Will Washington’s Groundbreaking Climate Law Inspire Other States?

The downtown Bellingham, Washington, transit station is an integral part of life for riders who rely on buses to get around. It also needs upgrades to continue providing low-carbon transportation for the town’s increasing population. 

Within a few years, the local transit authority will begin work on a new station that includes additional bays and charging infrastructure for a growing fleet of all-electric buses. The project is made possible by a $5 million grant from the nation’s second economy-wide state cap-and-invest law for carbon emissions, the Climate Commitment Act.

“This law has generated over $3 billion so far for projects that bring cleaner water, better air quality, and green energy solutions to Washington,” said Altinay Karasapan, an organizer for the Seattle-based Climate Solutions. “It’s an indispensable, unprecedented tool.”

The concept behind cap-and-invest is simple. Lawmakers set a cap on carbon emissions from major sources that declines gradually, in line with climate goals. Polluters bid to purchase emission allowances, which they may also trade among themselves. Revenue from auctions then funds projects to cut pollution or improve climate resilience.

Washington’s cap-and-invest program operates in conjunction with other state climate laws, including a hundred percent clean electricity standard and clean fuel requirements. However, what makes the Climate Commitment Act central to the state’s climate strategy is that it forces polluters themselves to fund the energy transition.

“It’s our landmark climate policy that stretches across the economy,” said Caroline Halter, communications manager for Washington’s Department of Ecology. 

The Climate Commitment Act is designed to cut statewide emissions by 95 percent below 1990 levels by 2050. Its passage in 2021, after years of work by legislators and climate groups, made Washington the second state, after California, to establish such a program economy-wide.

“We followed in California’s footsteps,” Halter said. “It would be exciting to now see other states move in the same direction.”

It’s too soon to say for sure if Washington’s Climate Commitment Act will inspire a raft of cap-and-invest initiatives elsewhere. But with the Trump administration and Congress slashing clean energy funds, the need for state-level tools that finance climate action independent of the federal government has never been greater. 

And, there are signs that a wave of interest in cap-and-invest could be starting. 

Coast-to-coast action

New Jersey Democratic Representative Balvir Singh looks excited when he talks about the cap-and-invest bill he plans to introduce in New Jersey’s next legislative session. He said it is “pretty much modeled” after Washington’s Climate Commitment Act.

“The idea is to improve people’s health, while being a clean state where you can live well with your family,” added Singh, an energetic millennial.

Singh won last year’s election for a state assembly seat left open when fellow Democratic Representative Herbert Conaway was elected to Congress. Conaway had previously sponsored a state cap-and-invest bill, which Singh wants to push over the finish line. With over 600,000 adults and 167,000 children in New Jersey suffering from asthma, the potential health benefits are vast.

“We’ll be ready when the new session starts in January,” Singh said.

New Jersey isn’t the only state where cap-and-invest could move forward. Oregon’s Department of Environmental Quality recently approved a cap-and-invest program to help achieve the state’s goal of cutting carbon emissions 95 percent below 1990 levels by 2050. New York is working on a similar plan, though progress has stalled. Maryland’s Department of Environment is studying the concept, and in July, Vermont regulators updated their state’s climate action plan with recommendations for cap-and-invest. 

Vermont, Maryland, New York, and New Jersey already participate in the Regional Greenhouse Gas Initiative, an East Coast cap-and-invest program covering electric utilities. Proposals now under consideration in these four states would establish cap-and-invest programs there that operate similarly to RGGI but apply to the whole economy.

“We realized it would be much more effective to address multiple sectors under one policy,” explained Jane Lazorchak, Vermont’s Climate Action Office director.

Not all these initiatives are guaranteed to move forward, however. New York serves as a cautionary tale on how politics can interfere with climate policy. Until January, New York looked set to implement cap-and-invest this year, fulfilling provisions in the state’s Climate Act. Then, Governor Kathy Hochul put the release of key regulations on ice.

“She effectively killed her own climate program,” said Michael Richardson, an organizer with Third Act Upstate New York. “She’s killing it with delays.”

To activists like Richardson, it seems like Hochul got cold feet after listening to industry claims about cap-and-invest raising energy costs. If so, the governor might do well to look to Washington, where cap-and-invest has not produced the dramatic cost spikes industry lobbyists like to predict, and has also proved immensely popular with voters. A 2024 ballot initiative to repeal Washington’s Climate Commitment Act didn’t just fail—it tanked spectacularly.

“It lost by 23 percentage points,” said Caroline Jones, a climate analyst for the Environmental Defense Fund. “That’s a higher margin than statewide results for the governor or presidential races.”

Jones credits the Climate Commitment Act’s durability to the broad coalition that came together to defend it, including over 500 environmental, social justice, health, and faith groups and 20 tribal nations. 

“Washingtonians are seeing the health and economic upside of a well-designed cap-and-invest policy,” Jones said. “And voters clearly want it to continue.”

A learning curve 

Is cap-and-invest the best way to reduce emissions? It depends on who you ask. Many economists argue that a carbon tax, which, instead of auctioning off allowances, charges polluters a set amount per ton of climate-warming gas emitted, is a more efficient way to curb pollution. However, in the US, passing any climate policy with “tax” in the name will be a heavy lift.

“Pretty much every climate group in our state supports cap-and-invest, because it’s the only new stream of revenue for clean energy on the table,” said Mark Dunlea, an adviser to 350 New York City.

Having active cap-and-invest programs in multiple states means lawmakers can learn from those policies as they work out challenges in their own jurisdictions. One concern about cap-and-invest is that some emitters might simply choose to buy up allowances and concentrate polluting activities in already overburdened communities. 

To address this, Washington requires that 35 percent of Climate Commitment Act funds go to projects benefiting marginalized groups. Revenue from auctions also pays for investments in air monitors and systems that combat localized pollution.

“Learning from communities in California was a driving reason Washington put that in our law,” said Karasapan. 

Will other states learn from Washington, as lawmakers there took lessons from California? Perhaps. 

“We now have multiple states that have established cap-and-invest and built best practices others can learn from,” said Halter. “There’s also never been a more important moment for states to lead on this issue. It’s an exciting time.”