Senate showdown looms over EPA carbon rules

WASHINGTON (Reuters) - The U.S. Senate is moving toward a showdown vote on Wednesday over legislation that would block the Environmental Protection Agency from regulating greenhouse gas emissions, a key energy initiative of the Obama administration.

Senate Majority Leader Harry Reid said he "hoped" for votes early on Wednesday to "get rid of that issue one way or another."

Congress failed last year to forge a broad energy policy that included battling greenhouse gas emissions blamed for global warming. The White House has long said the EPA was bound to begin restricting emissions in the absence of legislation.

Senate Republicans, saying the U.S. economy can ill afford costly new pollution controls, were hoping their initiative wins the support of several moderate Democrats -- many from coal-producing and consuming states -- who could face tough re-election bids next year.

Even with such support, the legislation is not expected to get the 60 votes that leaders will require for passage in the 100-member Senate.

However, a vote tally that has more than 50 votes in favor of halting EPA regulations on carbon dioxide pollution, which began to kick in this year, would be touted as a victory by conservatives.

"It will show that a strong bipartisan majority of the U.S. Senate supports reining in the EPA and rejecting the Obama administration's cap and trade agenda," said Matt Dempsey, a spokesman for Senator James Inhofe.

"Cap and trade" refers to legislation environmentalists and the Obama administration have pushed over the last couple of years to sharply reduce carbon emissions from large factories, electric utilities and oil refineries by allowing firms to swap a continuously dwindling number of pollution permits.

That effort collapsed in the Senate last year, dealing a blow to environmentalists, who wanted the United States to join a global program to impose carbon pollution reductions over the next several decades.

President Barack Obama has promised to forge a new energy plan this year but it is hard to see how he would get any legislation through the fractious Congress, increasingly on an election footing.

The White House announced the president would outline a plan on "America's energy security" in a speech on Wednesday where he could talk about expanding clean energy to battle climate change and the future of nuclear energy after the crisis in Japan's stricken Fukushima plant.

The United States has now been eclipsed by China and Germany in new clean energy investment because of the lack of a national energy policy, according to a report by Pew Charitable Trusts, a Washington-based think tank.

Senator Inhofe has long been the most outspoken voice in Congress against legislation or administration regulations to reduce greenhouse gas emissions, despite a Supreme Court decision that EPA has the authority to regulate the pollution emissions under the Clean Air Act.

The Republican-controlled House of Representatives also is advancing legislation to stop all EPA regulations on greenhouse gas pollution.

Still unclear is whether votes also will be staged on Wednesday in the Senate on two Democratic ideas that would be an alternative to the Republicans' total prohibition on EPA regulation of carbon pollution.

One, by Senator Jay Rockefeller, would impose a two-year pause in EPA regulations. Another, by Senator Max Baucus, would exempt any carbon emitter of less than 75,000 tonnes a year from being regulated by EPA and also would exempt agriculture operations from regulation.

Whitney Stanco, an energy policy analyst at MF Global, said in a research note that even if the Senate effort fails this week, "We continue to believe the odds favor at least a delay of EPA GHG (greenhouse gas) regulations on stationary sources before the end of 2011."

But an aide to Senator Mary Landrieu said that if the Senate fails to get 60 votes for any measure this week, revisiting the issue this year would be unlikely.

Landrieu, a moderate Democrat from an energy-producing state, intends to vote for the amendment to strip EPA's regulatory authority on carbon, as well as for the Baucus amendment, the aide said.

(Additional reporting by Timothy Gardner; Editing by Eric Walsh)