One key element conspicuously absent from the bill, however, is a description of how the allowances will be distributed. President Obama has said that he supports a system where 100 percent of the allowances are auctioned off to polluters to ensure that each company pays for all its carbon emissions. But many in Congress and industry are concerned that the cost of these permits could hurt the steel and paper industries, among others, by putting them at a disadvantage compared with countries that don’t regulate carbon dioxide emissions. At the MIT forum, Congressman Markey said that to protect these industries, some of the allowances will be given away rather than auctioned off.
Eventually, he said, the goal is to auction off all of the allowances, but achieving this could first require ensuring that China and India are also limiting carbon dioxide emissions. Other participants in the forum emphasized that bringing technologies for reducing emissions to these countries could require research and development to lower the cost of renewable energy and of capturing and storing carbon dioxide.
Cap-and-trade legislation has failed in the past. But this year, the possibility of the EPA regulating carbon emissions could push legislators to pass a bill that would give them more control over how such emissions are regulated, Markey said. In 2007, a Supreme Court decision paved the way for the EPA to regulate greenhouse gases. “The only way to avoid that is to have Congress act,” he said. “Industries across the country will have to gauge how lucky they feel, if they kill the legislation, in terms of how the EPA will treat them.”