Voters in Washington state on Tuesday upheld a groundbreaking law that is forcing companies to cut carbon emissions while raising billions of dollars for programmes that include habitat restoration and preparing for climate change.

Just two years after it was passed, the Climate Commitment Act, one of the most progressive climate policies ever passed by state lawmakers, faced a repeal effort from conservatives. They blamed it for ramping up energy and gas costs in Washington, which has long had some of the highest gas prices in the nation.

The law requires major polluters to pay for the right to do so by buying “allowances.” One allowance equals 1 metric ton of greenhouse gas pollution. Each year the number of allowances available for purchase drops — with the idea of forcing companies to find ways to cut their emissions.

The law aims to slash carbon emissions to almost half of 1990 levels by the year 2030.

Those in favor of keeping the policy said that repealing it would not guarantee lower prices, but it would jeopardise billions of dollars in state revenue for years to come. Many programs are already funded, or soon will be, by the money polluters pay — including investments in air quality, fish habitat, wildfire prevention and transportation.

For months, the group behind the repeal effort, Let's Go Washington, which is primarily bankrolled by hedge fund executive Brian Heywood, has held more than a dozen events at gas stations to speak out against what they call the “hidden gas tax.”

The group has said the carbon pricing program has increased costs from 43 to 53 cents per gallon, citing the conservative think tank Washington Policy Center.

Gas has gone as high as $5.12 per gallon since the auctions started, though it stood at $4.03 in October, according to GasBuddy. And the state's historic high of $5.54 came several months before the auctions started in February 2023.

Without the program, the Office of Financial Management estimated that nearly $4 billion would vanish from the state budget over the next five years. Lawmakers approved a budget that runs through fiscal year 2025 with dozens of programs funded through the carbon pricing programme, with belated start dates and stipulations that they would not take effect if these funds disappear.

Washington was the second state to launch this type of program, after California, with stringent annual targets. Repeal would have torpedoed Washington's plans to link up its carbon market with others, and could have undermined efforts to help other states launch similar programmes.