Friday, March 20, 2009

Center Supports Free (CO2) Allowance Allocation To Utilities

There should be no doubt that selling auctions to utilities will significantly increase the price of the cap-and-trade program beyond that of allocating them free based on historical carbon dioxide (CO2) emissions. And no money is required from ratepayers to be given back to them them (huh?) in allocating free credits. Utility companies are in disagreement over what percentage of the allowances should be auctioned. Sixty of the country's biggest investor-owned companies developed a consensus position (pdf) that was organized by the Edison Electric Institute trade group.

Another outfit that includes participants in the U.S. Climate Action Partnership, a high-profile coalition lobbying for a cap-and-trade bill that includes other big corporations and a few mainstream environmental groups have a position similar to EEI's position when it comes to emission allowances. Five power companies -- Duke Energy Corp., Exelon Corp., FPL Group Inc., PG&E Corp. and PNM Resources -- have all agreed to side with U.S. CAP should it differ during the legislative debate from the EEI approach.

The Center disagrees with President Obama, EEI, utilities supporting auction and environmental groups supporting an auction of allowances.The Center would be happy to work with President Obama, environmental groups, EEI and any utility companies promoting the free allocation of allowances. That is how a successful system was operated in the Clean Air Act Acid Rain Program and that should be the model for any cap-and-trade program. (NYT, 3/19/09)

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