Climate Talks Ease Concern in Farm Belt

By IAN TALLEY

WASHINGTON -- House Democrats are on the verge of a deal with rebelling Farm Belt legislators on a climate-change bill, a move that could pave the way for a full House vote on legislation as soon as next week.
Dozens of Democrats -- mostly from Midwest agricultural states -- are concerned that the bill, which aims to cut greenhouse-gas emissions, could disproportionately raise energy prices for residents and businesses in their states.
Lawmakers and industry officials close to the negotiations said the two sides could reach an agreement within days, under which rural utilities could receive a small share of free emission credits -- less than 1% of the total that would be handed out. The credits allow the holder to emit a certain amount of greenhouse gases.
"We're very optimistic about progress" in negotiations, said Drew Hammill, a spokesman for House Speaker Nancy Pelosi (D., Calif.). "We should know in the next couple of days if we'll be able to introduce the bill next week."
If a deal is reached, prospects for passage in the House are stronger than in the Senate, where many lawmakers still have reservations about the climate-change proposal. Senate Majority Leader Harry Reid (D., Nev.) said he planned to take up a version of the House bill later this year.
Under the deal, distribution of the credits to the electric industry would be based largely on retail sales, not emissions. Since many rural states rely on coal-fired power and have fewer customers than coastal states, their electric bills could rise disproportionately. The additional credits would help them offset the costs of cutting greenhouse gases such as carbon dioxide.
The deal also could appease Farm Belt lawmakers by giving the U.S. Agriculture Department's Farm Service Agency greater involvement in oversight of the market for "offsets," credits for projects that cut greenhouse gases. Many of the projects would likely come from the agriculture sector, such as planting trees that absorb carbon dioxide.
Write to Ian Talley at ian.talley@dowjones.com