The CO2 market design dance gets livelier.
House lawmakers planning to introduce a cap-and-trade bill soon are looking closely at a proposal to give some CO2 emission allowances free to regulated utilities, a congressional aide said Monday. This approach to allowances would move House policymakers much closer to utilities' position on the matter.
But also Monday, two "Blue Dog" Democrats proposed a CO2 market bill of a different stripe. Not really a cap-and-trade bill, this one would create a board of advisers to determine annually what emission credits should cost in order to achieve emissions reduction targets. The Safe Markets Development Act appears to be based on a proposal by the veteran Center for Clean Air Policy.
The measure, introduced by Lloyd Doggett of Texas and Jim Cooper of Tennessee, would have the Treasury Department conduct quarterly allowance auctions, and the board would determine annually whether the price it set had achieved the emission reduction target.
The approach creates price predictability, the Center for Clean Air Policy says, it prevents allowance price booms and busts, it ensures transparency and it gives everybody time to adjust. This model would work for a "training wheels" phase, 2012 to 2020. Phase 2, after 2020, would be a more traditional emissions cap-and-trade program.
We'll see. This model hasn't been talked about much.
Cap-and-trade with allowance giveaways is the approach much more discussed. The giveaways part has not been liberal Democrats' preference, but if Gerard Waldron, staff director and chief counsel to Representative Ed Markey's committee on global warming, is reporting accurately, Markey and others are looking at free allocations to the load-serving utility sector. Waldron spoke to the American Bar Association in Washington.
Utilities want a hefty percentage of free allowances. If they can reach a comfortable compromise with Markey and Representative Henry Waxman of California, plus Speaker Nancy Pelosi of California, then maybe a bill is possible sometime soon. Utilities want certainty (and allowances). Democrats want a carbon program. Anything could happen.
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