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US climate bill set to contain few surprises

The long-awaited US climate bill is set to be formally unveiled today, with the Obama administration launching a last ditch effort to pass the controversial legislation this year.

The wide-ranging bill has been heavily-trailed and according to Reuters a summary of the final version of the bill obtained by the news agency yesterday contained no major surprises.

At the heart of the new bill will be a binding commitment to cut US carbon emissions by 17 per cent on 2005 levels by 2020. It will be supported by an emissions trading scheme that will be launched in 2013 and will initially cover power firms, before ultimately being expanded to cover other carbon intensive industries.

The launch of the new national scheme would also spell an end to the two regional emissions cap-and-trade schemes operating in the US.

Reuters said that the summary confirmed that many of the previously trailed elements of the bill would be retained, but did not contain details regarding how many free pollution permits will be distributed to firms covered by the emissions trading scheme.

There also appeared to be no update on how the bill will address emissions from transport. Earlier versions of the bill had proposed some form of levy on transport fuels, but the three Senators working on the bill - Democrat Senator John Kerry, Republican Senator Lindsey Graham, and independent Senator Joe Lieberman - had expressed fears that any such move would be positioned as a " gas tax" by the legislation's opponents.

However, while uncertainty continues to surround some elements of the bill it will definitely include a host of sweeteners designed to secure the support of a handful of moderate Republicans who will be needed to pass the bill.

In particular, it will propose new tax and loan guarantees for nuclear power and direct federal funding for clean coal projects. It will also retain plans for an expansion of offshore drilling, albeit with new protections that would allow states to reject drilling projects within 75 miles of the shore that have been introduced in the wake of the oil spill in the Gulf of Mexico.

The launch of the bill is expected to be attended by representatives of a host of American blue chip firms, many of whom have said they will support the legislation.

However, the administration still faces a huge uphill battle if the bill is to be passed ahead of the November mid-term elections.

The chances of the bill passing received a major blow late last month when Republican Senator Lindsey Graham withdrew his support for the legislation, scuppering an earlier planned launch of the bill and leaving it without any Republican endorsement.

Senator Graham originally left the group of Senators working on the bill in protest at perceived efforts by the Democrats to push it down the Senate agenda behind planned immigration reforms. It had been hoped that he would return to the fold after senior Democrats said they would move to pass the climate bill first, but he has failed to reverse his position and said last week that he would like to see the bill paused until the oil spill in the Gulf of Mexico is resolved.

Senator Graham is now not expected to be present at the launch of the bill and the withdrawal of his support will make it even harder for the Democrats to secure the small number of Republican votes they need to reach the 60 vote mark required to pass the bill. Their task will be complicated further by the fact that a number of Democrat Senators have also expressed scepticism about the impact of the bill on carbon intensive industries.

Work has already begun on the official environmental and economic impact studies that have to accompany the bill with the first reports expected within about a month. The bill will then have to move through various committees before facing a full vote on the Senate floor.

Speaking yesterday Senator Kerry said that with the mid-term elections looming and polls suggesting the Democrats could struggle to hold onto their Congressional majority the bill represented the "last, best chance to pass comprehensive climate and energy legislation".

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