This is, of course, wrong. It's made dangerous, however, by the fact that it seems so plausible. Won't American companies retain more jobs if they aren't burdened by having to pay for permits?
The flaw here is simple. In the sense that's relevant to profit-maximizing companies, everyone pays for emissions permits. Firms that are forced to buy permits at auction or on the open market pay in the obvious, explicit way. But firms that receive free allocations also pay, implicitly. Each permit they use is one that they can't sell, and the marginal cost of carbon emissions remains exactly the same. Whether we auction the permits or hand them out makes no difference: the profit-maximizing course of action will not change, and firms will hire or fire the same number of workers.
Aren't I overstating my case? Not really. Under even the most imaginative scenario, the benefits to actual laborers (rather than shareholders) from this policy are minimal. Perhaps the cozy financial situation of firms that receive free allocations will make it more difficult for them to lay off workers, from a purely public-relations standpoint. But when soft influences like public image conflict with hard profit maximization, this economist's bet is on the latter; and regardless, the vast majority of any job cuts will come through attrition rather than immediate layoffs.
Most of the time, policymaking is hard—there's a legitimate tradeoff at the heart of almost every policy dispute. This is not one of those times. Handing out allowances is a simple giveaway to firms and their shareholders, and it needlessly makes Waxman-Markey less progressive.
(You can find a extensive post on the topic here.)