White House seeks consumer aid in U.S. climate plan

WASHINGTON Wed Apr 8, 2009 9:09pm BST

A demonstrator for clean energy holds up a sign during a rally on Capitol Hill in Washington March 2, 2009. REUTERS/Kevin Lamarque

A demonstrator for clean energy holds up a sign during a rally on Capitol Hill in Washington March 2, 2009.

Credit: Reuters/Kevin Lamarque

WASHINGTON (Reuters) - A portion of the revenue from any U.S. system capping carbon emissions must go toward softening the impact of higher energy prices on consumers, a White House official said on Wednesday.

Joseph Aldy, special assistant to the president for energy and the environment, said building a clean energy economy will not be easy.

"There will be those who are going to be vulnerable as we make this transition and ... we need to actually target the allowance value and revenues to those households, communities, and businesses," Aldy said at an Energy Information Administration forum.

President Barack Obama's budget proposal called on Congress to pass a cap-and-trade bill that would auction 100 percent of carbon permits, essentially forcing companies to pay quickly for their emissions.

But a White House spokesman on Wednesday said Obama is "flexible" on the amount of permits sold to industry.

Obama's proposal would use most of the revenue generated from the sell of carbon permits for tax breaks, offsetting costs for consumers.

Some industrial state lawmakers have raised concerns that a cap-and-trade system will burden big polluters such as coal-burning power plants with substantial additional costs.

Aldy said the White House was reaching out to moderate U.S. Senators to seek support for climate change legislation in the chamber, where passage will likely be difficult.

Separately, Aldy and other Democratic congressional aides on EIA panel also expressed support for development of a cap-and-trade system over placing a tax on carbon emissions.

"Tax bills pass every year," said Greg Dotson, the chief environment and energy counsel for the House Energy and Commerce Committee. "I think the question is whether that is durable over time."

Dotson said a cap-and-trade system would provide more certainty for businesses and for other countries trying to gauge U.S. commitment to addressing climate change.

Andrea Spring, a Republican aide for the Energy and Commerce committee, disagreed with Dotson's assertion. Raising concerns about climate change legislation in general, Spring said a carbon tax was a more transparent option.

"At least with a carbon tax you're kind of admitting what you're doing: you're raising energy prices," Spring said. "With a cap-and-trade program, you're doing the same thing."

(Reporting by Ayesha Rascoe; Editing by David Gregorio)

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