Obama budget sticks to auctioning all CO2 permits

By Deborah Zabarenko, Environment Correspondent

WASHINGTON (Reuters) - President Barack Obama's $3.55 trillion budget, released on Thursday, retains his plan to cut climate-warming carbon dioxide emissions by auctioning off 100 percent of emission permits to industries.

That is at odds with some in Congress, including members of Obama's own Democratic Party, who are pushing for 50 percent or more of those emissions to be given away in the early stages of the plan to ease the transition to a lower-carbon economy.

Opponents fear that charging companies for the carbon they emit would put unnecessary pressure on an already struggling economy.

Selling all the emission permits is projected to bring $646 billion in revenue over the first years of the program, and White House budget director Peter Orszag said that would not change when more details about the administration's budget request are released next week.

"We're not going to provide the full details of what will be released on Monday, but I will say that you should anticipate no changes in our climate proposal," Orszag told reporters, when asked if the 100 percent figure would hold.

During last year's presidential campaign, Obama said he wanted all emissions permits to be sold, rather than given away, but has signaled there may be flexibility on that point.

Under the Obama plan, the amount of carbon dioxide emissions -- which come from coal-fired power plants, oil refineries, cars and other industrial and natural sources -- would be capped. Companies that emit more than the limit would have to buy emissions credits from companies that emit less.

Even as Obama's budget request was released on Thursday, the director of the nonpartisan Congressional Budget Office stressed the whole point of this kind of cap-and-trade system was to push companies to lower emissions.