wa-law.org > bill > 2025-26 > HB 2416 > Engrossed Second Substitute
The legislature intends to treat all municipal solid waste management systems fairly and equivalently throughout the state under the Washington cap and invest program. This act achieves more equal treatment of all communities with municipal solid waste management systems under state policy.
Beginning January 1, 2027, until the end of the second compliance period, the department must allocate no cost allowances to a waste to energy facility specified in RCW 70A.65.080(2) that was constructed prior to 1992, if the facility is operated in compliance with federal laws and regulations and meets state air quality standards. Except as provided in subsection (2) of this section, no cost allowances are allocated for the benefit of solid waste ratepayers. No cost allowances must be allocated in an amount equal to the following percentages of the facility's baseline greenhouse gas emissions during the calendar years 2021 through 2025:
For emissions year 2027, 93 percent of baseline greenhouse gas emissions; and
Beginning with emissions year 2028 and for each emissions year through the end of the second compliance period, the amount of no cost allowances awarded to the facility must decline by an additional seven percent for each emissions year, relative to the amount awarded under (a) of this subsection.
50 percent of the allowances allocated under subsection (1) of this section must be consigned to auction. Proceeds from the consigned allowances may only be used with the approval of the department by the owner or operator of the waste to energy facility for investments in projects or programs that reduce greenhouse gas emissions associated with the waste to energy facility.
For purposes of this section, "emissions year" means the calendar year in which greenhouse gas emissions occur.
The legislature intends by this section to allow all consumer-owned electric utilities and investor-owned electric utilities subject to the requirements of chapter 19.405 RCW, the Washington clean energy transformation act, to be eligible for allowance allocation as provided in this section in order to mitigate the cost burden of the program on electricity customers.
[Empty]
By October 1, 2022, the department shall adopt rules, in consultation with the department of commerce and the utilities and transportation commission, establishing the methods and procedures for allocating allowances for consumer-owned and investor-owned electric utilities. The rules must take into account the cost burden of the program on electricity customers.
By October 1, 2022, the department shall adopt an allocation schedule by rule, in consultation with the department of commerce and the utilities and transportation commission, for the first compliance period for the provision of allowances at no cost to consumer-owned and investor-owned electric utilities. This allocation must be consistent with a forecast, that is approved by the appropriate governing board or the utilities and transportation commission, of each utility's supply and demand, and the cost burden resulting from the inclusion of the covered entities in the first compliance period.
By October 1, 2026, the department shall adopt an allocation schedule by rule, in consultation with the department of commerce and the utilities and transportation commission, for the provision of allowances for the second compliance period at no cost to consumer-owned and investor-owned electric utilities. This allocation must be consistent with a forecast, that is approved by the appropriate governing board or the utilities and transportation commission, of each utility's supply and demand, and the cost burden resulting from the inclusion of covered entities in the second compliance period. The allowances included in this schedule must reflect the increased scope of coverage in the electricity sector relative to the program budget of allowances established in 2022.
By October 1, 2028, the department shall adopt an allocation schedule by rule, in consultation with the department of commerce and the utilities and transportation commission, for the provision of allowances at no cost to consumer-owned and investor-owned electric utilities for the compliance periods contained within calendar years 2031 through 2045. This allocation must be consistent with a forecast, that is approved by the appropriate governing board or the utilities and transportation commission, of each utility's supply and demand, and the cost burden resulting from the inclusion of the covered entities in the compliance periods. The rule developed under this subsection (2)(d) may prescribe an amount of allowances allocated at no cost that must be consigned to auction by consumer-owned and investor-owned electric utilities. However, utilities may use allowances for compliance equal to their covered emissions in any calendar year they were not subject to potential penalty under RCW 19.405.090. Under no circumstances may utilities receive any free allowances after 2045.
[Empty]
During the first compliance period, allowances allocated at no cost to consumer-owned and investor-owned electric utilities may be consigned to auction for the benefit of ratepayers, deposited for compliance, or a combination of both. The rules adopted by the department under subsection (2) of this section must include provisions for directing revenues generated under this subsection to the applicable utilities.
By October 1, 2026, the department, in consultation with the department of commerce and the utilities and transportation commission, must adopt rules governing the amount of allowances allocated at no cost under subsection (2)(c) of this section that must be consigned to auction. For calendar year 2030, electric utilities may use allowances for compliance equal to their covered emissions if not subject to potential penalty under RCW 19.405.090.
The benefits of all allowances consigned to auction under this section must be used by consumer-owned and investor-owned electric utilities for the benefit of ratepayers, with the first priority the mitigation of any rate impacts to low-income customers.
If an entity is identified by the department as an emissions-intensive, trade-exposed industry under RCW 70A.65.110, unless allowances have been otherwise allocated for electricity-related emissions to the entity under RCW 70A.65.110 or to a consumer-owned utility under this section, the department shall allocate allowances at no cost to the electric utility or power marketing administration that is providing electricity to the entity in an amount equal to the forecasted emissions for electricity consumption for the entity for the compliance period.
The department shall allow for allowances to be transferred between a power marketing administration and electric utilities and used for direct compliance.
Rules establishing the allocation of allowances to consumer-owned utilities and investor-owned utilities must consider the impact of electrification of buildings, transportation, and industry on the electricity sector.
Nothing in this section affects the requirements of chapter 19.405 RCW.
A consumer-owned utility that is party to a contract that meets the following conditions must be issued allowances under this section for emissions associated with imported electricity, in order to prevent impairment of the value of the contract to either party:
The contract does not address compliance costs imposed upon the consumer-owned utility by the program created in this chapter; and
The contract was in effect as of July 25, 2021, and expires no later than the end of the first compliance period.
The department may not allocate allowances to an electric utility under this section for greenhouse gas emissions associated with electricity produced by a waste to energy facility that receives no cost allowances under section 2 of this act.
By December 1, 2030, the owner or operator of a waste to energy facility constructed prior to 1992 must provide a two-part plan to the department and the department of commerce. The plan must include a proposed greenhouse gas emissions reduction plan and a waste reduction and material recovery plan. The greenhouse gas emissions reduction portion of the plan must outline how the facility will achieve emissions reductions consistent with the state emissions limits for 2040 and 2050 under chapter 70A.45 RCW. The waste reduction and material recovery portion of the plan must be consistent with the state's waste management hierarchy established in RCW 70A.205.005, take into consideration the organic material management policies in RCW 70A.205.540 and 70A.205.545 and the expected impacts of chapter 70A.208 RCW, and align with the county's local solid waste plan under chapter 70A.205 RCW.
In the plan, emissions reductions may be proposed to be achieved by any combination of carbon capture, sequestration or other captured carbon use adopted by rule or policy by the department, waste reduction activities, recycling and reuse activities, energy conservation, industrial symbiosis, or other greenhouse gas emissions reduction strategies identified by the owners or operators of the waste to energy facility.
In developing the plan, the owner or operator of the waste to energy facility must consult with local municipally created stakeholder and community advisory bodies formed with the purpose of advising on climate or sustainability decisions.
Within 90 days of receipt, the department, in consultation with the department of commerce, must complete its review of the plan. The owner or operator of the waste to energy facility must address the department's comments and finalize the plan within 90 days of receipt of the department's comments. The owner or operator of a waste to energy facility must take reasonable steps towards implementation of the plan and operate the facility and take other actions, as appropriate, consistent with the goals of the plan.