House Democrats agreed yesterday to give the battered automotive industry a small percentage of valuable greenhouse gas emissions allowances under their proposed cap-and-trade system in exchange for increased production of electric and advanced vehicles.
The deal would give the industry 3 percent of the allowances from 2012 through 2017. The allowances would then drop to 1 percent from 2018 through 2025, at which point they would be phased out entirely.
"The agreement on allowance values will spur more innovations and new, green job creation here at home," Rep. John Dingell (D-Mich.) said in a statement. "This is a significant achievement for the automotive industry and its workers, as the bill will help fund research, development, implementation and deployment of new, low-carbon technologies and upgrading manufacturing facilities to provide the next generation of green vehicles right here in the United States."
It was not immediately clear if the free allowances would serve as the sole incentive for the production of electric cars and other high-fuel economy vehicles, or if the industry would receive additional funding for advanced technology research and development. It was also not clear how the allowances would be distributed between carmakers and other parts of the industry.
A spokesman for the committee said lawmakers were still working out the specifics.
Three percent is less than the 5 percent of allowances the auto industry had originally called for, but the deal was nonetheless applauded by the Alliance of Automotive Manufacturers, an industry trade group representing Detroit's Big Three, Toyota Motor Co. and other automakers. "We're pleased that the committee recognizes the importance of reinvesting in the industries responsible for making the emissions reductions," alliance spokesman Charles Territo said in an e-mail.
The allowances are not the only lifeline that the bill from Democrats on the Energy and Commerce Committee would give to the ailing industry. The bill also includes a "cash for clunkers" program that would pay Americans to scrap their old cars and trucks and replace them with newer, more fuel-efficient ones. Supporters of the program say it will give a much-needed boost to sagging new car sales, while also curbing the nation's fuel consumption and cutting down on the carbon emissions that accompany the burning of transportation fuels.
The original March draft from Energy and Commerce Chairman Henry Waxman (D-Calif.) would have also required states and utilities to develop plans to support the use of plug-in hybrid electric vehicles and all-electric plug-ins and for the Energy Department to launch a large-scale electric demonstration program. State and local governments, possibly in concert with utilities, automakers and other partners, would be eligible to apply to DOE for financial assistance to carry out programs for integrating plug-ins into their area (E&E Daily, April 1).
Waxman said that his committee realized the importance of the domestic auto industry both in terms of the environment and the economy. "It is critically important that the American automobile industry be a strong driver of jobs as we move to build a more energy independent American economy," he said in a statement.
Other committee Democrats said they had yet to see the specifics of the agreement, but that the numbers were in line with what they had been negotiating in recent days. "That's pretty much what we agreed to," Rep. Bart Stupak (D-Mich.) told reporters yesterday evening.
If lawmakers decide to provide additional funding to spur advanced technology vehicles, they could look to a $25 billion DOE loan program created in the 2007 energy law. The program is designed to help carmakers and parts suppliers retool to produce more fuel-efficient cars, but DOE has yet to hand out the first batch of loans. Last month, Dingell and Rep. Sander Levin (D-Mich.) teamed up with Rep. Fred Upton (R-Mich.) to introduce legislation to double the program to $50 billion (Greenwire, April 29).
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