Obama Signals Flexibility on Cap-and-Trade Permit Auctions
By Kim Chipman and Edwin Chen
March 12 (Bloomberg) -- President Barack Obama, speaking to chief executive officers, signaled flexibility on his plan to have companies to pay for all government-issued pollution permits under an emissions-trading system aimed at tackling climate change.
“We’re going to have a structure that arrives at that right balance,” Obama said today while answering questions at the Business Roundtable, a Washington-based group made up of CEOs from U.S. companies including Citigroup Inc. and General Motors Corp.
Obama unveiled a budget last month that assumes almost $650 billion in revenue by 2019 from a so-called cap-and-trade program. His proposal would require companies to buy government- issued permits to release carbon-dioxide, a greenhouse gas that many scientists say is contributing to global warming.
Company officials, including those representing General Electric Co. and Duke Energy Corp., say the government should provide free permits at the start to ease the cost of transition to a low-carbon economy.
Weyerhaeuser Co. CEO Daniel Fulton asked Obama to explain why he’s calling for a “100 percent auction” of permits. Fulton, head of North America’s largest lumber producer, said such a requirement would essentially be a “tax” and burden companies already grappling with a difficult economy.
Obama said giving carbon permits away for free means “you’re not really pricing the thing. It doesn’t work.”
“The flip side is, you’re right, if it’s so onerous that people can’t beat it, then it defeats the purpose,” Obama said. He also said that a program viewed as too costly for businesses won’t be politically viable.
To contact the reporters on this story: Kim Chipman in Washington at kchipman@bloomberg.net; Edwin Chen in Washington at echen32@bloomberg.net
Last Updated: March 12, 2009 19:04 EDT |
