The legislation, sponsored by Rep. Ed Markey, D-Mass, and Henry Waxman, D-Calif., would require businesses, utilities and others to have government permits for carbon emissions.
Initially, the White House sought to auction off all of the permits, generating a lot of revenue. Instead, 85% will be given away until 2025, when the government starts to phase them out. That's still too soon for some businesses, though.
At a hearing before the House Energy and Commerce Committee, business groups said repeatedly it was "critical" that the bill's provisions, especially the phase-in of caps on greenhouse gas emissions, be loosened.
"The bill has moved in a positive direction," said Dan Reidinger, spokesman for the Edison Electric Institute, an association of electric utilities. He said the group is still pursuing "incremental improvements."
While the bill has already passed the commerce panel, it also has to clear both the Agriculture and Ways and Means Committees before it can get a House floor vote.
Ag Chairman Collin Peterson, D-Minn., recently warned that the bill could stall in his committee if concessions aren't made for his members.
That will put a lot of pressure on the bill's sponsors to further amend it, since it required corporate sponsorship to get this far. Many businesses joined the U.S. Climate Action Partnership, a coalition with green groups that has been a key advocate for a cap-and-trade bill. Dow Chemical is one of USCAP's founders.
And if the bill isn't changed? Companies refuse to say what they might do in that situation.
"We are confident that the changes we seek can be accomplished," Dow's Wells told IBD.
Reidinger was also circumspect.
"We are just going to take things one step at a time," he said.
Most green groups back cap-and-trade programs as the best way to get a carbon reduction program in place. Many big businesses see a lucrative market in carbon permits.
Ultimately, the Waxman/Markey bill seeks to reduce carbon emissions to 28% below 2005 levels by 2020 and 80% by 2050.
But Thomas Farrell, president of Dominion Resources (D), testifying on behalf of the Edison Electric Institute at the hearing, said changes in the greenhouse gas emission allowances were "critical."
"A longer phase-out of the period of transitional allowances is one of the modifications to the bill that we seek," Farrell testified. "EEI believes these allocations are critical to holding down costs to electricity consumers — our fundamental and overriding concern."
At the same hearing, Dow's Wells also called for "critically important" revisions "to minimize the costs on U.S. manufacturers." Namely, that the carbon caps shouldn't be so tight.
"We think it would be better for the 2020 target to reflect a 14% reduction in (greenhouse gas) emissions from 2005 levels... rather than a 17% reduction," he testified.
G. Tommy Hodges, spokesman for the American Trucking Associations, urged lawmakers to prevent increases in the cost of diesel fuel. His industry consumes 90% of the product used in the U.S.
"(It is) critical to set aside free allowances specific to diesel fuel to mitigate dramatic fuel pricing increase," Hodges said. "Mechanisms should be put in place to ensure any diesel fuel emission allowances are in fact used to keep fuel prices in check."
A GOP staffer on the Energy and Commerce Committee said it showed how hard it will be to keep the business-green coalition.
"It is interesting that 85% free allowances still isn't enough," the staffer said.