Dem Leaders Offer Compromise on Cap-and-Trade
Facing resistance from moderate Democrats, House Energy and Commerce Committee Chairman Henry Waxman (D-Calif.) is ready to compromise on some key provisions of the cap-and-trade legislation he co-sponsored with Energy and Environment Subcommittee Chairman Ed Markey (D-Mass.).
One area of contention is the distribution of carbon allowances, which polluting companies will need to obtain for each ton of carbon dioxide they plan to emit. The Obama administration has called for — and continues to push for — 100 percent of permits to be auctioned off, while some industry leaders and moderate Democrats support giving out some or all allowances for free in order to reduce the economic burden on polluting companies and consumers.
The original Waxman-Markey draft did not specify how the allowances would be distributed, but now Waxman has signaled that he is open to the free allocation of 40 percent of permits to local electricity distribution companies and 15 percent to the industries that would be most vulnerable to international competition under the agreement, according to E&E Daily (via Climate Progress). The free permits would slowly be phased out in favor of a 100% auction within 10 to 15 years.
Another major compromise involves the short-term emissions reduction targets. The Obama administration called for a 14 percent reduction by 2020, while the Waxman-Markey bill stipulated a 20 percent cut. Now Bloomberg reports that Waxman has agreed to a 17 percent target, while E&E Daily says Waxman will settle for 14 percent. The long-term target — an 83 percent reduction by 2050 — will probably remain in place.
While environmentalists will no doubt be disappointed by Waxman’s capitulation — particularly since even the ambitious draft bill was unlikely to reduce emissions as far as some scientists have urged — it was inevitable that some compromise was in order if the legislation was to have any chance of passing. It is still unlikely to win much or any Republican votes, but Waxman may have done enough to address the concerns of moderate Democrats on his committee.
Waxman still hopes to vote the bill out of committee by Memorial Day.