Washington Ecology Adopts Cap-and-Invest and GHG Reporting Updates

By: Jeff Baldino & Rachel Ford

On September 23, 2026, the Washington Department of Ecology adopted significant amendments to its Cap-and-Invest Program (WAC 173-446) and Greenhouse Gas (GHG) Reporting Rule (WAC 173-441). The updates expand program coverage, revise reporting requirements, and prepare Washington’s carbon market for linkage with California and Québec.

Key regulatory changes include:

• Allowance Markets and Offsets: Updates annual allowance budgets, increases
  auction purchase limits from 10% to 25%, expands future-vintage auction
  opportunities, and revises offset provisions, including those for Tribal projects.
• Biofuel Eligibility: Reduces the minimum lifecycle GHG reduction threshold for
  qualifying biofuels from 40% to 30%, expanding eligibility for exemption from
  Cap-and-Invest compliance obligations and aligning with other State programs.
• Expanded Electricity Coverage: Removes certain emissions thresholds for
  electricity suppliers, including exemptions for unspecified electricity (electricity
  purchased without an identified generation source). The changes expand
  reporting and compliance obligations while maintaining an exemption for
  qualifying wheeled-through electricity.
• Future Sector Compliance Requirements: Updates provisions governing the
  phased inclusion of waste-to-energy facilities beginning in 2027 and railroads
  beginning in 2031. Changes include revised applicability criteria for railroads and
  new allowance allocation provisions for qualifying waste-to-energy facilities.
• GHG Reporting and Verification: Revises reporting error correction thresholds
  and strengthens missing-data procedures, placing greater emphasis on data
  completeness and accuracy.
• Market Linkage: Aligns compliance periods, allowance trading provisions, and
  market oversight requirements with California and Québec to support a linked
  carbon market.

What Comes Next?

The amendments generally take effect this week, on October 24, 2026, although certain requirements will be phased in over subsequent compliance periods or upon market linkage. Regulated entities should evaluate how these changes affect their reporting obligations, allowance strategies, and compliance planning.

For additional information, visit the Washington Department of Ecology’s rulemaking
page.