Washington’s “cap-and-invest” carbon pricing system faces a precarious future. Organizers of an initiative to repeal the nascent market last week delivered 400,000 signatures to be verified by the Secretary of State’s Office. On signs, supporters lampooned a 2022 quote from Gov. Jay Inslee that cap-and-trade in the state would result in gas price increases in “pennies.” The increase was likely closer to between a quarter or two per gallon. Oil companies simply passed along the program’s new costs to consumers.

Voters might well send the auction system up in smoke — and billions of dollars in future proceeds to help decarbonize the state. Washington voters twice before rejected initiatives to tax carbon.  

The Times editorial board endorsed the 2021 Climate Commitment Act that created cap-and-trade here, with the caveat its efficacy must be closely monitored. Clearly, “cap-and-invest” will need reforms to survive.

First, Washington needs pragmatic leadership — and action — to disarm those who want to crash the system. Leaders must find ways to rein in the cost of the market’s allowances, those permits companies must buy to cover their emissions. Washington’s latest auction, at $66.03 per metric ton of carbon, is close to double the $38.73 price of the linked cap-and-trade system between California and Quebec. Twice this year, Washington’s system triggered special auctions of additional allowances in an effort to lower their price. Under the current law, the state can expand the allowance supply while still ensuring fewer will be needed over time to meet Washington’s goal of being nearly carbon free by 2050.

Allowance costs “went up too much, too fast, leading to price shocks at the pump,” says State Sen. Mark Mullet, D-Issaquah, a cap-and-trade supporter who is also running for governor. “That was avoidable if we’d implemented this in a more thoughtful way.”

Second, Washington needs a bigger carbon market. To that end, the state Ecology Department recently announced a plan to merge Washington’s auctions with the California-Quebec system. The marriage would increase money and players in the marketplace, likely stabilizing the cost of allowances. “Linkage,” as it’s formally called, will take at least until 2025, but pursuing it signals to market participants a wider pool is on the way.

Third, the Legislature should consider whether a limited amount of the allowance proceeds should go back to motorists. One possibility is a car tab rebate that would demonstrate the carbon market really is about changing behavior of the state’s biggest emitters — generally, businesses that exceed 25,000 metric tons of carbon dioxide per year — over time.

None of these changes disregards the crisis we face from heat-trapping greenhouse gases. We must confront catastrophic climate disruptions with a system that has been proven to effectively decrease emissions using market forces. By example, a nearly 15-year-old cap-and-trade system among nine northeast states that covers power plants lowered emissions by 1.3 million tons per year, according to a 2021 study.

The possibility of a second Donald Trump presidency could also gut federal initiatives like the Inflation Reduction Act that are fighting climate change. Washington’s cap-and-invest system would become a bulwark against Trump’s actions.

The auctions have already raised $1.5 billion to use for Washington projects that reduce emissions and improve air quality.

Yet, future funding is in jeopardy, with a sword of Damocles hanging over the new carbon market. If “cap-and-invest” is to endure, our state must make it as stable and predictable as possible for companies and the people of Washington.

The Legislature convenes in January. Lawmakers need to get to work.

The Seattle Times editorial board members are editorial page editor Kate Riley, Frank A. Blethen, Melissa Davis, Josh Farley, Alex Fryer, Claudia Rowe, Carlton Winfrey and William K. Blethen (emeritus).