Cap and Trade Rules
Climate Plan May Not Tackle Free Credits, Waxman Says

By Daniel Whitten
March 27, 2009

A draft of climate-change legislation to be
made public next week isn’t likely to take a stand on whether some
emissions credits should be free, according to the chairman of the
committee writing the measure.

“We probably will not be making those decisions next week,” when the
Energy and Commerce Committee may release its initial proposal,
panel Chairman Henry Waxman, a California Democrat, said in an
interview yesterday.

President Barack Obama proposed in his 2010 budget outline that all
credits be auctioned to raise $646 billion by 2019. Representative
Jay Inslee of Washington state is among Democrats who have said they
support giving away credits to companies.

Waxman and former committee Chairman John Dingell of Michigan were
among four Democrats who sent a letter to Obama today pledging to
work together to pass climate legislation that they called imperative.

“Our districts and the entire nation urgently need comprehensive
energy legislation that provides a pathway to private-sector energy
investments, energy independence and a safe climate,” the lawmakers
said in the letter. It was also signed by Edward Markey of
Massachusetts, chairman of a House Energy and Environment
subcommittee, and Rick Boucher of Virginia, the former subcommittee chairman.

The members said the legislation will seek ways to spur development
of clean-coal technology, mitigate the costs of the program and
protect U.S. manufacturers that may be vulnerable to competitors in
countries that don’t have similar mandates.

Clean Coal, Trade

Sponsors of separate measures to develop clean coal and ease trade
concerns say their proposals are likely to be incorporated in the draft.

A coal measure sponsored by Boucher would provide $1 billion a year
to fund projects that capture and store carbon dioxide, primarily
from coal plants. A trade measure from Inslee calls for free credits
that would prevent manufacturers from moving overseas.

An alliance of labor and environmental groups today argued for
allocation of allowances to industries such as steel and cement.
Without such protection, “our energy-intensive industries will
gravitate to areas where they don’t have strong environmental
standards,” said Leo Gerard, president of the United Steelworkers of
America, on a conference call with reporters.

Representatives Charles Rangel of New York, the chairman of the
tax-writing Ways and Means Committee, Inslee and Gene Green of Texas
are among Democrats calling for steps to cut the potential costs of
the program to consumers.

‘Off Our Backs’

“The Republicans are calling it ‘a trillion-dollar tax’ and we have
to get that off of our backs,” Rangel told reporters. “For me to go
to my district and share this with a guy who is unemployed, I’m not
going to go over that big.”

Obama has expressed increasing flexibility, saying in a March 24
news conference that cap-and-trade legislation must include
provisions to guard against “huge spikes” in electricity prices.
Obama told a group of chief executive officers in Washington on
March 12 that any climate-change law must win the support of

“We’re going to have to find a structure that arrives at that right
balance,” Obama said. “We are not going to be able to move this in
an effective way without partnership with the business community.”
Develop Legislation

White House energy and climate coordinator Carol Browner has said
there are no plans for Obama to send his own cap-and- trade bill to
Congress and that the administration will work with lawmakers “to
develop legislation.”

Waxman and Markey face pressure to moderate their past views on
energy and climate as they attempt to garner support for their measure.

A bill introduced by Markey in 2008 would have auctioned 94 percent
of the allowances in 2012, transitioning to a 100 percent auction in
2020. A 2007 Waxman measure would have left it to the president to
determine the appropriate amount of free allowances.

Last March, Waxman and Markey introduced a bill to ban construction
of coal-fired power plants that don’t limit greenhouse gases. The
measure would have blocked states and the EPA from issuing permits
for factories that didn’t capture and store carbon dioxide emissions.

The committee members include several Democrats from coal- producing
states, such as Boucher and Mike Doyle of Pennsylvania, who have
argued against such steps.

In the Senate, the road to passage may be more difficult than in the
House because 60 votes will be needed to end floor debate and a
dozen or more Democrats may oppose it. The Energy and Natural
Resources Committee is working on an energy plan, and the
Environment and Public Works Committee has yet to announce a
schedule for its climate bill.


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