U.S. senators aim at trade plan in House climate bill

The Valero St. Charles oil refinery is seen during a tour of the refinery in Norco, Louisiana in this August 15, 2008 file photo. Democrats in the Senate on Tuesday began a drive to advance climate change legislation, a top Obama administration priority, amid warnings that a bill recently passed by the House of Representatives to reduce carbon emissions would have to be changed.

WASHINGTON (Reuters) - The U.S. Senate should adopt many of the climate control measures already sketched out by the House of Representatives but some trade provisions may need to be changed, a leading senator said on Tuesday.

"There's a lot that needs to be kept" from the House bill, Senator John Kerry said, adding there was "great admiration for the threading of the needle" that House Democrats engineered to pass their version of the legislation on June 26.

But a House move to slap U.S. penalties on some foreign goods that gain an unfair advantage because of the climate change legislation should be changed, Kerry told a Senate Finance Committee hearing on trade implications of the bill.

"I think the president should have some discretion" in the setting of such border tariffs, he told reporters after the hearing. Besides being a member of the Finance Committee, Kerry chairs the Foreign Relations Committee.

Under the House bill, starting in 2020, a "border adjustment" program would begin to set additional tariffs that would protect certain energy-intensive U.S. industries, such as steel, cement, paper and glass, from foreign imports.

The Government Accountability Office, the investigative arm of Congress, on Wednesday estimated these U.S. companies accounted for about 4.5 percent of domestic output in 2007.

U.S. lawmakers face difficult votes on climate change legislation because it could result in higher consumer prices for energy and other goods. They also fear it could put U.S. companies at a competitive disadvantage with firms in countries that do not commit to the pollution reduction.

Some lawmakers, including Senator Charles Grassley, the senior Republican on the Finance Committee, fear the provision would violate international trade rules and could spark retribution from major exporting countries, such as China.

The bill that narrowly passed the House last month aims to put the United States on a path to reducing industrial emissions of carbon dioxide and other greenhouse gases by 17 percent by 2020 and 83 percent by 2050.

That would be accomplished mainly through substituting oil, coal and other high-polluting fuels with cleaner, more expensive alternative fuels.

President Barack Obama has urged Congress to pass a climate change bill, a top priority of his administration. The United States is a leading emitter of greenhouse gases associated with global warming.

On Wednesday, leaders of western industrialized countries meeting in Italy agreed to reduce global carbon emissions by 50 percent by 2050, although a broader group of developed and developing countries did not adopt this goal.

(Editing by John O'Callaghan)