CCAN’s Policy Director Ted Glick spent some time Tuesday on Capitol Hill delivering a sign-on letter to Congressman Charlie Rangel (D-NY) and other members of the House Ways and Means Committee. The letter, circulated by the Chesapeake Climate Action Network and the Southern Alliance for Clean Energy and signed by 32 religious, climate and environmental groups, calls for 100% auction of pollution permits as part of climate legislation being developed in the Housel.
Rangel is the Chairman of the Ways and Means Committee which, along with the Agriculture Committee (and possibly other committees), is next in line to take up the sweeping proposal to establish a national renewable electricity standard and a cap-and-trade program to curb greenhouse gas emissions.
Among other things, Ways and Means deals with trade and revenue measures, both of which will be impacted by the proposed bill.
The sign-on letter that Ted handed directly to Chairman Rangel addressed revenue measures in the climate bill. After Congressman Boucher and others in the House Energy and Committee had their say, the bill left Committee poised to give away 85% of the pollution permits. Fifty percent of those free permits would be given to the fossil fuel industry, thirty-five percent of them directly to the coal industry. All these free giveaways amount to handing our nation’s biggest polluters a check for $20.8 billion a year beginning in 2012.
Auctioning 100% of the permits to emit global warming pollution is the only fair way to cap carbon and ensure pocketbook protection for American families. Instead of Boucher’s coal-friendly bill, those who signed the letter support President Obama’s campaign pledge to auction 100 percent of the carbon permits and rebate most of the money to consumers.
Read the entire sign-on letter below the fold.
June 2, 2009
Dear Chairman Rangel:
On behalf of thousands of members and supporters, we applaud your leadership in crafting policies that address climate change. We look forward to working with you and other members of your committee in establishing comprehensive climate legislation that auctions pollution permits as we believe that auctioning permits provides the only effective and fair way to structure climate legislation to ensure adequate consumer protection.
The energy legislation adopted by the Energy and Commerce Committee, on the other hand, freely allocates a majority of the pollution permits to utilities and industries. Some of these giveaways would result in a transfer of wealth from ordinary households to industry stakeholders without providing consumers any relief from higher energy prices. Utilities are supposed to use the free permits they receive to benefit their customers, but it is questionable how much of the value of these permits will actually flow through to consumers.
We are not alone in this conclusion. As the Environmental Protection Agency’s analysis of the Waxman/Markey proposal points out, “Freely distributed allowances to firms tends to be very regressive” and “[free allowances to utilities] makes the cap-and-trade more costly overall.”
The economics of auctions are abundantly clear. More than 600 economists signed a letter this spring warning that free pollution permits to companies will provide windfall profits while depriving the government and taxpayers of the resources necessary to offset the transition to a new energy economy.
Without auctions, consumers, including the most vulnerable populations, will bear the transition cost with little prospect for relief. Dr. Peter Orszag, current Director of the Office of Management and Budget and former director of the Congressional Budget Office, warned in his November 2007 testimony to the House Budget Committee:
“Even if the companies received allowances for free, they would still raise prices to their customers because the cost of using an emission allowance for production
