msnbc.com staff and news service reports
updated 5/15/2009 6:57:35 PM ET 2009-05-15T22:57:35

Leaders of the House Energy Committee introduced a modified, 932-page climate bill on Friday, having made compromises that include generating just a fraction of the money President Barack Obama wanted to get from it to pay for a middle-class tax credit.

The White House said it was satisfied with the bill, as did many environmental groups. But some, most notably Greenpeace USA, called the legislation a corporate giveaway. "Polluting industries will receive hundreds of billions in subsidies in the form of allowances over the life of the bill," it said in a statement.

The committee revealed critical details in advance of 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.

'Big step,' White House says
White House Press Secretary Robert Gibbs said Friday that while some of the bill's details may not be exactly what the president campaigned on, the legislation still "represents a big step forward in dealing with dangerous greenhouse gases."

The bill targets an 83 percent reduction in greenhouse gases by mid-century — a long-term goal that is in line with the President's.

But Greenpeace USA questioned that was realistic given that the bill also sets a 2020 target of a 4-7 percent reduction below 1990 levels.

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., had already agreed to:

  • Lower targets for renewable energy.
  • Require a smaller reduction by 2020 in the emissions blamed for global warming.
  • Give away valuable emissions permits to electricity distribution companies and auto manufacturers.

"After months of hearings and discussions with my colleagues, I am pleased that we have produced a bill that has widespread support from all regions of the country," Markey said in a statement. "This bill marks the dawn of the clean energy age."

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 all the permits, saying it would place an unfair burden on industry. Republicans called the sale a national energy tax.

Fighting over permits
On Friday, soon after the bill was introduced, some industry sectors were already complaining that they didn't get a fair share of the free permits. Electricity utilities, for example, will get 35 percent of all available permits for free, while refiners only get 2 percent.

Meanwhile, some environmental groups said the bill was giving billions of dollars away to polluters.

Obama, for his part, 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.

Gibbs said on Friday that the president still believes that protections are needed to protect middle-class families from price fluctuations.

The Associated Press contributed to this report.

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