SB 6246 — Concerning emissions from emissions-intensive, trade-exposed facilities under the climate commitment act.

S-3970.1ENGROSSED SENATE BILL 6246 State of Washington 69th Legislature 2026 Regular Session By Senators Slatter, Shewmake, and Saldaña Read first time 01/20/26.

1 SBESB 6246 (b) Paper manufacturing, including pulp mills, paper mills, and paperboard milling, North American industry classification system codes beginning with 322;

2 SBESB 6246 criteria adopted by rule is also eligible for treatment as emissions- intensive, trade-exposed and is eligible for allocation of no cost allowances as described in this section.

(b) For the four years beginning January 2027 and in each subsequent four-year period, the annual allocation of no cost allowances established in (a) of this subsection shall be adjusted according to the benchmark reduction schedules established in (b)(ii) and (iii) and (e) of this subsection multiplied by the facility's actual production during the period,period. except as provided in subsection (9) of this section.

The department shall adjust the no cost allocation of allowances and credits to an emissions-intensiveemissions- intensive and trade-exposed facility to avoid duplication with any no cost allowances transferred pursuant to RCW 70A.65.120 and 70A.65.130, if applicable.

The mass-based baseline must be based upon data from 2015 through 2019, unless the emissions-intensive, trade-exposed facility can demonstrate that there have been abnormal periods of operation that materially impacted the facility and the baseline period should be p.

3 SBESB 6246 materially impacted the facility and the baseline period should be expanded to include years prior to 2015.

For each year during the years 2027 through 2030, these facilities must be awarded no cost allowances equal to 97 percent of the facility's mass-based baseline,baseline. except as provided in subsection (9) of this section.

For each year during the years 2031 through 2034, these facilities must be awarded no cost allowances equal to 94 percent of the facility's mass-based baselinebaseline. , except as provided in subsection (9) of this section.

(d) During the years 2023 through 2026, each emissions-intensive, trade-exposed facility must record its facility-specific carbon intensity baseline based on its actual production.

4 SBESB 6246 (d)(e)(i) DuringFor the years 20232027 through 2026,2030, the second period benchmark for each emissions-intensive, trade-exposed facility mustis recordthree itspercent facility-specificbelow carbonthe intensityfirst period baseline basedspecified onin its(a), actual(b), production.and (c) of this subsection.

(e)(i) For the years 2027 through 2030, the second period benchmark for each emissions-intensive, trade-exposed facility is three percent below the first period baseline specified in (a), (b), and (c) of this subsection.

(4)(a) By December 1, 2026, the department shall provide ((a report to the appropriate committees of the senate and house of representatives that describes alternative methods for determining p.

5 SBESB 6246 (4)(a) By December 1, 2026, the department shall provide ((a report to the appropriate committees of the senate and house of representatives that describes alternative methods for determining the amount and a schedule of allowances to be provided to facilities owned or operated by each covered entity designated as an emissions- intensive, trade-exposed facility from)) recommendations for the consideration of the legislature regarding the schedule of allowances to be provided to emissions-intensive, trade-exposed facilities from January 1, 2035, through January 1, 2050.

(i) A proposed method for making annual reductions to emissions- intensive, trade-exposed facility allowance allocation that would mitigate the risk of leakage and ensure total no-cost allowances allocated to emissions-intensive, trade-exposed facilities align with the annual allowance budgets established by the department under RCW 70A.65.070 and are consistent with the emissions limits established in RCW 70A.45.020, including the percentage reductions in emissions-intensive,emissions- intensive, trade-exposed facility allowance allocation that would be applied each year from January 1, 2035, through January 1, 2050;

(ii) Proposed criteria and methods for the department to make adjustments to allowances allocated at no cost to emissions-emissions-intensive, intensive, trade-exposed facilities to address significant changes in leakage risk and to achieve the purposes of the greenhouse gas emissions cap and invest program established under this chapter including, but not limited to, the achievement of emissions limits established in RCW 70A.45.020;

(iii) The proposed design of an allowance allocation policy or method that would require a portion of the allowances provided at no cost to emissions-intensive, trade-exposed facilities to be consigned to auction and for the proceeds to be invested in projects or programs for reducing greenhouse gas emissions at the emissions- intensive, trade-exposed facilities from which they were consigned, including the percentage of allowances to be consigned to auction and p.

6 SBESB 6246 programs for reducing greenhouse gas emissions at emissions- intensive, trade-exposed facilities, including the percentage of allowances to be consigned to auction and proposed criteria and methods for the distribution and use of consigned funds at emissions-each intensive,emissions-intensive, trade-exposed facilities;facility;

(iv) Additional state policies or strategies that may be necessary to support the reduction of emissions and decarbonization of emissions-intensive, trade-exposed facilities in support of the achievement of emissions limits established in RCW 70A.45.020;70A.45.020, including how to address technological and economic feasibility and infeasibility, and other barriers to implementation;

(ii) Potential for deployment of technologies and strategies for reducing emissions at emissions-intensive, trade-exposed facilities through 2050 and other facility-specific or industry-specific factors;factors, including consideration of factors that may affect deployment of these technologies and strategies, such as technical and economic feasibility and infeasibility;

(c) IfIn theaddition legislatureto doesthese notrecommendations, adoptthe adepartment ((compliancemay obligationinclude for))information scheduleon ofadditional allowancesstate topolicies be provided to facilities owned or operatedstrategies bythat eachincentivize covered entity designated as emissions-intensive, trade-exposed facilities fromto Januaryuse 1,lower-carbon 2035,raw throughmaterials, Januaryrecycled 1,materials, 2050,or bymaterial Decembersubstitution, 1,to 2027,reduce thosethe facilitiesemissions mustattributable continue to receive allowances as provided in the yearsmanufacture 2031of throughan 2034individual untilgood aor schedulegoods isin adopted.the state.

(5)(d) If the actuallegislature emissionsdoes ofnot anadopt emissions-intensive,a trade-((compliance exposedobligation facilityfor)) exceedschedule theof facility'sallowances noto costbe allowancesprovided assignedto forfacilities thatowned complianceor period,operated itby musteach acquirecovered additionalentity compliancedesignated instrumentsas suchemissions-intensive, thattrade-exposed thefacilities total((by complianceDecember instruments1, transferred2027)) tofrom itsJanuary compliance1, account2035, consistentthrough withJanuary this1, chapter2050, equalsthose emissionsfacilities must continue to p.

7 SBESB 6246 duringreceive allowances as provided in the complianceyears period.2031 through 2034 until a schedule is adopted by the legislature.

(5) If the actual emissions of an emissions-intensive, trade- exposed facility exceed the facility's no cost allowances assigned for that compliance period, it must acquire additional compliance instruments such that the total compliance instruments transferred to its compliance account consistent with this chapter equals emissions during the compliance period.

In the event 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 emissionemissions reduction requirements specified in this section.

For a facility that is built on tribalp. lands or is determined by the department to impact tribal lands and resources, the protocols must be developed in consultation with the affected tribal nations.

(9)(a)8 TheESB purpose6246 oftribal thelands reportingor andis planningdetermined requirementsby ofthe thisdepartment subsection (9) is to establishimpact atribal frameworklands underand whichresources, greenhousethe gasprotocols emissionmust reductionsbe willdeveloped beginin toconsultation bewith achievedthe ataffected eachtribal emissions-intensive,nations. trade-exposed facility.

It(9)(a) isThe not,purpose however,of the p.reporting requirements of this subsection (9) is to establish a framework under which measures for reducing greenhouse gas emissions by emissions-intensive, trade- exposed facilities in support of statewide emissions limits, including implementation barriers, can be identified, evaluated, and progressed.

8It SBis 6246not, however, the intent of the legislature that the reporting and planning framework established in this section necessarilyrequire beimplementation fullyof implementedany asspecific aemissions prerequisitereduction tomeasures theidentified, legislaturebut takingto additionalcollect actioninformation addressingthat will inform the allocationdevelopment and implementation of no-coststate allowancespolicies toand emissions-intensive,programs trade-that exposeddirectly support or enable emissions reduction activities by emissions-intensive, trade-exposed facilities.

The legislature intends, using the provisions of this subsection (9) as a starting point, to begin to establish a framework that will:

(i) Achieve emissionemissions reductions by emissions-intensive, trade- exposed facilities in a manner compatible with the overall allowance budgets established under this chapter and the statewide emissionemissions limits of chapter 70A.45 RCW;

and (ii) ProvideInform appropriatethe development and implementation of policies and programs, including financial incentivesincentives, forto earlysupport actionsand enable emissions reductions by owners and operators of emissions-intensive, trade-exposed facilities;facilities, including when the department and other state agencies consider grant applications or award other funds deriving from revenues under this chapter.

(b) By December 1, 2028, and (iii)every Considerfour suchyears actionsthereafter, whenthe owner or operator of an emissions-intensive, trade-exposed facility must provide the following to the department considersin granta applicationsform orand awardsmanner otherprescribed fundsby derivingthe fromdepartment revenuesthrough underguidance thisor chapter.rule:

(b)(i) ToInformation receiveabout no-costthe allowances associated with greenhouse gas emissions afterof Januaryeach 1,emissions-intensive 2027,facility and, to the ownerextent ordetermined operatorto ofbe anfeasible emissions-intensive,for trade-exposedthe facility mustby bethe indepartment, complianceeach withunit thiswithin subsectioneach (9).facility;

Theand owner(ii) orAn operatorassessment of antechnically emissions-and intensive,economically trade-exposedfeasible facilitymeasures mustto providereduce thegreenhouse followinggas toemissions at the department:facility.

(i)The Byassessment Marchmust: 31, 2028, and every two years thereafter, information about the greenhouse gas emissions of each emissions- intensive facility and, to the extent determined to be feasible for the facility by the department, each unit within each facility, including:

(A) TheInclude products,information identifying and volumesestimating ofapplicable suchpotential products,emissions producedreduction byprojects thein facility;each facility using current p.

(B)9 AESB qualitative6246 descriptionavailable oftechnologies, theor sourcesthose ofthat emissionsare fromlikely to be available in the facility;next 10 years, along with their implementation costs.

(C)To Athe detailedextent analysis,feasible, supported by data, of the portioninformation andon percentageapplicable ofpotential theemissions facility'sreduction emissionsprojects attributablemust to:include the:

(I) EmissionsDescription associated with fossil fuel combustion for purposes of producingthe low-temperatureproject; heat;