Refineries to get some allowances for free

Our D.C. correspondent Jennifer Dlouhy reports here and on the Texas on the Potomac blog that Texas Democratic Reps. Gene Green of Houston and Charlie Gonzalez of San Antonio have helped get a little bit of a break for refiners under the massive climate change bill. Rep. Henry Waxman, D-Calif., chairman of the House Energy and Commerce Committee, and Rep. Edward Markey, D-Mass., have signed off on the compromise.

Under the so-called “cap-and-trade” plan, power plants, refiners and manufacturers could exceed the limits by buying and exchanging emissions allowances on a new carbon-trading market.
Waxman and Markey have agreed to give away roughly 55 percent of those allowances, with 35 percent going to local electricity distributors, 15 percent going to trade-sensitive industries such as timber and steel manufacturing, and another 3 percent going to automakers.
Under the compromise with Green and Gonzalez, refiners would get 2 percent of the allowances. That is a smaller share than the 5 percent the industry had asked for, but a boost over the 1 percent Waxman had offered in negotiations.
The free allowances would eventually phase out for each industry; after that, power plants and manufacturers would have to buy the pollution permits from the federal government in an auction.

Naturally, the American Petroleum Institute, says that doesn’t cut it:

“Unfortunately, while the proposal is meant to solve a serious environmental challenge and spur growth in our weak economy, its inequitable system of allocations will have a disproportionate adverse impact on consumers and producers of gasoline, diesel fuel, jet fuel, crude oil and natural gas. Those who drive, fly or take the bus or train to work will shoulder a disproportionate burden and this must be rectified. Emission allowances will be distributed inequitably, ultimately imposing greater costs on consumers and producers of oil and gas. According to independent studies, domestic production will decline, increasing reliance on imports.

Other critques of the bill…
Environmental Defense see’s the bill as “a breakthrough agreement” that has “won the support of a broad group of moderate lawmakers..”

“Chairmen Waxman and Markey have picked the lock; it’s a huge boost for passage of a cap this year,” said Fred Krupp, president of Environmental Defense Fund. “This bill can win not only the support of environmentalists and business, but also the diverse group of regional interests that make up the Congress. It’s a watershed agreement.”
The bill includes an important and aggressive short-term target to reduce greenhouse gas emissions 17 percent below 2005 levels by 2020–right in the middle of the range called for by the 30 leading companies and non-profit groups in the U.S. Climate Action Partnership, of which the Environmental Defense Fund is a member.
“The agreement delivers a strong cap on pollution with a smart plan to protect family budgets and economic competitiveness, and that’s precisely the formula we need,” Krupp said.

A group of wind energy companies — including equipment manufacturers — is saying the bill doesn’t go far enough with its renewable energy standards:

The Waxman bill …. includes a renewable electricity standard that is less than one-half the level proposed by President Obama and Chairman Markey’s original proposal. AWEA supports a renewable energy standard of 25 percent by 2025.
The letter also warned, “America is on the verge of losing the wind manufacturing industry to Asia and Europe. There is significant international trade in wind turbines and the competition to host this industry is intense. America trails its competition in passing stable renewable energy policy commitments. Thirty-seven other countries have firm commitments.”

And another group of environmentalists just plain hates the bill and wants a major re-write:

* Dump the cap and trade provisions and carbon capture and sequestration provisions as they currently stand.
* Pass a federal Renewable Electricity Standard that mandates at least 25 percent renewables by 2025.
* Pass a federal Energy Efficiency Resource Standards that requires at least a 15 percent reduction in energy usage by electric utilities by 2020.
* Pass separate climate legislation that forces the auction of allowances or imposes a carbon tax on polluters and gives the proceeds to the public (a revenue neutral carbon tax).

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