CAP&TRADE BILL W/85% FREE ALLOWANCES

Panel Adds Free Permits To CO2 Bill
Ian Talley, May 16, 2009 (Wall Street Journal)

"The latest version of the House Democratic leadership's climate bill would give away for free up to 85% of the pollution permits created to launch a proposed system to cap greenhouse-gas emissions…a part of the multibillion-dollar price paid by California Democratic Rep. Henry Waxman, chairman of the House Energy and Commerce Committee, to win support from moderates in his own party for the sweeping bill.

"The measure would force businesses to acquire permits to emit carbon dioxide and other greenhouse gases. Those permits, which could be sold, would have value because the overall quantity of industrial greenhouse-gas emissions would be capped."

From NationalWildlife via YouTube.

"The compromise would allow certain industries to avoid paying for greenhouse-gas permits over the next two decades. President Barack Obama and Mr. Waxman had originally pushed for all the emission permits to be auctioned, which would have generated $624 billion over 10 years…to fund Mr. Obama's middle-class tax cuts and research on clean-energy technology.

"Some environmental groups… were concerned that the level of free credits would weaken industry incentives to cut emissions and reduce benefits to consumers to cushion energy and product-cost increases…The oil industry…was concerned that only a fraction of the free allocations would go to the transportation sector, which accounts for about a third of total U.S. emissions…"

With 85% free allowances in the early years, this cap&trade system will require time to become equitable. (click to enlarge)

"… 35% of the credits will be allocated to the power industry. Energy-intensive industries, such as the cement, glass and paper manufacturing sectors, will get 15% of the free permits. An additional 9% would go to the natural-gas sector, 2% to oil refiners and 1.5% to users of heating oil. Most of those emission allocations will phase out between 2026 and 2030.

"The auto industry would get 3% of the free credits up to 2017, for investments in clean-vehicle technology. The remaining free allocations, about 10%, would be divided among the carbon-capture and storage industry, clean-energy research and development, deforestation-prevention projects, and help for other countries to adapt to climate changes."