* Cap and trade faces opposition in Senate
* Administration had forecast $646 billion in revenue
* Loan guarantees for nuclear tripled to $54.5 billion
(Adds background, quote from White House official)
By Jeff Mason and Timothy Gardner
WASHINGTON, Feb 1 The White House on Monday
dropped prospects for revenue from a climate cap-and-trade
system opposed by many lawmakers, but its proposed budget still
called for a "market-based" policy to fight climate change.
Last year the administration forecast revenues of $646
billion for 2012-2019 from a program in which the output of
greenhouse gas would be capped and polluters would be forced to
buy, and could later trade, emissions permits.
"Unlike last year, we do not show an assumed amount of
cap-and-trade revenue since the exact nature of the legislation
remains in flux," an administration official told Reuters.
As a bill to tackle climate change was stalled in the
Senate amid opposition from lawmakers from coal-and
oil-producing states, the omission of the revenues shows
uncertainty about how much revenue can be generated.
It also shows a wariness that revenues could be seen by
some lawmakers as a tax on oil and coal companies that would
raise energy prices.
"Keeping the revenues out of the budget is a political
calculation to make it harder for skeptics to characterize
cap-and-trade as a tax," said Michael Levy, a climate expert at
the Council on Foreign Relations.
Obama pledged during his campaign to auction 100 percent of
the credits in the early years of an emissions trading system,
an assumption that was included in last year's budget.
But the climate bill passed by the House of Representatives
would auction only 15 percent of the permits, while most of the
rest would be given away at first to polluters.
In another compromise, the budget on Monday tripled loan
guarantees for new nuclear power plants to $54.5 billion in a
bid to win votes for the bill from Republican lawmakers.
NO CARBON TAX, FORGING AHEAD
Some have wondered whether Obama would pursue another type
of climate legislation this year such as a carbon tax.
The proposed budget for the fiscal year to Sept. 30, 2011,
said the administration would push for a "market mechanism" to
reduce U.S. greenhouse gas emissions by roughly 17 percent in
2020 compared to 2005 levels.
"The President doesn't support a carbon tax, so the market
mechanism is cap and trade," a White House official said.
The emissions reduction targets in the budget are in line
with those Obama has pledged at an international level.
"I don't think you can read anything into the budget about
the administration's wavering on a commitment on a
comprehensive climate bill," said Evan Ard from Evolution
Markets, a carbon and energy broker based in New York.
"The idea is to set a target for reducing emissions and
setting up a program that hopefully allows you to do it at low
cost; it's not about generating revenue."
The budget unveiled on Monday is subject to change by
White House aides are working to advance climate
legislation among lawmakers, and the budget includes the loan
guarantees for new nuclear power plants as well as $545 million
for capturing and burying carbon emissions from utilities to
win over skeptical Republicans.
A Senate bill is still in the works, but chances of passage
appear dampened by the congressional election in November as
lawmakers fear being punished for supporting a measure that
some say would increase energy costs.
A climate law is crucial to Obama's efforts to get
international momentum behind efforts to fight global warming
and craft a follow-up pact to the Kyoto Protocol. The
administration last week formally embraced the Copenhagen
Accord on global warming.
The budget also said the United States "will take prompt,
substantial action to help vulnerable countries adapt and build
resilience to the effects of climate change."
The administration is also pushing the federal
Environmental Protection Agency to move toward regulating
greenhouse gases in an effort to push companies to support
The budget includes more than $6 billion in funding for
clean energy technologies, with a focus on research,
development and demonstration projects, the White House said.
(Editing by Russell Blinch and Vicki Allen)