Washington (Platts)--13May2009

US House Energy and Commerce Committee Chairman Henry Waxman on Tuesday
said negotiations with moderate Democrats on the panel have led to an
agreement that would reduce the percentage of CO2 reductions the US would have
to make by 2020 to 17% from the 20% envisioned in his draft proposal.

The California Democrat said the bill's other targets of reducing carbon
emissions 42% below 2005 levels by 2030 and 83% below 2005 levels by 2050
remain unchanged.

Speaking with reporters after leaving a closed-door meeting of committee
Democrats, Waxman also said negotiators have agreed to provide enough free
emission allowances to the US electric utility sector to cover 35% of its
emissions. US power generators are the largest single source of US carbon
emissions, accounting for 40% of the total.

Waxman said the question of whether and how many free emissions to
provide to oil refiners is still being negotiated.

In addition, the chairman said Democrats on the panel have reached
agreement on a number of other issues, including adding language to the
climate change and energy bill that would provide the steel, aluminum and
cement industries, which are considered vulnerable to foreign competition,
with enough free allowances to cover 15% of their total greenhouse gas
emissions.

Further, Waxman said members reached an agreement with the US auto
industry that would provide consumers with incentives to trade in their older
vehicles for more fuel-efficient models.

Energy and Environment Subcommittee Chairman Edward Markey, a
Massachusetts Democrat, who wrote the draft bill with Waxman, said the members
also reached agreement on language that would require electric utilities to
meet a certain percentage of their demand with renewable energy by a certain
date.

Under the compromise, Markey said that while utilities will be required
to meet 20% of their demand from renewable energy by 2020, 5% can come from
energy efficiency measures. Further, the agreement provides that if a state
governor verifies that the 15% target cannot be met, then utilities in that
state would be permitted to increase the percentage of the target attributable
to efficiency programs to 8%. The original language would have established a
20% renewable requirement by 2020.

Waxman said his committee will begin debate on the bill Monday and he
expects the panel will approve the measure by the end of next week.

Although committee Republican appear to be unified in their opposition to
any climate change bill, Waxman said he believes "bill will be backed by a
number of industry groups and I hope that when Republicans see the broad
support for this legislation and that their constituents want it" they'll vote
in favor.
--Cathy Cash, cathy_cash@platts.com