A House energy reform bill is in limbo as House Democrats negotiate with companies over allocations that will temporarily spare them from the costs of the bill’s carbon-emissions trading program.
Manufacturers — particularly from the steel industry — along with operators of coal-fired power plants and oil refineries are in intense talks with Democratic members of Congress over who will get free credits to emit carbon dioxide while most companies are charged for the privilege.
President Barack Obama is looking to charge companies $646 billion in carbon fees over the next decade.
The total value of the credits to be given away are still being negotiated, so lawmakers and lobbyists are fighting over percents.
Virginia Democrat Rick Boucher of the House Energy and Commerce Committee is leading the negotiations with power companies. According to industry insiders, the coal-fired utilities want the government to give them 40 percent of all free allowances, warning of higher consumer electric bills otherwise.
Boucher said he told Obama in a White House meeting Tuesday that it was critical to make a deal with the coal industry to produce a bill Congress would agree to pass.
“Industry support will make our agreement durable and make it tenable to produce a bill in the Senate,” Boucher said, adding that Obama said at the meeting that he agreed with that concept.
The bill already sets aside 15 percent of the free cap-and-trade allowances for steel and other industries, including paper and glass, but some of those companies are seeking an increase.
Rep. Gene Green, D-Texas, is working on behalf of the oil and natural gas industries to secure 5 percent of the allowances. Green also made his case to Obama on Tuesday.
“The president said he understands that and knows there will be compromise in that area,” Green said.
Lobbyists say the credits are key to the bill’s passage.
“We believe this will probably be the best way to cushion the results for our customers,” said a lobbyist for a coal-fired utility, who asked not to be identified.
“And it will also help maintain support for the bill because if there are dramatic cost increases as a result of the auctions, it will lead to a backlash and our customers will make sure politically that it does not get support in the long term.”
Members of the GOP are also complaining that the Democrats are not negotiating publicly who will get the free allowances.
“They are literally writing this bill in secret, working with some industry groups and some members,” said Rep. Steve Scalise, R-La.
Industry groups and Democrats are also debating how long they should be granted free allowances. The coal-fired power groups are pushing for allowances until 2050, while the oil refineries are aiming for freebies until 2023.
