Energy-intensive industries want more CO2 permits

WASHINGTON (Reuters) - U.S. energy-intensive industries -- like aluminum, chemicals, paper and steel -- want the U.S. Senate to give them a bigger share of the free pollution permits that would be needed to emit greenhouse gases under climate change legislation.

Industries that consume a lot of energy received 13.5 percent of the permits in climate change legislation cleared last month by the House of Representatives. The affected companies want it raised to 15 percent in the Senate's climate change bill, as it was originally in the House measure.

"That seemingly minor difference actually amounts to hundreds of millions of allowances valued at billions of dollars over the life of the program," four industry groups said in a letter to the Senate Environment and Public Works Committee, which is drawing up climate change legislation.

The letter, faxed Wednesday night to all of the committee's members, was signed by four trade groups: The Aluminum Association, American Chemistry Council, American Forest & Paper Association and the American Iron and Steel Institute.

Under climate change legislation, a U.S. company would be required to have a pollution permit to emit one ton of carbon dioxide and other greenhouse gas emissions each year. Those companies that use cleaner energy and reduce their emissions could sell their permits to companies that pollute more.

The trade groups said their member companies need the extra free pollution permits to ease the transition to new long-term technologies currently not available that will reduce greenhouse gas emissions.

The groups said the Senate legislation also needs to provide relief to deal with the expected increased cost of energy that U.S. manufactures will face when paying for electricity that will be required to be generated from more expensive renewable energy fuels.

"Such increased costs will be incurred by domestic manufacturers and will not impact foreign competitors in regions where weaker or nonexistent policies have no energy cost impact," the groups said.

Senate Barbara Boxer, who chairs the Senate's environment committee, said on Thursday she plans to unveil a climate bill in early September.

"We need to make sure that our industries that require a lot of energy operate on a level playing field with manufacturers in other countries of the world," she said.

(Editing by Christian Wiessner)