U.S. utility-first climate bill sparks opposition

* Opposed by rural electric coops and chemistry group

* Some power cos like Duke support idea of utility first

By Timothy Gardner

WASHINGTON, July 14 (Reuters) - Two U.S. business groups
opposed on Wednesday the latest version of a climate change
proposal circulating in the U.S. Senate, saying it was unfair
to power companies and would hurt energy-intensive industries.

Senators John Kerry, a Democrat, and Joe Lieberman, an
independent, have crafted a draft bill focusing on capping
greenhouse gas pollution from electric power utilities first.
It scales back previous ambitions for a broad attack on
emissions. [ID:nN13105578]

The plan would launch a "cap-and-trade" market in which
utilities that cut pollution could sell credits to companies
that do not. It expects overall emissions limits would be
achieved because the cap on all utilities toughens over time.

Ten states in the U.S. East have capped emissions from
utilities for two years under a plan called the Regional
Greenhouse Gas Initiative. Senator Olympia Snowe from Maine,
one of the states in RGGI, has said the program could be seen
as a template for a national plan.

But not all utilities are on board.

"We have some real reservations about the utility-only
approach and that's hard for us to get past," said Glenn
English, the chief executive of the National Rural Electric
Cooperative Association. His group says its members provide
power for about 42 million Americans in 47 states with 9,000
rural power cooperatives.

English said the legislation could unfairly saddle regions
of the country that use coal with higher electric bills.

PROVIDES CERTAINTY TO INVEST IN RENEWABLES, NUCLEAR?

Several publicly-traded power companies such as Duke Energy
(DUK.N) have backed the idea of utility-first carbon caps,
saying that such a plan would give them certainty to invest
billions of dollars in low-carbon power such as nuclear, or
wind and solar farms, or other electricity sources.

Duke's Chief Executive Jim Rogers said earlier this month
that a utility-first plan would have to guarantee that other
parts of the economy, such as manufacturers, would also face
caps on emissions in coming years. [ID:nN01620093]

But English said such guarantees were no easy task. "Far
too often these kinds of intentions seem to get left behind."

The American Chemistry Council also opposed utility-first
legislation. The plan would have "far-reaching impacts on the
U.S. economy, especially industries such as chemistry that are
energy-intensive and exposed to global trade," it said.

Carbon caps are also opposed by several senators from
energy-intensive states. Senators John Rockefeller, a Democrat
from coal-rich West Virginia, and George Voinovich, a
Republican from manufacturing-centric Ohio, were outspoken
against cap-and-trade legislation being pushed this year during
a conference call with reporters.

"There aren't 60 votes for cap and trade. It's become a
dirty word all over the state of Ohio," Voinovich said.

They unveiled legislation on Wednesday that aims to boost
research funds for "clean coal" technology known as carbon
capture and storage.

Rockefeller said he hopes the measure will be included in a
broader energy and environment bill that could be on the Senate
floor in late July -- one that they hope will not impose carbon
controls on utilities.

The Rockefeller-Voinovich plan would create a $20 billion
fund over 10 years from a new fee on utility customers that
they estimate would cost households less than $10 per year.

(Additional reporting by Richard Cowan; Editing by Lisa
Shumaker)