Some little states with big emissions could see allowance windfall

Small states with potent carbon dioxide emissions could win big under House climate legislation, according to a new analysis that shows residents of power-pumping states collecting a large number of free pollution permits to soften the rising cost of energy.

Every person in Wyoming stands to receive 16 permits, or allowances, in 2016, amounting to a minimum of $160 to reduce the price of their electricity. That's the biggest per person benefit provided by the cap-and-trade bill that narrowly passed the House in May.

California residents, meanwhile, would each receive about four allowances, or at least $40, during that same year. That's the smallest personal benefit, according to an analysis of the bill by the World Resources Institute and the Georgetown State-Federal Climate Resource Center.

"Wyoming is much more carbon-intensive than California. Wyoming on a per capita basis has more emissions," said John Larsen, a researcher with WRI. "This is to help them reduce their energy demand and mitigate the carbon costs that will ultimately be manifested under the cap-and-trade program."

Free allowances can lubricate the transition to an economy that is suddenly saddled with a price for every ton of carbon dioxide released into the atmosphere. All the states and local power distributors would receive about 2.6 billion free allowances in 2016, the value of which is meant to be passed down to consumers to lessen the shock of rising power prices associated with carbon regulations.

The analysis might be used as an argument that sudden surges in energy costs could be offset by the allowances in polluting states. That could drive political support for the bill.

Warming? Not around Casper


North Dakota, for example, stands to receive about 12.5 permits per person in the year studied, second behind Wyoming. The state's senators, both moderate Democrats from a coal-rich region, are considered key swing votes in getting the bill passed in that chamber. Aides to Sens. Byron Dorgan and Kent Conrad did not respond to requests for comment.

Wyoming is a different story. Sens. John Barrasso and Michael Enzi, both Republicans, don't figure into Democratic strategies aimed at collecting 60 votes. Addressing climate change is not a priority there, said state Rep. Thomas Lubnau II, who believes global warming is a "political strategy" concocted by liberals.

"I'm a little dubious about the necessity of a [carbon] cap," he said. "It's 49 degrees on July [29th] just north of Casper, Wyo., right now."

"The climate has been changing -- depending on whether you believe in creationism or evolution -- for millions of years," Lubnau added. "The weather will change every day. It's a brilliant political strategy to say that every bad weather change is the fault of the conservatives."

Wyoming state Sen. John Schiffer, a Republican and a rancher, is used to studies that highlight Wyoming as the beneficiary of one public program or another on a per capita basis. The entire state has fewer than 533,000 people, and in his neck of the woods, there are only 1.6 people on every sprawling square mile.

"When you mention per capita, it just makes me laugh, because I think, 'Oh dear, we gotta go find another million people somewhere,'" Schiffer said.

Other small states that benefit under a per person calculation include Alabama, Indiana, Iowa, Kansas, Kentucky and Nebraska. All of their residents would receive the equivalent of at least 11 allowances.

Texas-sized emissions -- and allowances

But the analysis doesn't just look at disbursements on an individual level. It also points to the overall collection of allowances by local energy distributors in each state, which would receive permits based on formulas that consider the amount of electricity that is sold within the state's borders and the amount of emissions it produces.

States altogether would receive 2.2 billion allowances under that formula.

Texas wins under the measurement. It would net more free allowances than any state, or about 180 million permits in 2016. Texas produces more emissions than any other state, driven by its massive refinery operations.

California would receive the second-largest number of allowances, about 145 million, even though it's one of the smallest users of coal in the country, relying on little more than what's burned in Delaware. Still, California is the most populous state in the country, with 36.8 million people, who emit vast amounts of petroleum-related greenhouse gases, second only to Texas.

States that 'go deeper' see little reward

Other states hitting home runs include Florida, Illinois, New York, Ohio and Pennsylvania, all of which would receive at least 95 million allowances.

Vermont, meanwhile, would come away with the fewest allowances. It has been working for a decade to reduce its energy use -- and emissions -- and made history last year when it became the first state in the country to reduce its demand for electricity.

Officials there pushed Congress to have other states follow its lead. Their efforts failed.

Rather than the current distribution of allowances set up in the bill sponsored by Reps. Henry Waxman (D-Calif.) and Edward Markey (D-Mass.), Vermont wanted the legislation to provide more permits to states that invested their own money in energy efficiency renewable power programs.

Bigger emission slashes could have been had, said Blair Hamilton, who runs Efficiency Vermont, the state's energy efficiency utility.

"That would reward states that go deeper," he said.

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