FACTBOX: U.S. Democrats launch draft carbon legislation

(Reuters) - Democrats in the U.S. House of Representatives launched a sweeping effort on Tuesday to regulate emissions of planet-warming gases and encourage growth of alternative energy.

The draft legislation, circulated by House Energy and Commerce Committee Chairman Henry Waxman and Representative Edward Markey, is likely to face a tough fight in the Senate.

The plan gave a basic outline on how a national cap-and-trade market on emissions would work, but did not broadly consider how emissions credits would be initially distributed to polluters. President Barack Obama has favored auctioning 100 percent of the permits, but has indicated there could be some room to ease back on that goal.

Here are some highlights of the draft legislation.


Establishes cap-and-trade market to reduce economy-wide greenhouse gas emissions by 20 percent below 2005 levels by 2020, 42 percent by 2030, and 83 percent by 2050.


Allows 2 billion tons per year of reductions through so-called “offsets,” or investments in clean energy projects that cut greenhouse gas emissions, like wind and solar farms, or destruction of gases at industry and farms, split evenly between domestic and international projects.


The plan would require power utilities to generate 6 percent of their power from alternative energy sources like solar, wind and geothermal by 2012 and 25 percent by 2025.


Incentives for wide-scale commercial deployment of technology to capture carbon dioxide from power plants for permanent storage underground.


Authorizes U.S. companies in industries that use a lot of energy to receive “rebates” to compensate for additional costs of cap and trade. If rebates are not sufficient, the president would have the power to establish a “border adjustment” program, possibly tariffs on goods from countries that do not take action on cutting greenhouse gases.


Establishes a low-carbon transportation fuel standard to promote advanced biofuels like cellulosic ethanol, backed by support in the form of grants and loan guarantees for electric vehicle demonstrations.

Reporting by Timothy Gardner; Editing by Christian Wiessner