White House Flexibility Signaled on Climate Bill

By IAN TALLEY
WASHINGTON -- The White House is open to compromise on certain key elements of its climate-change agenda, including whether businesses could get some emissions allowances for free, administration officials said Wednesday.

Barack Obama
"[The president's] preferred approach was 100% auction to create incentives for companies to reduce their greenhouse-gas emissions," said White House spokesman Ben LaBolt. "Members of Congress are looking at a variety of policy options to help us make that transition, and the administration will be flexible during the policy-making process as long as those larger goals" of a clean-energy economy, "green" job creation and cutting oil imports are met, he said in an email.
Many lawmakers have warned that passing a climate bill will be difficult if the administration sticks to a position that all of the greenhouse-gas emissions allowances under a so-called cap-and-trade system would have to be purchased at auction. Recent Senate votes have indicated that proponents of an economy-wide cap and trade proposal don't yet have the 60 votes needed in the Senate to overcome a filibuster.
"The road to success is 60 votes [in the Senate], and so we want to make sure that we're able to address as many members' needs as possible to try to get there," Joseph Aldy, special assistant to the president for energy and the environment, said at an energy conference here Wednesday.

Henry Waxman
President Barack Obama last month backed away from pressing for 100% auction of emission credits, telling the Business Roundtable that it wasn't politically feasible. The president's science adviser said in an interview with the Washington Post Wednesday that a climate bill didn't necessarily have to start with 100% auction, but could work its way there over time.
Rep. Henry Waxman (D., Calif.), chairman of the Energy and Commerce Committee, last week unveiled a 648-page draft climate change and energy bill that will likely become the blueprint for congressional and administration policy efforts. Congressional debate on the Waxman bill and other proposals is expected to begin in earnest when lawmakers return from a break the week of April 20.
Mr. Aldy said the administration had reached out to moderate Democrats in the Senate who have expressed reservations about current proposals to cap greenhouse-gas emissions. Nearly a dozen lawmakers from states with heavier reliance on coal-fired power plants and energy-intensive industries last year blocked a more lenient climate proposal in the Senate.
Many of those same senators have written to Mr. Obama warning against trying to push a bill with 100% auction and outlining some of their concerns. Legislators are concerned that auctioning off so many credits would cost industries too much, and they want a larger portion of the revenue funneled into low-carbon energy technologies and energy-intensive sectors.
In the president's fiscal 2010 budget, the administration proposed cutting greenhouse-gas emissions 83% from 2005 levels by 2050, and auctioning off all of the credits that give the holder the right to emit gases such as carbon dioxide.
Mr. Obama proposed distributing most of the revenue gathered in the auction as tax credits to lower-income households, while siphoning off a fraction to fund clean energy technologies.
Write to Ian Talley at ian.talley@dowjones.com