CAP&TRADE FIGHT COMING

Senate climate bill to include free permits
Richard Cowan (w/avid Alexander and Eric Beech) August 14, 2009 (Reuters)

"A climate control bill that Democratic leaders hope to move through the U.S. Senate will seek to give companies a substantial number of pollution permits, potentially worth billions of dollars, rather than sell them, an aide to a key Democratic senator said…

"There will be a "significant role" for allocations -- or free permits -- in the Senate bill, similar to the approach taken by the global warming legislation recently passed by the U.S. House of Representatives, the aide said."

The plan is to auction progressively more of the emissions allowances as the system gets going. (click to enlarge)

"The free permits are designed to help companies during a transition period…build business support for the legislation…[and] shield consumers from bigger price increases for energy and other goods…Under the House-passed bill, about 85 percent of pollution permits…[required] to emit carbon dioxide and other greenhouse gases initially would be given to companies…Senate Democrats are expected to introduce their version of a sweeping bill to control carbon emissions from utilities and manufacturers [when Congress reconvenes September 8]…

"The aide, who asked not to be identified, said…the Senate bill] will not lay out the specific formula for dispensing the pollution permits [potentially worth billions of dollars], which would diminish over time as companies are allowed to emit fewer and fewer greenhouse gases…The formula will be worked out when the Senate Environment and Public Works Committee meets…"

A Congressional Budget Office (CBO) showed the plan will control costs. Studies by the Environmental Protection Agenchy (EPA) and the Energy Information Administration (EIA) found the same. (click to enlarge)

"The committee, along with other Senate panels, also [has] to work out many other thorny issues, including possible trade protections for some domestic energy-intensive industries, such as steel, cement and paper…[and possible] changes to the House's overall targets…for emissions cuts from 2005 levels of 17 percent by 2020 and 83 percent by 2050. There are pressures to both reduce or increase those targets in the Senate.

"President Barack Obama, who has made a high priority of enacting climate control legislation [because he wants as much progress as possible before the December United Nations meeting in Copenhagen to discuss a new global climate change treaty], initially proposed the government sale of all of the permits. But the House did not follow that path and Obama has shown flexibility…It is not clear whether the full Senate will pass a bill this year, although Democratic leaders say they will try in October…"