Obama's cap-and-trade scheme faces defeat

THE push for climate change legislation in the US has taken a dramatic turn as consensus builds to dump a cap-and-trade scheme.

THE push for climate change legislation in the US has taken a dramatic turn as consensus builds to dump a cap-and-trade scheme.

In an attempt to win support across the political divide, a group of US senators has proposed starting again with a climate change plan that would impose different carbon control limits on individual sectors and industries.

The proposal is a radical departure from the legislation passed in the US House of Representatives, but blocked by the Senate, that seeks to set a national target for carbon emissions, and introduce a credits trading scheme.

The emerging political shift means US President Barack Obama may have to change course, abandoning his support for a 17 per cent reduction on 2005 carbon emissions by 2020, which was at the heart of his position at the UN climate change summit in Copenhagen in December.

The shift has implications for the Rudd government, which has a target of a 5 per cent cut by 2020 and a cap-and-trade scheme in legislation blocked in the Senate by the Coalition, members of which have called on Kevin Rudd not to act before the US.

Three US senators -- Republican Lindsey Graham, Democrat John Kerry and independent Joe Lieberman -- have proposed a scheme where cuts to greenhouse gases would be broken into separate areas of emissions: electric utilities, transport and industry. They hope the alternative will win cross-party support in the lead-up to mid-term congressional elections in November.

Under their proposal, electric power plants would have an overall cap that would become tougher over time, according to The Washington Post. Fuel for vehicles would be subject to a carbon tax that would be used to help finance electrification of transport, while industries would be exempted from the tax under a phase-in period of many years.

Senator Graham said a cap-and-trade scheme to regulate carbon was not going to work, but he agreed some form of carbon regulation was needed in return for expanded use of nuclear power and backing for limited offshore drilling to find new gas.

US climate change legislation with a cap-and-trade scheme was passed in the house last June, under a bill sponsored by two Democrats, Henry Waxman and Edward Markey.

The legislation imposed a cap-and-trade scheme that would be fully phased in by 2016 with a 17 per cent emissions reduction target on 2005 levels by 2020.

Mr Obama used this scheme as the basis of the position he advocated in Copenhagen that failed to reach agreement on firm targets. A separate bill, which has been stalled in the Senate since last year, includes a 20 per cent target.

Mr Obama had been promoting the Environmental Protection Agency's ability to impose limits on greenhouse gases, but some senators want to block the EPA.