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Washington — House Democrats said Wednesday they had reached an agreement that could provide the struggling auto industry with up to $15 billion for advanced vehicles as part of a proposed plan to limit carbon emissions.
They also said they have agreed to changes to carbon-cap proposals that could ease the impact on states such as Michigan that rely heavily on coal for electricity generation.
The agreements, announced by House Energy & Commerce Committee Chairman Henry Waxman and former committee chairman John Dingell of Michigan, among others, would grant automakers 3 percent of the federal government’s revenue from carbon emissions permits starting in 2012.
That is less than what automakers had asked Congress for last month, but lawmakers who support the industry and a trade group said the deal is good news.
“I’d say that it’s encouraging, that this is a long process, and that it is encouraging that legislators recognized the need to return some of the investments to the industries responsible for reducing emissions,” said Charles Territo, a spokesman for the Alliance of Automobile Manufacturers, which represent most major automakers doing business in the United States.
The auto industry’s share could be worth $12 billion to $15 billion a year over the first six years the program is in place, said Lisa Zelljadt, a senior analyst at PointCarbon, which researches carbon markets.
Getting agreement from Dingell, one of the auto industry’s biggest defenders in Congress and a potential foe of carbon limit legislation, is a significant step, Zelljadt said.
“Getting him on board in support of this bill is a pretty big deal for Waxman and Markey,” she said. “That bodes well for the progress of the bill.”
The group had sought 5 percent of allowances under a cap-and-trade program. Such a plan would place an overall cap on the amount of carbon emitted in the United States, and issue emissions permits to various industries. Some of those permits would be auctioned, and Wednesday’s deal would send 3 percent of the money from those auctions, and from fines of those violating emissions limits, to the auto industry.
It’s still unclear how the money would be awarded, or how it would be divided among automakers — a major issue because Detroit’s Big Three have seen their market share steadily decline. And carbon legislation faces uncertain prospects in the Senate, where Republicans, who generally oppose such a plan, have greater ability to block Democratic priorities.
But even a fraction of the revenue could be worth billions of dollars, and help the industry offset what are expected to be major costs of adjusting to a market in which emitting carbon comes at a cost.
“The agreement on allowance values will spur more innovations and new, green job creation here at home,” Dingell, D-Dearborn, said in a written 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.”
The auto industry will receive 3 percent of allowances from 2012 through 2017, and after that will receive 1 percent of allowances through 2025.
“This agreement will recharge our automotive sector by moving forward with American production of electric vehicles and other fuel efficient cars, trucks, and SUVs,” said Rep. Ed Markey, D-Mass., chairman of the Energy and Environment subcommittee.
The auto agreement is part of a larger series of deals Waxman, D-Calif., and other supporters of a tough carbon limit have struck in recent days to bring along hesitant Democrats from Michigan and other industrial states.
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