According to Rep. Mike Doyle (D-PA), corporations would be subsidized for most of their global warming pollution for more than ten years, under terms being negotiated for the climate and energy bill being drafted by the House Energy and Commerce Committee. If this is true, the Waxman-Markey American Clean Energy and Security Act would violate a pledge by President Obama to fund tax cuts for working families through carbon market revenues and would generate massive windfall profits for polluters. Doyle said most of the pollution permits created for a cap-and-trade system to reduce greenhouse gases would be given away:
While the exact numbers were still in flux, Doyle said, “The majority of the permits will be allocated (given away) at first.”
Asked what percentage would be sold to utilities, manufacturers and other firms, Doyle responded, “Not a big number initially…in the first 10 to 15 years.”
The Center for American Progress “supports auctioning 100 percent of the greenhouse gas emission permits from day one under a cap-and-trade program” and using the auction revenues to assist workers and industries to make the transition to a low-carbon economy:
This would include supporting new investments in green technology and energy efficiency; sheltering American households from any economic dislocations due to shifting energy prices; alleviating higher costs for energy-intensive industries; adapting to some of the effects of global warming that we are already experiencing globally; and creating good, “green jobs” and more vibrant, healthier communities in this process. A 100 percent auction will ensure that large polluters, and not the hardworking Americans least able to foot the bill, are financing the investments necessary to carry out these vital public projects.
Of course, without any climate policy, the public is subsidizing all the costs of global warming pollution, as the threat of catastrophic climate change grows without bound. So even a cap-and-trade system that pays hundreds of billions of dollars of public money to corporate polluters to get them to clean up their act is better than the alternative. As President Obama explained to business leaders in March, he is flexible on his campaign pledge for full auction of pollution permits:
Now, the experience of a cap-and-trade system thus far is that if you’re giving away carbon permits for free, then basically you’re not really pricing the thing and it doesn’t work, or people can game the system in so many ways that it’s not creating the incentive structures that we’re looking for. The flip side is, you’re right, if it’s so onerous that people can’t meet it, then it defeats the purpose — and politically we can’t get it done anyway.