RCW 70A.65.135: Allocation of allowances—Waste to energy facilities.

(1) Beginning January 1, 2027, until December 31, 2030, 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, defined as the facility's average annual emissions, during the calendar years 2021 through 2025:

(a) For emissions years 2027 and 2028, 100 percent of baseline greenhouse gas emissions;

(b) For emissions year 2029, 93 percent of baseline greenhouse gas emissions; and

(c) For emissions year 2030, 86 percent of baseline greenhouse gas emissions.

(2)(a) 40 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.

(b) Before expenditure of proceeds from consigned allowances under (a) of this subsection, the owner or operator of the waste to energy facility must submit to the department a written proposal of how the investments in projects or programs will reduce greenhouse gas emissions associated with the waste to energy facility. Before developing a proposal, the owner or operator of the waste to energy facility may consult with the department and the department of commerce to understand the information that will be needed to adequately review the proposal. Within 90 days of receipt, the department must complete its review of the proposal. The owner or operator of the waste to energy facility must address the department's comments and gain final approval of the revised proposal from the department. The owner or operator of the waste to energy facility must take reasonable steps toward implementation of the proposal consistent with the proposal timeline and requirements. A proposal may take the form of a project or program in the greenhouse gas reduction plan required in RCW 70A.65.137, once approved by the department.

(3) If the actual emissions of the waste to energy facility exceed the facility's no cost allowances allocated for emissions years 2027 through 2030, an owner or operator of the waste to energy facility must acquire additional compliance instruments such that the total compliance instruments transferred to its compliance account consistent with this chapter equal emissions during emissions years 2027 through 2030. The waste to energy facility must be allowed to bank unused allowances. The department must limit the use of offset credits for compliance by the waste to energy facility such that the quantity of no cost allowances plus the provision of offset credits does not exceed 100 percent of the facility's total compliance obligation for emissions years 2027 through 2030.

(4) The department must withhold or withdraw the relevant share of allowances allocated to the waste to energy facility under this section if the facility ceases production in the state and becomes a closed facility. If an entity curtails all production and becomes a curtailed facility, the allowances are retained but cannot be traded, sold, or transferred and are still subject to the emissions reduction requirements specified in this chapter. If the curtailed facility becomes a closed facility, then all unused allowances must be transferred to the emissions containment reserve established in RCW 70A.65.140. A curtailed facility is not eligible to receive no cost allowances during a period of curtailment. Any allowances withheld or withdrawn under this subsection must be transferred to the emissions containment reserve established in RCW 70A.65.140.

(5) For purposes of this section, "emissions year" means the calendar year in which greenhouse gas emissions occur.