After weeks of delay, House Democrats released details Friday about how they’ll ease the pain of households, businesses and electric utilities that will be forced to pay more for energy under climate change legislation.
Working out how to distribute emissions allowances had held up legislation from House Energy and Commerce Committee Chairman Henry Waxman (D-Calif.) and Energy and Environment Subcommittee Chairman Edward Markey (D-Mass.).
{mosads}Democrats announced a breakthrough in talks heading into a scheduled markup starting Monday. (See the summary here.)
President Obama’s plan would have required companies to buy emissions credits at auction. But several Democrats on the subcommittee objected to this, fearing that an auction would raise energy prices and stunt economic growth.
Distributing free allowances will help mitigate higher costs, but will probably reduce government revenues that Obama had planned to send back to taxpayers.
Under the House Democrats’ plan, electric distribution utilities will receive 30 percent of the allocations, on the condition that they use them to protect consumers from price increases due to compliance with the emission reduction targets.
Local natural-gas distribution companies would receive 9 percent of the allowances, and similarly use them to protect customers against price hikes.
Energy-intensive, trade-sensitive industries would receive 15 percent of the allowances. Those credits won’t begin to phase out until after 2025.
Oil refiners would receive 2 percent of the free allowances, less than the 5 percent they had sought.
Rep. Gene Green (D-Texas), a leader of an informal oil-patch caucus that had sought additional help for refiners, said he appreciated the help the bill did provide but that he’d work for more.
{mosads}“While I believe the refining industry could use additional allowances, and I hope any final agreement does so, this is a reasonable first step to protecting our energy infrastructure and keeping good-paying jobs here at home,” Green said.
The government would give utilities allowances to help them cover the costs of installing and operating carbon capture and sequestration technologies. Electric utilities would receive 2 percent of the allowances from 2014 to 2017, and 5 percent of the allowances in 2018 and “subsequent years.”
Automakers would receive 3 percent through 2017 and 1 percent from 2018 to 2025.
States would receive 10 percent from 2012 through 2015; 7.5 percent in 2016 and 2017; 6.5 percent from 2018 through 2021; and 5 percent after that for investments in renewable energy and energy efficiency.
One of the biggest concerns of Democratic lawmakers is a climate bill’s effect on families with low or moderate incomes, who are less able to adjust to the inevitably higher energy costs.
Under the plan, 15 percent of the allowances will be auctioned each year. The proceeds will go to low- and moderate-income households.
Advocates for the bill praised the allocation announcement.
“This compromise is critical to maintaining momentum for a mandatory climate bill in this Congress,” said Paul Bledsoe, director of communications and strategy for the bipartisan National Commission on Energy Policy. “Without it, prospects would have been markedly diminished.”