Washington (Platts)--20Apr2009

Officials with the Obama administration and industry will share their
views with Congress this week on draft legislation that would cap US
greenhouse gas emissions by 83% by 2050 and create a federally-regulated
emissions market that would require companies to pay for the right to emit
GHGs.

US Environmental Protection Agency Administrator Lisa Jackson, Energy
Secretary Stephen Chu and Transportation Secretary Ray Lahood are scheduled to
appear on Wednesday before the House Energy and Commerce Committee and the
Energy and Environment Subcommittee to discuss the GHG cap-and-trade proposal,
which also includes a renewable electricity standard and other energy-related
provisions.

The two panels will kick off four days of hearings Tuesday with opening
statements from members.

The hearings come days after Jackson on Friday said her agency had
determined that six greenhouse gases posed a threat to the public health and
welfare. The so-called endangerment filing could lead to EPA regulating
emissions of the six gases under the Clean Air Act.

Lawmakers will also hear Wednesday from members of the US Climate Action
Partnership, a group of large companies and environmental organizations that
are advocating a cap-and-trade scheme that would give industries a significant
portion of free emission allowances early in the process to help them meet the
new GHG restrictions.

Duke Energy Chairman President and CEO Jim Rogers, a USCAP member who has
said he opposes the administration's stated position against any free
allowances, is expected to testify. The electric generation sector is the
largest source of greenhouse gases in the US.

Jeff Sterba, chairman and CEO of PNM Resources, dwill testify on Thursday
on behalf of the Edison Electric Institute about how emission allowances
should be allocated under a cap-and-trade bill to address the impact of GHG
limits on energy consumers. EEI members ended their historic division on this
topic earlier this year when they agreed unanimously that a large portion of
GHG allowances should go to state-regulated local distribution companies.

American Public Power, the National Rural Electric Cooperative
Association and the National Association of Regulatory Utility Commissioners
will also testify.

Former Vice President Al Gore, who was among the earliest national
politicians to warn of the dangers of climate change, and former US Senator
John Warner, a Virginia Republican who co-authored a carbon cap-and-trade that
failed on the Senate floor last year, are also scheduled to testify on Friday.

The committee also will examine carbon market oversight, the role of
states and the Clean Air Act.

The proposed bill from committee Chairman Henry Waxman, a California
Democrat, and subcommittee Chairman Ed Markey, a Massachusetts Democrat, would
cap GHG emissions at 3% below 2005 in 2012, 20% below 2005 levels by 2020
before tightening to an 83% reduction in 2050.

The proposal would establish a a GHG emission cash market overseen by
the Federal Energy Regulatory Commission. The draft, however, is silent on
whether any allowances would initially be given away to emitting industries.
The draft also largely left open for members to determine how best to use this
market's revenues which were forecast by the administration to be about $646
billion in 10 years if 100% of allowances were auctioned.

--Cathy Cash, cathy_cash@platts.com