Washington’s carbon fee rose by 15% at the state’s second cap-and-trade auction, the Department of Ecology reported Wednesday, and is high enough to turn on an emergency valve to contain energy costs.

Energy companies and investors bought nearly 8.6 million allowances for $56 apiece at the May 31 auction. The price exceeded the $51.90 threshold Ecology set before the auction that will automatically trigger a special auction in August to increase the supply of allowances.

The auction will be closed to investors and open only to the oil refineries, natural gas distributors and others that must acquire enough allowances to cover carbon emissions attributed to their products. Investors bought more than 10% of the allowances, Ecology reported.

Washington’s allowance price exceeds California’s all-time high of $30.85. California has held 35 cap-and-trade auctions since 2012, but has never had to resort to a special auction to hold down costs.

It’s unclear how the carbon fee will impact pump prices. A formula cited by California regulators to help the public assess costs suggests a $56 allowance adds 44.8 cents a gallon to gasoline and 56 cents a gallon to diesel.

The results showed Washington’s cap-and-trade program is too costly and harming the economy, Western States Petroleum Association senior director Jessica Spiegel said in a statement.

Former Seattle state senator Reuven Carlyle, the architect of the carbon-reduction law, noted Ecology reported the auction results as much of the U.S. was blanketed by wildfire smoke.

He said in an interview that oil companies should disclose what they are passing on to consumers. “I believe in radical transparency,” he said. “I deeply appreciate there are impacts, and we have to be sensitive to that.”

Companies will have to start turning in allowances to Ecology in November 2024. Carlyle attributed the demand for allowances to companies wanting to gradually acquire enough to cover their emissions.

“Almost everybody is participating in the auctions because they just want to buy a little bit,” he said. “We have a scarcity (of allowances) right now because we just started.”

Emissions from fuel used to grow and transport farm goods is supposedly exempted from the carbon fee. Farm and non-farm fuel, however, mix through the supply chain, and farmers report paying cap-and-trade surcharges.

Skagit County dairy farmer Jason Vander Kooy estimated Wednesday that cap-and-trade has raised his diesel bill by up to $500 a day.

“It’s coming right during the spring field work. That’s our peak fuel usage,” he said. “The cost of business keeps going up and people wonder why farms keep getting bigger and bigger and the small guys get out.”

In addition to the auction for allowances to cover emissions in 2023, Ecology held an “advance auction” and sold 2.45 million allowances at $31.12 each to cover 2026 emissions.

The two auctions brought in more than $557 million for state climate-related spending. The first auction, held in February, when allowances sold for $48.50, brought in $299.9 million.

Cap-and-trade is transferring money from drivers to state agencies, “all in the name of climate change,” said Sen. Mark Schoesler, R-Ritzville.

“It’s shocking how Democrats actually seem to be proud about taking so much money away from citizens,” he said in a statement.