CONGRESSIONAL CLIMATE: Democratic leaders have released a draft plan to handle the hand out of allowances to emit carbon dioxide under legislation to combat climate change.
Image: White House photo 2/24/09 by Joyce N. Boghosian
Democratic leaders of the House Energy and Commerce Committee have reached agreement on the distribution of hundreds of billions of dollars in allowances that would be used for compliance with a new U.S. climate policy, according to a summary of their proposal.
Reps. Henry Waxman of California and Ed Markey of Massachusetts circulated the proposed allowance allocations last night to committee Democrats ahead of next week's planned markup of the climate and energy bill. The complete legislative text, expected to fill about 1,000 pages, will be released later today, Democratic aides said.
In their summary, Waxman and Markey explain that they are trying to accomplish three goals with emission allowances: "to protect consumers from energy price increases, to assist industry in the transition to clean energy economy and to spur energy efficiency and the development and deployment of clean energy technology."
The allowance-allocation proposal comes after months of negotiations among Democratic lawmakers and outside interests trying to grab pieces of the allocation pie. President Obama campaigned for the White House last year seeking a complete 100 percent auction of cap-and-trade allowances, but he has since acknowledged that compromise was necessary to get agreement on the legislation.
Republicans have continued to criticize the legislative process, with Rep. Joe Barton (R-Texas), the ranking member on Energy and Commerce, insisting that Democrats were buying votes by handing out allowances. Barton has predicted that Democrats would make too many promises and give away more than they have.
"I don't see how Henry and Ed put the genie back in the bottle," Barton told reporters.
But aides to Waxman and Markey said today the allowance breakdown totals up to 100 percent, starting in the cap-and-trade program's opening year, 2012, with 85 percent given free and an auction for the remaining 15 percent.
Here's how the Democrats would divide the credits:
The electric utility industry, which produces the largest share of U.S. greenhouse gas emissions, would receive 35 percent of the allowances for free. More specifically, state-regulated local electric-distribution companies will get 30 percent of the credits, with a stipulation that they must use the funds to protect consumers from electricity price increases. Merchant coal and long-term power producers will get the remaining 5 percent of the allowances. All of the utility sector credits will be distributed according to a formula suggested by the industry, split along historic emission levels and retail sales. Credits will be phased out between 2026 and 2030.
Local natural gas distribution companies would get 9 percent of the allowances, with a requirement that state-regulated firms use the funds to protect consumers from natural gas price increases. The free allowances will be phased out between 2026 and 2030.
States would get 1.5 percent of the allowances for programs to benefit users of home heating oil and propane, an issue of primary concern in the Northeast. The free allowances will be phased out between 2026 and 2030.
Democrats plan to begin auctioning 15 percent of the allowances around 2011, with the proceeds directed toward low- and moderate-income families. The funds would be distributed via tax credits, direct payments and electronic benefit payments -- which is similar to how states now process food stamps and other low-income assistance programs. Unlike the free credits, the payments will not phase out. U.S. EPA would have a year to set up the program following enactment, with the first compliance auction beginning in 2012. The House Ways and Means Committee must sign off on this provision.
Energy-intensive industries, including pulp, paper, cement and steel, would get free credits -- 15 percent starting in 2014 but phasing out by about 2 percent per year. The allowances will be phased out after 2025. Also, the bill would give the president authority to impose tariffs on carbon-intensive goods from developing countries.
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9 Comments
Add CommentWill state and local governments be able to cap emissions within their jurisdictions? Or will this allow a factory to bid their way around such local limits?
Reply | Report Abuse | Link to thisCARBON DIOXIDE IS NOT A POLLUTANT, it is an absolutely nesessary gas for the existence of life.
Reply | Report Abuse | Link to thisIT DOES NOT CAUSE GLOBAL WARMING, wake up people you are being lied to,conned. CO2 amount in the atmosphere follows temperature, it does not cause or lead temperature. Go look at the observed facts, don't let opinionators and theoryests think for you.
Cap and Trade is a huge TAX on poor people. Right now,as we speak, rich people are in Washington DC making up the rules to vastly enrich themselves.
Questions about global warming answered by scientific observations:
Reply | Report Abuse | Link to thishttp://earthobservatory.nasa.gov/Features/GlobalWarmingQandA/#02
"If Earth has warmed and cooled throughout history, what makes scientists think that humans are causing global warming now?
The main reason that scientists think humans caused warming since 1950 is that none of the natural processes that influence Earth’s climate have changed enough during that time period to explain the warming.
Over the past thousand years, temperatures have been preserved in natural records like tree rings, ice cores, and coral reefs. Many independent estimates of temperatures from these sources show that while global average surface temperatures varied, at no time were they warmer or did they climb more quickly than during the latter half of the 20th century. Three things can alter global temperatures over this short period: changes in the Sun’s activity, volcanic eruptions, and human emissions of greenhouse gases and aerosols.
During the twentieth century, the average amount of energy coming from the Sun either remained constant or increased slightly. (See “Has the Sun been more active in recent years?” for more on that topic.) Major volcanic eruptions temporarily cooled temperatures by pumping reflective gases into the atmosphere. At the same time, the burning of fossil fuels pushed greenhouse gas levels higher than they have been for at least the past 700,000 years. Laboratory experiments have shown that carbon dioxide, methane, and other greenhouse gases absorb and re-radiate infrared energy, or heat, and satellite observations have shown that these gases have the same heat-trapping effect in the atmosphere. The dramatic rate of increase in greenhouse gases during the latter half of the 20th century matches the rate of temperature increase."
Of course allocations will be handed out politically since pols are doing the handing out. They will distribute them in a fashion that buys the most votes and yields the most contributions.
Reply | Report Abuse | Link to thisThat's why government and business shouldn't mix. Business has to produce a better product at a lower cost or else they will be out of business. The consumer wins. Politicians have to buy votes and build their war chest to stay in power which has nothing to do with good business. The consumer loses.
If you believe anything else, you're pretty naive.
If you allow for exceptions you end up with an ineffectual process. This is merely another way for someone to make more bucks -- while continuing to pollute. I live in one of the top 5 air polluted areas in the US... So what the heck -- let the polluters/carbon traders live in reprocessed air while I slowly die from their pollution. Someone has to sacrifice for the good of the few so I guess Im it.
Reply | Report Abuse | Link to thisThis article explains nothing in detail. Who is paying what and why? The link to the site at the end of the article needs a password!
Reply | Report Abuse | Link to thisHow do the editors get away with calling CO2 a pollutant?
Reply | Report Abuse | Link to thisWe as a species in this Beautiful planet that we are destroying slowly because of our long dependence of dead animal matter to fuel our technologies and the greed of those that control it.Lets be real and remove the foggy rose colored glasses.You want change...work for it..it wont land on your lap.
Reply | Report Abuse | Link to thisI guess I just don't see the point of posting on a site called Scientific American if you're not interest in science in America. There are plenty of teabagging blogs and so forth out there...
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