Dems' climate bill shy on tax credit help

[May 16, 2009]  WASHINGTON (AP) -- The House Democrats' bill to limit gases blamed for global warming would generate a fraction of the money President Barack Obama wanted to get from it to pay for a middle-class tax credit.

Leaders of the House Energy Committee officially introduced the 932-page legislation on Friday, revealing critical details in advance of the panel taking a vote on the measure by the end of next week. The bill - the American Clean Energy and Security Act - would for the first time mandate reductions in the heat-trapping gases linked to global warming, and also shift the country toward cleaner energy sources.

The bill would cap emissions from large industrial sources at a certain level, and distribute permits to companies to meet increasingly lower pollution targets.

In his budget, Obama called for auctioning off 100 percent of the pollution permits, a strategy that would have raised nearly $650 billion over the next decade. Most of the money would have paid for a tax credit to offset higher energy prices expected to be passed down from industries as they reduce the pollution that causes global warming.

But House Democrats said Friday they plan to auction only 15 percent of the allowances to help lower- and middle-income families pay for higher energy bills. The rest will be given away to a variety of industries and states to ease costs and to help pay for improvements in energy efficiency and investments in clean-energy technology.

A White House spokeswoman said Friday that the bill shields consumers in other ways.

"The summary released today ... indicates there are a number of mechanisms in place that are aimed at protecting consumers, and we're glad to see that Congress is taking this issue seriously," said Christine Glunz with the White House Council on Environmental Quality. "We remain committed to a market-based emissions reduction program that generates enough revenue to aid consumers."

The measures are the latest concessions to come out of weeks of negotiations aimed at winning over the committee's moderate Democrats who expressed concern about the cost the legislation would place on industry and electricity customers in their districts.

Reps. Henry Waxman, D-Calif., and Rep. Ed Markey, D-Mass., have already agreed to lower targets for renewable energy, to require a smaller reduction by 2020 in the emissions blamed for global warming, and to give away valuable pollution permits to electricity distribution companies and auto manufacturers.

But how the legislation would handle the distribution of permits in a program that caps and puts a price on greenhouse gases was a central piece that has been missing from the bill since its unveiling in March.

Moderate Democrats from Southern and Midwestern states dependent on fossil fuels and home to heavy industry balked at selling off the permits, saying it would place an unfair burden on industry. Republicans called the sale a national energy tax.

But Obama has said that any plan to control global warming pollution should compensate consumers and communities if there are additional costs.

That compensation came largely through an extension of his Making Work Pay tax credit, Obama's signature $400 tax cut for most workers.

Congress had already voted to let it expire at the end of 2010 when it passed a nonbinding budget blueprint in April. The proposal in the climate bill takes away the money that would have paid for it. Starting in 2012, the revenues from auctioning off all the permits would have generated around $65 billion a year.

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The bill is H.R. 2454.

On the Net:

House Energy and Commerce Committee: http://www.energycommerce.house.gov

Congress: http://thomas.loc.gov/

[Associated Press; By DINA CAPPIELLO]

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