The climate change bill moving through the U.S. Congress would initially give away the majority of permits to emit greenhouse gases to entities like electricity distributors and big energy users, such as steel and cement plants, in a cap and trade program.
The climate change bill moving through the U.S. Congress would initially give away the majority of permits to emit greenhouse gases to entities like electricity distributors and big energy users, such as steel and cement plants, in a cap and trade program.
President Barack Obama had campaigned on a plan of auctioning 100 percent of the permits, but has since indicated some flexibility.
To avoid windfall profits for big polluters, an aim of the bill would be to give the permits to power and natural gas distributors rather than big fossil fuel-burning power plants. The idea is that the distributors, which are regulated by the states, would pass on breaks to consumers through lower bills or investments in energy efficiency.
The legislation can still be amended, but Democratic leaders hope to pass a bill in the House of Representatives by August. It's not clear whether the Senate will act this year.
Below is a breakdown of how most of the permits would be distributed, according to a document describing the legislation obtained by Reuters.
PERMITS TO BE AUCTIONED: 15 pct
- Aims to push proceeds of auctions to low and moderate income households to protect them from energy costs
THE REST OF PERMITS TO BE GIVEN AWAY INITIALLY TO:
LOCAL ELECTRIC DISTRIBUTION COMPANIES 30 pct
- Distributors, which are regulated by the states, must use the allocations to protect consumers from electricity price increases.
- Allocations to phase out from 2026 to 2030, then go to full auction.
HEAVY INDUSTRIES LIKE CEMENT AND STEEL 15 pct
- Phases out after 2025
STATES 10 pct
- For investments in renewable energy and energy efficiency.
