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House Democrats Debate The U.S Climate Bill

May 15, 2009

Democrats in the U.S. House of Representatives on Thursday said they were working out final details of a climate change bill, as they announced new breaks for an industry that they said would also minimize the potential impact on consumers’ energy bills.

“We have reached agreement on most key matters,” said Representative Rick Boucher, who represents Virginia, the coal-producing state.
The White House was very optimistic about the expectation that the environmental bill will be approved by the House Energy and Commerce Committee, as well as healthcare reform efforts that panel also hopes to advance.

White House spokesman Robert Gibbs commented, “I think there’s still a lot of reason to believe that we can get both done.”

Democrats on the Energy and Commerce Committee have been negotiating amongst themselves for months as Republicans refused any “cap and trade” program in order to lower emissions of carbon dioxide and other greenhouse gases.

This results in a bill that aims to subdue the short-term impact on companies and ultimately energy prices. For example, the retooled legislation would reduce the price of future mandatory pollution permits that industry would buy, give greater incentives to companies to take extra steps to control carbon emissions and give some firms a couple decades to fully transition and implement the program.

Representative Henry Waxman, chairman of the committee, says that his panel plans to discuss and have the bill passed by the end of next week. That would open it for other House panels to consider before a full House debate, which would likely take place by August.
The legislation faces more contingency in the Senate.

The release of new details incited criticism from environmental groups. Union of Concerned Scientists President Kevin Knobloch said the bill needs strengthening in order to ensure that it “yields the green jobs and consumer savings that the public deserves.” The organization was dissatisfied by alternative energy standards for utilities that were less aggressive than they had anticipated. 

But under the House Democrats’ compromise, electric utilities could get up to $100 billion in bonus carbon pollution permits, if they capture and store greenhouse gas emissions, Boucher told reporters. He has been a negotiator on the bill.

Boucher said that this legislation would also give U.S. companies the ability to counteract up to 2 billion tons of emissions by financing green projects throughout the United States and other countries.

He added that the bonuses for utilities would be in addition to the pollution permits they would be given, which amounts to 35% of all the free permits to U.S. firms and about 90% of the emissions permits they will initially need.

Waxman and other Democrats were still negotiating some provisions, such as whether to give free emission permits to oil refineries.
Lou Hayden, a policy analyst at the American Petroleum Institute, says his industry is worried that the bill could incur penalties on it for pollution not only from refineries but also from fuel emissions from cars, airplanes and heating systems.

In a telephone interview Hayden said, “We hope Waxman is interested in reducing emissions; we hope he’s not interested in punishing industries.”

Under the Democrats’ compromise bill, the free emissions permits for electric utilities will start phasing out in 2026. By 2030, the utilities would be required to purchase 100% of pollution permits, Boucher said.

One of the authors of the bill, Representative Edward Markey said, “We are creating a 100-year solution to carbon, but we create a transition to protect the consumers.”

Boucher, who had wanted to give away 100% of permits, vowed to support the compromise. He also admitted that he still had several concerns including the goal of a 17% reduction in total greenhouse gas emissions by 2020, from 2005 levels. He believes that 14% would be “more appropriate.”

Boucher also considers the phase-out period for utilities’ free permits was not enough time.

Republicans believe the Democrats’ cap and trade system for harmful emission reductions would devastate the floundering U.S. economy. They said they will give alternatives next week.

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