Energy deal clubs Obama tax hopes

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By Tom LoBianco

House Democrats touted a weakened global-warming package Friday, releasing a compromise plan that undercuts President Obama's hopes to raise nearly $650 billion from the climate bill to pay for middle-class tax cuts.

Democrats on the House Energy and Commerce Committee, who have been locked in debate over how to tax carbon-dioxide emissions while protecting American industries, said Friday that their revised plan would give away 85 percent of the plan's carbon permits for free.

Under Mr. Obama's original plan, businesses and other users would be required to purchase all of the permits through an auction, with the proceeds returned to middle- and lower-class taxpayers.

White House spokesman Robert Gibbs acknowledged that some of the bill's "details may not be perfect" but said Mr. Obama would be happy to sign a climate bill that meets his primary goal of reducing greenhouse gas emissions and addressing global warming over the long term.

"If the president gets an opportunity to sign a bill that puts into law this nation reducing its greenhouse gas emissions by 83 percent by 2050, I think it will be hailed as a substantive achievement by all of those involved," Mr. Gibbs contended.

House Energy and Commerce Committee Chairman Henry A. Waxman, California Democrat, who with fellow Democratic Rep. Edward J. Markey of Massachusetts led the climate-bill talks in the House, released the new climate legislation Friday afternoon.

The House Energy and Commerce Committee begins final work on the Waxman-Markey bill Monday. Mr. Waxman has said he plans to pass the bill by the end of next week, before lawmakers go on their Memorial Day recess.

The original Waxman-Markey blueprint was altered significantly in the face of complaints from moderate Democrats from states heavily dependent on fossil fuels such as oil and coal. Many complained that forcing users to buy all of the pollution permits would put a major strain on their local industries and economies.

The revised bill released Friday would establish a so-called "cap-and-trade" system that would require industries to obtain a permit for each ton of carbon dioxide emitted and cap those emissions at steadily lower levels through 2050.

Mr. Obama had campaigned for a plan to auction all of the carbon permits under the system to avoid problems encountered in the European Union after regulators gave away all of their permits to affected industries without charge.

Mr. Obama was banking on projected revenues of some $646 billion from the cap-and-trade auctions to cover his promised tax cuts over seven years, but the House proposal looks as if it will pull in significantly fewer dollars for the federal government.

No price has been set for the permits, although estimates have ranged from $12 to $200 per ton of carbon dioxide.

A Waxman spokeswoman did not return a request for comment Friday.

The revised legislation outlines many of the details that had been absent from earlier legislation - including the system for permit allocations and a scaled-back mandate for purchasing electricity from renewable sources.

The legislation keeps some of the more controversial provisions, including a provision that allows individuals to file "citizen suits" against the government if they can show harm from global warming and a "grandfather clause" for coal-powered plants backed by a powerful lobbying coalition that represents energy companies and other businesses.

"This bill marks the dawn of the clean energy age," Mr. Markey said in a statement. "After months of hearings and discussions with my colleagues, I am pleased that we have produced a bill that has widespread support from all regions of the country."