House panel tackles climate change bill

WASHINGTON Tue May 19, 2009 6:29pm EDT

The Valero St. Charles oil refinery is seen during a tour of the refinery in Norco, Louisiana in this August 15, 2008 file photo. REUTERS/Shannon Stapleton

The Valero St. Charles oil refinery is seen during a tour of the refinery in Norco, Louisiana in this August 15, 2008 file photo.

Credit: Reuters/Shannon Stapleton

WASHINGTON (Reuters) - U.S. lawmakers began wrangling on Tuesday over a climate change bill aimed at reducing carbon dioxide and other pollutants, with Republicans arguing the legislation would burden the economy with higher energy costs.

The House of Representatives Energy and Commerce Committee dug in for several days of debate over the Democrats' bill, which now takes up 946 pages. Chairman Henry Waxman has predicted his panel will have enough Democratic support for approval this week before lawmakers leave for their Memorial Day holiday.

Republicans are first expected to try to surgically remove the heart of the proposal -- the establishment of a "cap-and-trade" system that would gradually reduce the amount of greenhouse gases that utilities, steelmakers, oil refineries and other companies could emit. Republicans are expected to lack the votes to kill cap and trade.

Representative Joe Barton, the senior Republican on the committee, has warned Waxman, "You are about to embark on an episode of putting the entire American economy, which is the world's largest, through an absolute economic wringer."

In a party-line vote, the committee voted 36-23 against a Republican-sponsored amendment to end the U.S. cap-and-trade system if China and India did not adopt a greenhouse gas emissions reduction plan at least as strict as what the United States would have.

President Barack Obama has put climate-control legislation high on his agenda. He would like to see significant progress by December when world leaders meet in Copenhagen to consider coordinated steps to reduce greenhouse gas emissions. It is unclear if Congress can finish a bill by then.

Obama on Tuesday called the legislation historic, saying it would help ease U.S. dependence on foreign oil, prevent the worst consequences of climate change and build a clean-energy economy.

With its mandate to reduce emissions 17 percent by 2020 from 2005 levels, Waxman said the bill would shore up the U.S. economy by encouraging new high-tech jobs while avoiding ecological disasters linked to global warming.

Republicans predicted energy costs would skyrocket under the bill and have reportedly prepared hundreds of amendments to try to modify the Democratic bill.

Obama's Environmental Protection Agency said on Tuesday the Democratic bill would protect consumers from big increases in utility bills.

'GET GOING'

Illustrating how long it may take to get through the bill, the committee spent more than an hour debating the first amendment offered to the legislation, which was sponsored by a Democrat.

The adopted amendment would create a "clean energy" bank within the Energy Department to provide direct loans and government loan guarantees for projects that use clean energy technology.

The committee also adopted a "cash for clunkers" program, which gives consumers vouchers worth $3,500 or $4,500 toward the purchase of a fuel-efficient vehicle if they turn in their cars and trucks that burn more fuel. The new vehicles would have to be purchased or leased by March 31, 2010. Consumers would not have to pay income taxes on the vouchers.

Under cap and trade, an ever-decreasing number of carbon pollution permits would be available, and companies that still lack the technology to meet the lower pollution requirements could buy more permits from companies that no longer need their full quotas.

About 85 percent of the emissions permits would be given away under the bill, with the rest auctioned off. That is far less than the 100 percent auction for the permits the Obama administration proposed initially, although it has indicated some flexibility on the issue.

U.S. Energy Secretary Steven Chu said on Tuesday the free permits were a "necessary part of allowing the United States to make this transition from where we are today to a cleaner economy."

"I know that there are some people who say it's not as strong as it should be, but I for one am of a different opinion. I think you've got to get this thing going," Chu said.

If the bill clears Waxman's committee, the House Ways and Means Committee will also take a stab at the legislation. Democratic leaders want to bring the bill up for a full House vote by August.

The legislation would then be sent to the U.S. Senate, where there is much stronger opposition. The full Senate may not take up the bill until sometime next year.

(Additional reporting by Ayesha Rascoe; Editing by Peter Cooney)

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