As I noted earlier today, Sen. Lieberman indicated that he’d be open to moving toward 100 percent auction of pollution permits under his and Sen. Warner’s cap-and-trade proposal.

I called David McIntosh, Lieberman’s counsel and legislative assistant for energy and the environment, to find out why this potentially tectonic shift has suddenly become a live option. He said:

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The environmental community and Senators whose views are going to be important have effectively communicated to Sens. Lieberman and Warner that they want to see free allocations to emitters phased out over time and why they believe that is justified. Within the bounds of getting a bill moving, Sen. Lieberman for one is going to try to be responsive to those arguments.

Beneath the careful language here is, I think, quite a compliment to the green community. This is not an issue the public is engaged on, and it represents enormous possible giveaways to industry. It is a credit to green groups that they’ve communicated forcefully and coherently to legislators that auction is the way to go.

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The question that remains is: if they’re auctioned, what should be done with the revenue? The green community needs to come to a consensus on the question and communicate that just as forcefully. Just as many legislators are worried about a windfall of gov’t revenue as are trying to get a sweet deal for constituent industries.