Wednesday, May 13, 2009

Waxman Still Wrong on Climate Allowance Auction

The Center supports cap and trade but believes the allowances should be allocated free just as they were in the very successful Acid Rain Program. President Obama wants 100% of the allowances sold to carbon dioxide (CO2) emitters. The president's 'sell plan' will never fly though because it is the utility equivalent of increasing the gasoline tax--the 3rd rail in Congressional politics. So House Energy & Commerce Committee Chairman Henry Waxman, left, according to The Wall Street Journal:
"...has agreed to give away to electric utilities 35% of the emissions permits that would be created by the bill, at least initially, rather than require them to pay for the makers initially would receive 3% of the permits free, and that certain trade-sensitive industries, such as aluminum, glass and steelmakers, initially would get 15% free."
This proposal is woefully inadequate. The 35% figure is way too low. All of the allowances should be allocated free, except for about 2% in order to evaluate the market for allowances, as was done in the Acid Rain Program. The auto proposal has it absolutely backwards too.

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