization is expected to remain sticky in Natural Gas and EITEs.
• WA CFS and CETA to drive decarbonization for Fuel Suppliers and Electricity, respectively.

Methodology to Calculate Covered Emissions from MRR

• To view data on Covered Emissions, filter the CCA Status column by Covered Entity, followed by filtering the sector to Fuel Supplier, Natural Gas Supplier, or Electric Power Entity. Greenhouse gas emissions are in units of metric tons of carbon dioxide equivalents (MTCO2e) using global warming potentials (GWPs) as specified in Table A-1 of WAC 173-441-040.
• To estimate covered emissions under the MRR, covered entities were grouped into sector-specific categories based on the applicability of reporting requirements and data availability. The categorization approach adopted is outlined below.

Glossary

WA CaI = Washington’s Cap-and-Invest Program
MMTCO₂e = Million Metric Tons of Carbon Dioxide Equivalent
MRR = Mandatory Reporting Requirement
EITEs = Emissions-Intensive, Trade-Exposed Sectors
NG = Natural Gas
YoY = Year-on-Year
CETA = Clean Energy Transformation Act
HB = House Bill
WA CFS = Washington Clean Fuel Standard
CP = Compliance Period