WASHINGTON Democrats in the U.S. House of Representatives have negotiated a climate change bill that would give industries most of the pollution emission permits they would need, according to documents obtained on Friday.
President Barack Obama has made passage of a bill a top priority and wants demonstrable progress by December, in time for a U.N. climate change meeting at which nearly 200 countries plan to form a pact to succeed the Kyoto Protocol.
In an attempt to ensure enough Democrats back the bill to have it win approval next week in the House Energy and Commerce Committee, the authors agreed to allow oil refiners and natural gas distributors, among others, to enjoy the free permits, at least until 2026.
Democratic leaders hope to win approval by the full House by August, even with Republican opposition. Prospects in the Senate are less certain.
Fifteen percent of emissions permits would be sold to polluters each year with proceeds given to low and medium income families to help pay possibly higher energy bills.
Also, an unspecified number of additional permits would be sold to recoup government costs and ensure the program does not add to already huge federal budget deficits.
By 2026, Washington would begin requiring the sale of a dwindling number of carbon emission permits that were free.
While Obama had called for a 100 percent sale of permits, which would have generated hundreds of billions of dollars in revenues, he has indicated he is open to giving some away.
His spokesman, Robert Gibbs, said administration officials were looking at the large number of free permits being proposed and called the House Democrats' plan a "first step in the process" but a "very positive" one.
Energy Secretary Steven Chu, speaking to reporters after a speech to the National Coal Council, said that even with an initial giveaway of permits, industries were still being warned they must find ways to decrease carbon emissions.
EASING THE BURDEN
Written by Representatives Henry Waxman and Edward Markey, the bill would establish a "cap and trade" system to steadily reduce emissions of greenhouse gases blamed for global warming while also allowing companies to swap pollution permits with each other on an as-needed basis.
But the reforms would inevitably lead to higher prices for consumers as companies switch to more expensive, cleaner fuels, some of which have not yet been developed.
The debate in Congress, coming in the midst of a deep economic recession, required Waxman and Markey to look for ways to ease cost burdens on both consumers and industry.
The result, according to a document obtained by Reuters, is a series of free emissions permits. Oil refiners, for example, would get 2 percent of those permits. They had been seeking 5 percent during protracted negotiations on Capitol Hill.
Local natural gas distribution companies would get 9 percent of the permits for free to protect consumers from price increases, according to the document.
For the power sector, 30 percent of the free permits would go to local electric distribution companies, while deregulated power plants would get 5 percent, according to the document.
Tony Kreindler, a spokesman for the Environmental Defense Fund, said in a telephone interview the compromise bill aims to prod electricity distributors to pass on the value of the pollution permits to households -- either by lowering power bills or through investments in energy efficiency, which would reduce consumer electricity demand.
"These permits do not go to the big coal burners," he said.
But other environmentalists said the House compromise gave away too much. Greenpeace called it a "weak start" and said the near-term carbon emission reductions in the bill were not enough "to avoid the worst impacts of global warming."
CURBS ON SPECULATION
Representative Gene Green, one of the Democrats who has been withholding support pending a deal to protect oil refiners in his Texas district, said that while extra help was needed, "This is a reasonable first step to protecting our energy infrastructure and keeping good-paying jobs here at home."
Green said a low-carbon fuel standard, which he said overlapped with a renewable fuel standard already in place, had been dropped because of a deadlock over the provision.
Meanwhile, Democratic Representative Bart Stupak introduced legislation on Friday seeking to curb excessive speculation in energy markets and give the Commodity Futures Trading Commission the authority to regulate the trading of contracts based on carbon emissions.
For the draft legislation, click on energycommerce.house.gov.
(Additional reporting by Tom Doggett and Jeff Mason, editing by Jackie Frank and Todd Eastham)