Lawmakers also are divided. Committee chairman Pete Domenici has warned it would be "impossible" to pass legislation to cut heat-trapping gas emissions in 2006 because of election-year gridlock. But he said the all-day panel conference on climate change options was a "starting point" for discussions.

"Designing and implementing a mandatory system (will) be very difficult both politically and economically," Domenici said. "We can start somewhere and this conference is our starting point."

Most lawmakers predict Congress ultimately will pass a law with an emissions trading scheme called a "cap-and-trade" system. Companies that reduce emissions could sell credits to companies that have a harder time reducing pollution.

Environmentalists have warned that any "cap and trade" credits should not be sold too cheaply.

The United States is the biggest emitter of carbon dioxide, one of several greenhouse gases blamed for melting glaciers and rising sea levels. Efforts to put mandatory caps on US carbon emissions have repeatedly failed in the Senate.

Some of the biggest US utilities -- including Exelon Corp. of Chicago and Duke Energy Corp. of Charlotte, North Carolina -- told lawmakers Congress needs to clarify plans on carbon dioxide cuts before they can build a new generation of low-emission power plants to meet growing US electricity demand.

"It is critical that we start now," said Elizabeth Moler, an executive vice president at Exelon, pointing out that Congress held the first hearings on global warming in 1978.

"We need the economic and regulatory certainty to invest in a low-carbon energy future," Moler said.

But Atlanta-based Southern Co., which operates a large fleet of coal-fired power plants, said mandatory caps are not needed because US industry is moving forward with high-tech ways to cut emissions on its own.

Southern is looking to build futuristic coal plants that would strip out carbon emissions before they enter the atmosphere, as well as a new fleet of nuclear plants, which emit no greenhouse gases.

"A mandatory program in our view is not necessary to make that happen," said Chris Hobson, a senior vice president at Southern.

Wal-Mart, the world's largest retailer, said it could accept mandatory carbon caps. It also said it is moving forward on its own with boosting efficiency and reducing emissions from its stores and giant delivery truck fleet.

Democrat Sen. Jeff Bingaman exacted a pledge from Domenici in last year's energy bill debate to pursue legislation that would eventually lead to mandatory cuts. But many Republicans say such cuts could stunt US economic growth.

Domenici told reporters he was "haunted" by the complexity of a mandatory system of caps.

"It's a devil of a mystery," Domenici said, declining to say when his committee might formally take up legislation. "I don't have the right kind of feel for it yet."

There are competing proposals. Republican Sen. John McCain, a leading contender for the 2008 presidential race, said he expects the full Senate to vote this year on a bill he has sponsored with Democrat Joseph Lieberman that calls for mandatory caps.