Washington (Platts)--15May2009

US refiners would receive 2% of the CO2 allowances created annually by a
carbon cap-and-trade scheme that would be created by legislation the House
Energy and Commerce Committee is scheduled to begin debating on Monday.

According to detailed summary of the proposed allowance allocations
posted on the panel's web site on Friday, the free allowances to the refining
industry would begin in 2014 and end in 2026.

Although the 35% allocation to the power sector was released earlier this
week, the latest summary said 30% of all allowances would be earmarked for
local electric distribution utilities, with 5% given to coal-fired power
plants with long-term power purchase agreements.

"These allowances will be distributed according to a formula recommended
by the utility industry and will phase out over a five-year period from 2026
through 2030," the document said.

The summary also said the bill proposes to give 9% of total annual
emission allowances to local natural gas distribution utilities and specifies
that the allowances must "be used to protect consumers from natural gas price
increases." The free allowances, the summary said, would phase out over a
five-year period from 2026 through 2030. The American Gas Association, which
represents LDCs, earlier this month asked committee member to provide the
sector with 12% of total allowances.

In addition, the summary said states will receive 1.5% of allowances for
programs to benefit users of home heating oil and propane. These free
allowances also would be phased out over a five-year period from 2026 through
2030.

It also said 15% of allowances with no phase-out will be auctioned each
year with proceeds going to low- and moderate-income families in the form of
tax credits, direct payments and electronic benefit payments to protect them
from other energy cost increases.

Some of the allocation details had already been released over the past
few days, including that energy-intensive, trade-exposed industries would
receive 15% of allowances in 2014 with full phase-out by 2025 unless extended
by the president.

Committee Chairman Henry Waxman, a California Democrat, said earlier this
week that he will begin debate on the bill Monday and expects to move it
through the committee by the end of next week. Waxman has said he intends to
complete work on the bill and have it ready by the end of May for full House
consideration.

--Christine Cordner, christine_cordner@platts.com