Waxman Delays Action on Climate Bill

By IAN TALLEY

WASHINGTON -- House Energy and Commerce Committee Chairman Henry Waxman delayed until next week further action on his big climate bill, amid sharp divisions among committee Democrats.
The delay indicates that the House Democratic leadership is having difficulty rounding up votes to move the bill forward, amid disagreements over which industries and regions of the country should bear the burden for cutting greenhouse-gas emissions. Democrats from industrial and coal-dependent states have expressed concerns that the climate bill would sharply raise energy costs and hurt the economy in their states.
"The hearings have spurred productive discussions between members on the legislation, which are continuing this week," Rep. Henry Waxman (D, Calif.), chairman of the House Energy and Commerce Committee, said in a memo to members.
Mr. Waxman and Energy Subcommittee Chairman Ed Markey (D, Mass.), had scheduled to mark up the American Clean Energy and Security Act this week. The main provision of the bill would mandate major greenhouse-gas-emission cuts and require emitters to buy and sell the right to emit gases such as carbon dioxide. It would also require a rising percentage of power to come from renewable-energy sources.
Messrs. Waxman and Markey left out one of the most controversial elements that will determine how much cutting emissions will cost, buying time for negotiations.
While the Obama administration and Democratic leadership want to auction off all the rights to emit -- called allowances -- representatives from regions heavily reliant on the coal industry, fossil-fuel generation and energy-intensive industries want the government to give out the emission credits to those sectors to soften the fiscal impact.
Last week, nearly a dozen moderate Democrats needed by leadership to pass a bill out of committee recommended weakening the emission-reduction targets in the early years of the program and giving out around 60% of the allocations to industries that would be hardest hit.
Under the proposal led by Virginia Democrat Rick Boucher, two-thirds of those allocations would go to the electric industry, one of the largest emitters of greenhouse gases in the economy. While a majority of those valuable emission credits would be given to local distribution companies to offset rising energy costs for consumers, a share would be given directly to coal-generation firms.
Although Messrs. Waxman and Markey have said there will be free allocations to the power industry -- primarily through the retail-distribution side to prevent windfall profits for the generators -- they are concerned that giving away too many emission credits may undermine the program.
The division between the moderate and more left-leaning Democrats broke out into the open late last week when influential Rep. John Dingell (D, Mich.) gave the GOP fodder for their attacks against the bill by declaring it "a tax, and it's a great big one."
The GOP, meanwhile, said the mark-up delay would give Democratic leadership time for "arm-twisting and vote buying."
Write to Ian Talley at ian.talley@dowjones.com