CERTIFICATION OF ENROLLMENT
ENGROSSED SECOND SUBSTITUTE SENATE BILL 6058
Chapter 352, Laws of 2024
68th Legislature
2024 Regular Session
CARBON MARKET LINKAGE—CALIFORNIA-QUEBEC CARBON MARKET
EFFECTIVE DATE: Contingent.
Passed by the Senate March 5, 2024 CERTIFICATE
Yeas 28 Nays 19
I, Sarah Bannister, Secretary of
the Senate of the State of
DENNY HECK Washington, do hereby certify that
President of the Senate the attached is ENGROSSED SECOND
SUBSTITUTE SENATE BILL 6058 as
passed by the Senate and the House
of Representatives on the dates
Passed by the House February 29, 2024 hereon set forth.
Yeas 57 Nays 39
SARAH BANNISTER
LAURIE JINKINS
Secretary
Speaker of the House of
Representatives
Approved March 28, 2024 2:47 PM FILED
March 29, 2024
Secretary of State
JAY INSLEE State of Washington
Governor of the State of Washington
 ENGROSSED SECOND SUBSTITUTE SENATE BILL 6058
AS AMENDED BY THE HOUSE
Passed Legislature - 2024 Regular Session
State of Washington 68th Legislature 2024 Regular Session
By Senate Ways & Means (originally sponsored by Senators Nguyen,
Hunt, Kuderer, Liias, Mullet, Pedersen, Saldaña, Shewmake, and
Stanford; by request of Department of Ecology)
READ FIRST TIME 02/05/24.
1 AN ACT Relating to facilitating linkage of Washington's carbon
2 market with the California-Quebec carbon market; amending RCW
3 70A.65.010, 70A.65.060, 70A.65.070, 70A.65.080, 70A.65.100,
4 70A.65.110, 70A.65.170, 70A.65.200, 70A.65.210, 70A.65.310, and
5 70A.15.2200; adding a new section to chapter 70A.65 RCW; creating a
6 new section; prescribing penalties; and providing a contingent
7 effective date.
8 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
9 Sec. 1. RCW 70A.65.010 and 2022 c 181 s 10 are each amended to
10 read as follows:
11 The definitions in this section apply throughout this chapter
12 unless the context clearly requires otherwise.
13 (1) "Allowance" means an authorization to emit up to one metric
14 ton of carbon dioxide equivalent.
15 (2) "Allowance price containment reserve" means an account
16 maintained by the department with allowances available for sale
17 through separate reserve auctions at predefined prices to assist in
18 containing compliance costs for covered and opt-in entities in the
19 event of unanticipated high costs for compliance instruments.
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 1 (3) "Annual allowance budget" means the total number of
2 greenhouse gas allowances allocated for auction and distribution for
3 one calendar year by the department.
4 (4) "Asset controlling supplier" means any entity that owns or
5 operates interconnected electricity generating facilities or serves
6 as an exclusive marketer for these facilities even though it does not
7 own them, and has been designated by the department and received a
8 department-published emissions factor for the wholesale electricity
9 procured from its system. The department shall use a methodology
10 consistent with the methodology used by an external greenhouse gas
11 emissions trading program that shares the regional electricity
12 transmission system. Electricity from an asset controlling supplier
13 is considered a specified source of electricity.
14 (5) "Auction" means the process of selling greenhouse gas
15 allowances by offering them up for bid, taking bids, and then
16 distributing the allowances to winning bidders.
17 (6) "Auction floor price" means a price for allowances below
18 which bids at auction are not eligible to be accepted.
19 (7) "Auction purchase limit" means the limit on the number of
20 allowances one registered entity or a group of affiliated registered
21 entities may purchase from the share of allowances sold at an
22 auction.
23 (8) "Balancing authority" means the responsible entity that
24 integrates resource plans ahead of time, maintains load-interchange-
25 generation balance within a balancing authority area, and supports
26 interconnection frequency in real time.
27 (9) "Balancing authority area" means the collection of
28 generation, transmission, and load within the metered boundaries of a
29 balancing authority. A balancing authority maintains load-resource
30 balance within this area.
31 (10) "Best available technology" means a technology or
32 technologies that will achieve the greatest reduction in greenhouse
33 gas emissions, taking into account the fuels, processes, and
34 equipment used by facilities to produce goods of comparable type,
35 quantity, and quality. Best available technology must be technically
36 feasible, commercially available, economically viable, not create
37 excessive environmental impacts, and be compliant with all applicable
38 laws while not changing the characteristics of the good being
39 manufactured.
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 1 (11) "Biomass" means nonfossilized and biodegradable organic
2 material originating from plants, animals, and microorganisms,
3 including products, by-products, residues, and waste from
4 agriculture, forestry, and related industries as well as the
5 nonfossilized and biodegradable organic fractions of municipal
6 wastewater and industrial waste, including gases and liquids
7 recovered from the decomposition of nonfossilized and biodegradable
8 organic material.
9 (12) "Biomass-derived fuels," "biomass fuels," or "biofuels"
10 means ((fuels derived from biomass that have at least 40 percent
11 lower greenhouse gas emissions based on a full life-cycle analysis
12 when compared to petroleum fuels for which biofuels are capable as
13 serving as a substitute)) whichever of the following fuels derived
14 from biomass has lower associated life-cycle greenhouse gas
15 emissions: (a) Fuels that have at least 30 percent lower greenhouse
16 gas emissions based on a full life-cycle analysis when compared to
17 petroleum fuels for which biofuels are capable as serving as a
18 substitute; or (b) fuels that meet a standard adopted by the
19 department by rule that align with the definition of biofuel, or
20 other standards applicable to biofuel, established by a jurisdiction
21 with which the department has entered into a linkage agreement.
22 (13) "Carbon dioxide equivalents" means a measure used to compare
23 the emissions from various greenhouse gases based on their global
24 warming potential.
25 (14) "Carbon dioxide removal" means deliberate human activities
26 removing carbon dioxide from the atmosphere and durably storing it in
27 geological, terrestrial, or ocean reservoirs, or in products. "Carbon
28 dioxide removal" includes existing and potential anthropogenic
29 enhancement of biological or geochemical sinks and including, but not
30 limited to, carbon mineralization and direct air capture and storage.
31 (15) "Climate commitment" means the process and mechanisms to
32 ensure a coordinated and strategic approach to advancing climate
33 resilience and environmental justice and achieving an equitable and
34 inclusive transition to a carbon neutral economy.
35 (16) "Climate resilience" is the ongoing process of anticipating,
36 preparing for, and adapting to changes in climate and minimizing
37 negative impacts to our natural systems, infrastructure, and
38 communities. For natural systems, increasing climate resilience
39 involves restoring and increasing the health, function, and integrity
40 of our ecosystems and improving their ability to absorb and recover
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 1 from climate-affected disturbances. For communities, increasing
2 climate resilience means enhancing their ability to understand,
3 prevent, adapt, and recover from climate impacts to people and
4 infrastructure.
5 (17) "Closed facility" means a facility at which the current
6 owner or operator has elected to permanently stop production and will
7 no longer be an emissions source.
8 (18) "Compliance instrument" means an allowance or offset credit
9 issued by the department or by an external greenhouse gas emissions
10 trading program to which Washington has linked its greenhouse gas
11 emissions cap and invest program. One compliance instrument is equal
12 to one metric ton of carbon dioxide equivalent.
13 (19) "Compliance obligation" means the requirement to submit to
14 the department the number of compliance instruments equivalent to a
15 covered or opt-in entity's covered emissions during the compliance
16 period.
17 (20) "Compliance period" means the four-year period, except as
18 provided in RCW 70A.65.070(1)(a)(ii), for which the compliance
19 obligation is calculated for covered entities.
20 (21) "Cost burden" means the impact on rates or charges to
21 customers of electric utilities in Washington state for the
22 incremental cost of electricity service to serve load due to the
23 compliance cost for greenhouse gas emissions caused by the program.
24 Cost burden includes administrative costs from the utility's
25 participation in the program.
26 (22) "Covered emissions" means the emissions for which a covered
27 entity has a compliance obligation under RCW 70A.65.080.
28 (23) "Covered entity" means a person that is designated by the
29 department as subject to RCW 70A.65.060 through 70A.65.210.
30 (24) "Cumulative environmental health impact" has the same
31 meaning as provided in RCW 70A.02.010.
32 (25) "Curtailed facility" means a facility at which the owner or
33 operator has temporarily suspended production but for which the owner
34 or operator maintains operating permits and retains the option to
35 resume production if conditions become amenable.
36 (26) "Department" means the department of ecology.
37 (27) "Electricity importer" means:
38 (a) For electricity that is scheduled with a NERC e-tag to a
39 final point of delivery into a balancing authority area located
40 entirely within the state of Washington, the electricity importer is
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 1 identified on the NERC e-tag as the purchasing-selling entity on the
2 last segment of the tag's physical path with the point of receipt
3 located outside the state of Washington and the point of delivery
4 located inside the state of Washington;
5 (b) For facilities physically located outside the state of
6 Washington with the first point of interconnection to a balancing
7 authority area located entirely within the state of Washington when
8 the electricity is not scheduled on a NERC e-tag, the electricity
9 importer is the facility operator or owner;
10 (c) For electricity imported through a centralized market, the
11 electricity importer will be defined by rule consistent with the
12 rules required under RCW 70A.65.080(1)(c);
13 (d) For electricity provided as balancing energy in the state of
14 Washington, including balancing energy that is also inside a
15 balancing authority area that is not located entirely within the
16 state of Washington, the electricity importer may be defined by the
17 department by rule;
18 (e) For electricity from facilities allocated to serve retail
19 electricity customers of a multijurisdictional electric company, the
20 electricity importer is the multijurisdictional electric company;
21 (((e))) (f) If the importer identified under (a) of this
22 subsection is a federal power marketing administration over which the
23 state of Washington does not have jurisdiction, and the federal power
24 marketing administration has not voluntarily elected to comply with
25 the program, then the electricity importer is the next purchasing-
26 selling entity in the physical path on the NERC e-tag, or if no
27 additional purchasing-selling entity over which the state of
28 Washington has jurisdiction, then the electricity importer is the
29 electric utility that operates the Washington transmission or
30 distribution system, or the generation balancing authority;
31 (((f))) (g) For electricity that is imported into the state by a
32 federal power marketing administration and sold to a public body or
33 cooperative customer or direct service industrial customer located in
34 Washington pursuant to section 5(b) or (d) of the Pacific Northwest
35 electric power planning and conservation act of 1980, P.L. 96-501,
36 the electricity importer is the federal marketing administration;
37 (((g))) (h) If the importer identified under (((f))) (g) of this
38 subsection has not voluntarily elected to comply with the program,
39 then the electricity importer is the public body or cooperative
40 customer or direct service industrial customer; ((or
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 1 (h))) (i) For electricity from facilities allocated to a
2 consumer-owned utility inside the state of Washington from a
3 multijurisdictional consumer-owned utility, the electricity importer
4 is the consumer-owned utility inside the state of Washington; or
5 (j) For imported electricity not otherwise assigned an
6 electricity importer by this subsection, the electricity importer may
7 be defined by the department by rule.
8 (28) "Emissions containment reserve allowance" means a
9 conditional allowance that is withheld from sale at an auction by the
10 department or its agent to secure additional emissions reductions in
11 the event prices fall below the emissions containment reserve trigger
12 price.
13 (29) "Emissions containment reserve trigger price" means the
14 price below which allowances will be withheld from sale by the
15 department or its agent at an auction, as determined by the
16 department by rule.
17 (30) "Emissions threshold" means the greenhouse gas emission
18 level at or above which a person has a compliance obligation.
19 (31) "Environmental benefits" has the same meaning as defined in
20 RCW 70A.02.010.
21 (32) "Environmental harm" has the same meaning as defined in RCW
22 70A.02.010.
23 (33) "Environmental impacts" has the same meaning as defined in
24 RCW 70A.02.010.
25 (34) "Environmental justice" has the same meaning as defined in
26 RCW 70A.02.010.
27 (35) "Environmental justice assessment" has the same meaning as
28 identified in RCW 70A.02.060.
29 (36) "External greenhouse gas emissions trading program" means a
30 government program, other than Washington's program created in this
31 chapter, that restricts greenhouse gas emissions from sources outside
32 of Washington and that allows emissions trading.
33 (37) "Facility" means any physical property, plant, building,
34 structure, source, or stationary equipment located on one or more
35 contiguous or adjacent properties in actual physical contact or
36 separated solely by a public roadway or other public right-of-way and
37 under common ownership or common control, that emits or may emit any
38 greenhouse gas.
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 1 (38) "First jurisdictional deliverer" means the owner or operator
2 of an electric generating facility in Washington or an electricity
3 importer.
4 (39) "General market participant" means a registered entity that
5 is not identified as a covered entity or an opt-in entity that is
6 registered in the program registry and intends to purchase, hold,
7 sell, or voluntarily retire compliance instruments.
8 (40) "Greenhouse gas" has the same meaning as in RCW 70A.45.010.
9 (41) "Holding limit" means the maximum number of allowances that
10 may be held for use or trade by a registered entity at any one time.
11 (42) "Imported electricity" means electricity generated outside
12 the state of Washington with a final point of delivery within the
13 state.
14 (a) "Imported electricity" includes electricity from an organized
15 market, such as the energy imbalance market.
16 (b) "Imported electricity" includes imports from linked
17 jurisdictions, but such imports shall be construed as having no
18 emissions.
19 (c) Electricity from a system that is marketed by a federal power
20 marketing administration shall be construed as "imported
21 electricity," not electricity generated in the state of Washington.
22 (d) "Imported electricity" does not include any electricity
23 ((imports of unspecified electricity that are netted by exports of
24 unspecified electricity to any jurisdiction not covered by a linked
25 program by the same entity within the same hour)) that the department
26 determines by rule to be: (i) Wheeled through the state; or (ii)
27 separately accounted for in this chapter.
28 (e) For a multijurisdictional electric company, "imported