Obama May Be Flexible On Auction of Permits Under Climate Bill

John P. Holdren, president Barack Obama’s science adviser, said the administration may give away some permits to emit carbon dioxide under a proposed cap-and-trade system, a shift from an earlier administration stance calling on 100 percent of the permits to be auctioned. Speaking with reporters, Holdren said any cap-and-trade bill must eventually mandate the auctioning of all permits to emit greenhouse gas emissions, but “whether you … start with that or get there over a period of time is something that’s being discussed.” Previously, Obama argued that capping CO2 emissions and immediately auctioning all permits was the best policy because it would set a fair market price for carbon and create government revenue that could be rebated to taxpayers affected by higher energy prices. But many companies and utilities have argued that auctioning all permits would send energy prices soaring and further weaken the economy. Environmentalists note that Europe’s experiment with giving away a large percentage of emissions permits has worked poorly and created a windfall for many utilities.