Senate to tackle cap-and-trade auctions

The Senate Finance Committee will hold hearings on Thursday to discuss how to auction off permits under a cap-and-trade program.

Cap-and-trade would set a ceiling on emissions. Polluters would have to acquire “permits” to exceed that limit. At issue is what percentage of those permits should be auctioned off and what percentage (if any) should be given away initially to energy-intensive industries who might have trouble adapting to cap-and-trade. Another unanswered question is whether the revenue from those auctions should be rebated directly to taxpayers or whether a portion should be used to develop alternative energy sources.

According to a committee press release:

The Committee will hear from experts on what factors should be considered when deciding whether certain firms or industries should receive free allowances and how to allocate them. Several aspects of a cap and trade program fall under Finance Committee jurisdiction, including collecting and distributing revenues from any auction for carbon allowances, and addressing any border or trade measures.

Witnesses include CBO Director Douglas Elmendorf, Dr; Jos Delbeke, Deputy Director-General of the European Commission Directorate-General for the Environment; and Dr. Anne Smith, Vice President, Practice Leader of Climate & Sustainability, CRA International, Washington, DC.