By Richard Cowan
WASHINGTON (Reuters) - Democrats in the U.S. Senate will push climate change legislation that would grant, initially at no cost, pollution permits to an array of industries, similar to legislation passed by the House of Representatives last June.
Details unveiled by the Senate Environment and Public Works Committee show the Democratic bill would give approximately 30 percent of the free pollution permits to electric utilities and another 5 percent to merchant coal firms. The grants are intended to smooth their transition to cleaner fuels and protect consumer against price increases.
An analysis by the U.S. Environmental Protection Agency said that under the Senate bill, consumers would be hit with only "slightly" higher costs than the House bill's impact, which has been estimated at $80 to $111 per year.
"We've reached another milestone as we move to a clean energy future," said Senate Environment and Public Works Committee Chairman Barbara Boxer.
Boxer is working with Senator John Kerry to advance the legislation in the Senate, where it faces staunch opposition from most Republicans and many moderate Democrats.
Other free industry permits outlined by the Senate Democrats include: 9 percent for local natural gas distribution companies; and 4 percent for energy-intensive manufacturers in the steel, cement, paper, glass and other industries in 2012 and 2013, rising to 15 percent in 2014 and 2015.
Electric utility customers would get about 35 percent of the free allowances to help compensate them for the higher costs of energy as utilities move away from burning cheap and highly polluting fossil fuels like coal.
The Alliance to Save Energy applauded the provisions, saying they put needed resources into energy efficiency as part of a broad program to reduce U.S. emissions of carbon dioxide and other greenhouse gases associated with global warming.
COST TO CONSUMERS
Kerry and Boxer, both Democrats, introduced their legislation on September 30, but some key details were just now being unveiled, including how carbon pollution permits would be allocated to industry and EPA's assessment of the cost to consumers when industry is forced to curtail its use of fossil fuels like oil and coal.
At the core of the Senate and House bills is the creation of a "cap and trade" system that would lower carbon emissions from smokestacks over the next four decades.
Companies would be allowed to trade on the open market an ever-dwindling number of pollution permits for each ton of carbon they release into the atmosphere.
The House-passed bill calls for a 17 percent emissions cut by 2020, from 2005 levels, while the Senate bill is more ambitious at 20 percent. Neither bill is as aggressive as some passed by other developed countries, including the EU.
Some of the new Senate provisions were aimed at picking up support from senators representing coal-producing and farm states. For example, the committee said the bill would now stimulate the development of technologies that would allow the burning of less-polluting coal.
When the initial legislation was unveiled nearly a month ago, it drew a quick rebuke from Democratic Senator Jay Rockefeller of West Virginia, a leading coal-producing state.
President Barack Obama wants significant progress in Congress on climate legislation ahead of an international meeting on the environment in December in Copenhagen.
But with Congress mostly focused on a controversial healthcare reform effort and support for climate change legislation uncertain in the Senate, the Copenhagen summit is likely to start without clear carbon-reduction goalposts in the United States.
Among the world's top producers of carbon emissions, U.S. climate change reform is seen as key to success in Copenhagen.
Most U.S. Republicans have criticized legislation mandating reductions in carbon emissions, saying it would eliminate jobs, encourage more companies to relocate factories abroad and significantly raise consumer prices.
The EPA analysis, however, said both the House and Senate bills would have a relatively small cost impact on consumers.
The Environment and Public Works Committee will hold three days of hearings next week on the bill and will attempt to approve the measure sometime in November.
Several other Senate committees are also reviewing climate change legislation and might not finish this year.
(Editing by Todd Eastham)
