Saturday, March 27, 2010

Senate Climate Bill's Allocation Fight Expected to Go Down to the Wire

Senate Climate Bill's Allocation Fight Expected to Go Down to the Wire; The new York Times

The food fight is just getting started.

Senators cobbling together a sweeping energy and climate bill are at the early stages of divvying up valuable emission allocations among regulated firms and well-financed interest groups.

Their decisions are big ones, worth hundreds of billions of dollars over the climate program's roughly 40-year lifespan. Already, lawmakers are fighting over who should get a bigger share of the allowances, as well as the broader philosophical mechanics of pricing greenhouse gases.

Interests pressing for Senate allocations run the gamut. Investor-owned power companies say they need more than a third of the free allocations for their customers to help them compensate for higher energy bills. States that stepped up first on climate policy claim their early actions deserve recognition. Other voices in the debate include retirees, wildlife conservationists, religious groups and advocates for keeping tropical rain forests standing.

Sens. Joe Lieberman (I-Conn.) and Lindsey Graham (R-S.C.) said yesterday they were getting closer to unveiling their "breakthrough" proposal on allocations with Sen. John Kerry (D-Mass.), promising a bill that would be both business and consumer-friendly. Graham and Lieberman said about 60 percent of the revenue raised by the government would immediately go directly back to the public as soon as the climate program starts.

Sources briefed on the senators' proposal say it has been dubbed "reduction and refund" instead of the "cap and trade" term that has been demonized by opponents.

The senators said that each industrial sector -- electric utilities, petroleum refiners, manufacturers -- will face different emission limits and startup dates. As such, the allocation plan for each also will be different.

For transportation fuels, the senators said an idea being offered up by BP America, ConocoPhillips and Shell Oil Co. involves a "linked fee" that would be tied to the carbon market price for the other industrial sectors.

Sens. Maria Cantwell (D-Wash.) and Susan Collins (R-Maine) are pushing in another direction entirely. Their proposal, dubbed the "CLEAR Act" (S. 2877 (pdf)), would skip the widespread trading of carbon allowances and instead require energy producers to bid in monthly auctions for carbon shares. It also would direct 75 percent of the resulting auction revenue as a refund to help compensate the public for increased energy costs, with the remaining 25 percent going toward clean energy research and development.

Cantwell said a primary driver of the bill was to avoid creating a multitrillion-dollar trading platform susceptible to market manipulation and price volatility -- something she fears will cause a public backlash under the Kerry-Graham-Lieberman proposal. She also said she disagreed with the idea of Congress setting up a system for free allowances through midcentury.

"I think a transparent process in which Congress paid attention to this issue every year for the next several decades is a better way to go," Cantwell said. "I think whatever happens with allowances, it's tough, we'd all like to think we could make those decisions right now for the next 50 years. But every person I've asked, do you want that responsibility and do you think you can do it accurately? They'd say no. And so they know you really need a process every year."

Read the whole of the article here.

Comment: As said time and time before, this is an incredible scheme that would enact new taxation on the American people and will eventually lead to a loss of sovereignty as the global 'cap and trade' components expand.

Additional Information:

Senators Outline US Utility Carbon Market for Climate Bill Business Week

'Cap and Trade' Loses Its Standing as Energy Policy of Choice New York Times

10 Senate Democrats oppose climate bill if it expands coastal drilling Miami Herald

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