Washington’s Department of Ecology released results this week for it’s sixth Allowance Price Containment Reserve (APCR) auction, held on February 18, 2026. The auction completely sold out sold out, with all 3,641,344 vintageless allowances available sold at the Tier 1 Price of $60.43. These results mark the strongest bidding activity the program has seen since its inaugural year in 2023, with the ratio of qualified bids to available allowances at 7.20, indicating significant demand from entities to secure allowances amidst a tightening market as the deadline for the first compliance period approaches.
The APCR is a separate reserve pool of allowances under the cap that are released in auction under two circumstances. First, an APCR auction is held annually in October ahead of the November 1st interim program deadlines. Second, when the regular quarterly auction prices reach the TIER one pricing threshold, as in this instance. Allowances from APCR auctions have no vintage year and cannot be traded or sold as they are deposited directly into the entity’s compliance account. This auction was triggered following last December’s auction, which settled at USD 70.86, well above the APCR Tier 1 price of USD 60.43.
Market Drivers: What is Fueling Demand?
2026 is the final year of the first compliance period under the Washington Cap-and-Invest, with the full compliance obligation for 2023 to due November 1st, 2027. In the interim, facilities are required to surrender 30% of their previous year’s emissions annually on November 1st. Uncertainty caused by Initiative 2117 in 2024, which aimed to repeal Washington’s landmark climate change law the Climate Commitment Act (CCA), suppressed prices and market activities. As the deadline approaches and the future of the program is more certain, covered entities are emboldened to secure allowances now. In addition, the cap, or the total number of allowances issued annually, is legislatively mandated to decline, leading to a potential increased scarcity of compliance instruments in an already tight market. This may be encouraging covered entities to procure sufficient allowances now to hedge against future compliance obligations can be met.
The market is currently operating at a time when significant deregulation of climate policy is occurring at the federal level. On February 12th, President Trump announced that the Environmental Protection Agency is repealing the endangerment finding, the foundation of United States federal greenhouse gas regulations. However, the Washington carbon market has not reacted to this federal rollback, as legal experts and state officials note that the CCA is state law and does not rely on this endangerment finding for its legal authority. In addition, Washington’s recent win on Initiative 2117 has provided certainty on the CCA’s longevity.
Looking Ahead
Washington is in the final stages of rulemaking to link it's market with the California-Quebec linked market, the Western Climate Initiative (WCI). A formal linkage agreement is expected by Summer 2026, with linkage expected to commence late 2027, which will allow for mutual recognition of compliance instruments between all three markets. Most recently, Ecology sought public comment until February 20 on amendments intended to align Washington’s program more closely with California’s requirements to facilitate a seamless transition. Pricing in the WCI is currently much lower than in Washington, in part due to delays in Program Review for both California and Quebec and their recent announcements on reduced caps moving forward. The ongoing Program Reviews are slated to be completed prior to Washington linkage.
ClearBlue is actively monitoring these developments, for more information about ClearBlue’s advisory services or market intelligence coverage, please contact us.