WAC 173-446-375

(1) Ecology shall maintain an emissions containment reserve account containing the following allowances:

(a) On January 1, 2023, ecology placed two percent of allowances from the first compliance period into the emissions containment reserve account based on annual allowance budgets necessary to achieve the 2030 statewide emissions limit under RCW 70A.65.070 by January 1, 2030.

(b) No sooner than January 1, 2027, ecology shall place two percent of the additional allowances available due to the increase in the allowances budgets for 2023-2026 as described in WAC 173-446-210 Table 210-2 relative to those budgets when allowances were placed in the emissions containment reserve from those budgets under (a) of this subsection.

(c) Allowances submitted by ecology for auction that are unsold after being offered for sale for 24 months in current and past year vintage allowance auctions and future vintage allowance auctions.

(d) Allowances from EITE facilities that have been curtailed or closed.

(e) Allowances from facilities that fall below the emissions threshold. The number of these allowances must be proportionate to the amount of emissions the facility was previously emitting.

(f) Unless the emissions containment reserve trigger price is suspended under WAC 173-446-340, allowances withheld from auction as described in WAC 173-446-357(3).

(2) Ecology shall distribute allowances from the emissions containment reserve account as follows:

(a) By auction when new covered and opt-in entities enter the program; and

(b) By direct allocation at no cost to cover the covered emissions for the first applicable compliance period for new or expanded EITE facilities. For the purpose of this subsection, the "first applicable compliance period" means the compliance period when the new or expanded EITE facility became a covered entity for the first time by reporting covered emissions greater than 25,000 MT CO2e in a single year.

(c) If provided to either new or expanded EITE facilities, the allowances provided will be limited to the number of allowances required to cover the covered emissions of the facility for the applicable emissions years. If the number of allowances that a new or expanded EITE facility is eligible to receive for a given emissions years as determined using Eq. 220-1 in WAC 173-446-220 (2)(b) or Eq. 220-4 in WAC 173-446-220 (2)(c) is greater than the facility's covered emissions for that given emissions year, then ecology will not allocate any allowances to that facility from the emissions containment reserve. When provided to either new or expanded EITE facilities, the allowances will be allocated in a manner that is consistent with the methods described in WAC 173-446-220 and the allowances must be placed in the EITE facility's compliance account and used for compliance at the next compliance deadline.

(d) Owners or operators of an EITE facility who wish to be allocated allowances from the emissions containment reserve must submit a request electronically to ecology concurrent with their request under WAC 173-446-220 (1)(a) by March 31st of the year following the emissions year when the facility became a covered entity for the first time by reporting covered emissions greater than 25,000 MT CO2e, concurrent with their request for allocation under WAC 173-446-220 (1)(a). Expanded EITE facilities must also include the following information when submitting such requests to ecology:

(i) Information that demonstrates how the facility meets the definition of an expanded EITE facility, including copies of applicable government permits or approvals and details of physical changes made to the facility and their impact on emissions at the facility.

(ii) Information that identifies how the covered emissions from the facility have changed since the expansion took effect, compared to the years that are required to be used to establish the facility's allocation baseline pursuant to WAC 173-446-220.

(3)(a) Ecology shall hold auctions of allowances from the emissions containment reserve account when new covered and opt-in entities enter the program.

(b) Auctions of allowances from the emissions containment reserve account shall follow the processes and procedures specified in WAC 173-446-310 through 173-446-362. Only covered entities and opt-in entities registered in Washington's program may participate in the auctions.