Thursday, April 9, 2009

Obama Willing to Compromise on GHG Auctioning?

Despite initially supporting a cap-and-trade program requiring a 100% auction of greenhouse gas emissions credits, there are indications that the White House might be willing to support legislation calling for less than full auctioning of credits.

Ben LaBolt, a spokesman for President Obama, has told The Wall Street Journal ("White House Flexibility Signaled on Climate Bill," April 9, 2009) that Mr. Obama's "preferred approach was 100% auction to create incentives for companies to reduce their greenhouse gas emissions.  Members of Congress are looking at a variety of policy options to help us make that transition, and the administration will be flexible during the policy-making process" as long as the administration's goals of creating a "clean-energy" economy are met.  
Members of Congress from coal-producing states as well as states that rely heavily on coal-fired power plants have voiced concern that a 100% auctioning scheme would provoke huge home-state opposition.  
The matter of how emissions credits should be handled is a tricky one.  The EU has been mightily burned by disputes involving its initial decision to give away emissions credits as part of the EU Emissions Trading Scheme.  In response, the EU has significantly tightened up the distribution of free emissions credits (although this remains a particularly difficult political issue with regard to the central and eastern European countries such as Poland).

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