Washington (Platts)--19Mar2009

A group of moderate Democrats in the US Senate is developing a proposal
designed to ensure that any US scheme to limit carbon emissions would not harm
the nation's manufacturing sector, while maintaining a level of CO2 reductions
most agree are necessary to combat climate change, Senator Debbie Stabenow
said Thursday.

The Michigan Democrat is leading a group of 16 Democrats from
manufacturing, agricultural, and energy-producing states that hope to cushion
the effects of a carbon controls on their industries.

"We're really solidifying the areas that we want to focus on," Stabenow
told reporters. "There are a number of us that understand the seriousness of
the need to address climate change, but it's got to be done in a way that
works, particularly for the Midwest...for manufacturing states," she added.

President Barack Obama has called for passage of a cap-and-trade bill
this year that would reduce GHG emissions 83% below 2005 levels by 2050 and
that would require companies to pay for the right to emit CO2. His fiscal
2010 budget estimates that selling pollution permits would earn the federal
government nearly $650 billion over the next 10 years.

Stabenow said she supports the reduction targets but disagrees with some
of the ways they would be reached at least in the short term. The group's
recommendations will call for at least some free allocation of emission
permits in the early years, she said, with auctions phased in over later
years.

She also said that federal support for technology research and
development and assistance to ratepayers should begin in the early years of
the mandate, and be focused focus on the states and industries that will
suffer the most from a cost on carbon.

"We're basically talking about rewriting the rules of the economy in many
ways, and that effects manufacturing in many states differently than other
states," Stabenow said.

Although she said her group has not taken a position on whether the
administration should attempt to push a carbon bill through the Senate as part
of a budget reconciliation bill, Stabenow said most of the senators she has
discussed the idea with are opposed. Attaching a carbon bill to the budget
measure would allow Democrats to pass the legislation with a simple 51-vote
majority rather than 60 votes they would need to avoid a Republican filibuster
if the language were introduced as a regular bill.

Stabenow said that the group of moderates does not plan to offer its own
legislation, but may instead offer amendments to whichever bill appears to be
moving through Congress.
--Jean Chemnick, jean_chemnick@platts.com