Senate defeats move to stop EPA CO2 regulation

WASHINGTON (Reuters) - The U.S. Senate on Thursday killed legislation that would have stripped the Environmental Protection Agency's power to regulate greenhouse gas emissions from large factories, electric power companies and automobiles.

The defeat of the Republican-inspired measure knocked down the most serious legislative challenge the EPA faced on regulating planet-warming gases, although it may have to contend with lawsuits from companies and industry groups.

In a procedural move, the Senate voted 53-47 to block the bill offered by Alaska Republican Senator Lisa Murkowski.

"We managed to avoid taking a big step backwards, and now it's time to come together and focus on creating clean energy jobs and moving into an energy independent future," EPA spokeswoman Adora Andy said.

The defeat of the bill could give new life to the effort in Congress to pass a broad energy and climate legislation, a top goal of President Barack Obama's even before the BP Plc oil spill in the Gulf of Mexico.

That is because many heavy industry companies, like power utilities and steel and cement makers, prefer that Congress craft a plan to cut emissions over facing likely tougher rules issued by the EPA.

"Today's vote is yet another reminder of the urgent need to pass legislation that would help America transition to a 21st century clean energy economy that would create jobs, strengthen our national security, and protect our environment for our children," Obama said in a statement.

Had Murkowski's move succeeded, it would have been another setback in the global climate change fight before the next U.N. talks in Mexico later this year.

Obama has always said he prefers that Congress deals with climate, but that the EPA would act if a bill failed.

In fact, the EPA last month finalized rules that would require large power utilities, manufacturers and oil refineries to get permits to emit greenhouse gases starting next year. In addition, it has issued rules on requiring autos to use less gasoline and diesel fuel and reduce carbon dioxide emissions.

PRE-EMPTING EPA

The comprehensive climate bill unveiled last month by Senators John Kerry, a Democrat, and Joe Lieberman, an independent, would pre-empt greenhouse gas regulation by the EPA, a move aimed at gaining support from lawmakers from energy states.

But passing a climate bill in the Senate, which would require 60 votes rather than the simple majority that Murkowski's resolution required, faces an uphill battle amid opposition from many lawmakers from oil and coal states.

Still, Senate Majority Leader Harry Reid has said he wants a climate bill to move to the Senate floor in coming weeks.

Reid met on Thursday with Democratic Senate leaders on clean energy. "There are a variety of opinions within our caucus about how to develop a bipartisan bill that can gain the necessary support, but there is also resolve to move forward with this effort," he said in a release.

Environmentalists applauded the Senate vote. "Senators today defeated a plan that would have shielded oil companies and other corporations from government oversight, letting those companies increase carbon pollution and America's dependency on oil," said Joseph Mendelson, director of global warming policy at the National Wildlife Federation.

The EPA is expected to release next week an economic analysis of the Kerry-Lieberman climate bill. If, as expected, it shows that carbon controls would only raise consumer costs slightly, it could boost Senate support for the bill.

(Additional reporting by Donna Smith, Tom Ferraro and Steve Holland; Editing by Peter Cooney)