Washington (Platts)--20May2008

The leading climate change bill in the US Senate will provide trillions
of dollars to consumers and industry through 2050 in an effort to ease the
switch to a low-carbon economy, according to a summary of the bill distributed
May 16 to Senate offices.

The hefty price tag of the bill, estimated at nearly $5.65 trillion,
amounts to an official acknowledgement from high-ranking senators that cutting
greenhouse gas emissions will be extremely costly in the decades to come.

The actual bill, S. 2191, has yet to be distributed to offices, making
members and staff very nervous, according to sources. Senators will not have
an opportunity to draft legislative language in the form of amendments until
they have a chance to view a copy of the bill.

Senate Majority Leader Harry Reid has said the chamber will debate the
bill beginning on June 2.

The legislative summary was distributed by Barbara Boxer of California, a
Democrat and the chairwoman of the Senate Environment and Public Works
Committee. She has not changed GHG emission reduction goals since the bill
passed her committee in December.

"The bill will reduce emissions from covered facilities 19% below current
levels by 2020, and 71% by 2050. It is estimated to reduce the total US
emissions (from all sources, capped and non-capped) by up to 66% by 2050," the
summary said.

The legislation is originally the work of Senator Joseph Lieberman,
Independent-Connecticut, and John Warner, Republican-Virginia.

The summary showed an expansion of what kinds of "offsets" companies can
use to meet their compliance goals. Offsets are energy or forestry projects
that directly reduce emissions but are not under the carbon cap.

Companies could get 5% of their emissions credits from energy projects in
the developing world through the Clean Development Mechanism. Companies can
also get 10% from international forestry projects, it said.

Heavy industry will receive $764 billion in "transition assistance" while
$800 billion will be set aside for a consumer "tax relief fund" to "help
consumers in need of assistance to related energy costs," it added.

The Senate Finance Committee, chaired by Montana Democrat Max Baucus,
will take the lead on the consumer tax measure. Baucus cast the decisive vote
both in the environment committee and the relevant subcommittee to help the
bill move along.

The bill would provide $1.165 trillion to consumers and industry in
manufacturing and coal-dependent states as a nod to the economic hit they
would feel. Additionally, states that have made efforts to reduce emissions
already would receive $566 billion for their ongoing efforts.

Significantly, there are no direct provisions for nuclear power,
something which Lieberman has said would be critical for passage but Boxer has
long said would be dealt with on the Senate floor. The bill needs 60 votes to
pass under Senate rules.

--Alexander Duncan, alexander_duncan@platts.com