Most emission permits to be free: U.S. Rep. Doyle

WASHINGTON Wed May 6, 2009 5:47pm EDT

The Valero St. Charles oil refinery is seen during a tour of the refinery in Norco, Louisiana August 15, 2008. REUTERS/Shannon Stapleton

The Valero St. Charles oil refinery is seen during a tour of the refinery in Norco, Louisiana August 15, 2008.

Credit: Reuters/Shannon Stapleton

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WASHINGTON (Reuters) - Most of the pollution emission permits that industry would need under a climate change bill being negotiated in the U.S. House of Representatives will initially be given to companies, instead of sold to them, Representative Mike Doyle said on Wednesday.

The Pennsylvania Democrat, who has been working on portions of the bill aimed at reducing U.S. emissions of carbon dioxide and other greenhouse gases, also told reporters that for the first 10 years to 15 years of the program, most of industry's permits would be free.

Barack Obama campaigned for president last year saying he wanted 100 percent of the permits to be auctioned, or sold, to industry. Once in the White House he signaled that there was room to negotiate.

House Democratic leaders, facing solid opposition from Republicans to any "cap and trade" climate bill, are having to rely on fellow Democrats to win passage of legislation this year. Many of those Democrats are demanding the free permits to help oil refinery, steel, utility and other industries in their districts.

Republicans generally have argued that the bill to bring down carbon dioxide emissions through a new permitting plan would raise energy prices and hurt consumers.

But those opposed to giving away the pollution permits fear companies that get them might raise their prices anyway. Furthermore, the free permits likely would gain value in the future if the company wanted to trade them away to other firms.

Doyle said leading Democrats were working to ensure that consumers are protected by the legislation.

Spokesmen for Representatives Henry Waxman and Edward Markey, who are leading the drive for a climate control bill in the House, were not available for comment.

NO WINDFALL SEEN

House Democratic leaders want to advance a climate change bill out of the House Energy and Commerce Committee by the end of May and are working intensively to finish details of the legislation.

"We're not there yet," Doyle told reporters of the overall bill, saying that specific permit allocations for various industries were still being negotiated.

The lawmaker represents a Pennsylvania district that has concerns about the impact of tougher industrial emissions on steel companies.

While the exact numbers were still in flux, Doyle said, "The majority of the permits will be allocated (given away) at first."

Asked what percentage would be sold to utilities, manufacturers and other firms, Doyle responded, "Not a big number initially...in the first 10 to 15 years."

He said the free permits will give companies time to capitalize on technology as it improves in coming years, as well as to work out trade considerations so that U.S. jobs are not lost to foreign companies that might be allowed to pollute more.

Tony Kreindler, spokesman for the Environmental Defense Fund, said that easing into auctions was consistent with goals outlined by the U.S. Climate Action Partnership, a group of companies and moderate environmental groups that have lobbied for a cap and trade bill.

"These allocations are not going to be given away to coal fired power plants," said Kreindler. He said they would be given mostly to local distribution companies and would not represent a windfall to heavy polluters such as happened in the early years of the European Union's cap and trade program.

(additional reporting by Timothy Gardner in New York; Editing by Cynthia Osterman)

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