US Senate set for energy, environmental bill debate

* Fate of carbon pollution controls still uncertain

* Oil spill response linked to alternative energy bill

By Richard Cowan

WASHINGTON, July 9 (BestGrowthStock) – Democrats in the U.S. Senate
aim to debate in late July a bill clamping down on offshore oil
drilling practices and fostering more alternative energy use,
but no decision has been made on whether to include
controversial climate change provisions, aides said on Friday.

As the Gulf of Mexico oil spill entered its 81st day with
BP (BP.L: ) (BP.N: ) still unable to plug its leaking undersea
well, the Senate was planning a two-week debate on an energy
and environmental bill that could start as early as July 19.

“Staff spent this week preparing different options,” said
Jim Manley, a spokesman for Senate Majority Leader Harry Reid.
He said Reid and other senior senators will review those
options when Congress returns from a 10-day break next week.

Manley added that steps to encourage the use of
cleaner-burning alternative energy sources will be a “core part
of the package” being crafted. Legislation responding to the BP
oil spill also will be included, he said.

Climate change legislation is a key part of President
Barack Obama’s domestic agenda, but it has been opposed by
Republicans and some moderate Democrats. Republican leaders
have branded the effort a “national energy tax.”

Manley would not comment on whether the bill will include
steps to put a price on carbon dioxide pollution as a way of
tackling global warming.

Other Senate aides and environmentalists said Democrats had
not decided whether to include climate control provisions —
even if they apply only to the heavy-polluting electric utility
sector — because of the difficulty getting enough support.

But a number of moderate Democrats, especially from
Midwestern states that would be hit hardest by new controls on
coal-burning electric power plants, have withheld their
support.

A climate change and alternative energy bill passed the
U.S. House of Representatives last year, with minimal
Republican support. It mandated a 17 percent reduction in
greenhouse gas emissions by 2020, from 2005 levels.

The legislation, however, has stalled in the Senate.

Only a few Republicans in the Senate have indicated they
might support such a bill this year and party leaders have
branded the effort a “national energy tax.”

Leaving a climate change component out of the massive bill
would be a major blow for environmentalists, while the failure
to pass a climate bill in Congress this year would deal a
further setback to international negotiations for tougher
carbon pollution controls.

Without legislation, Obama’s Environmental Protection
Agency early next year could go ahead with new regulations on
carbon pollution that are already facing legal challenges.

Key elements of the bill the Senate plans to debate
include:

* Lifting the cap on oil industry liability in offshore oil
spills. Companies involved in disasters like the one in the
Gulf of Mexico now have a $75 million cap on payments for
economic losses suffered by local businesses and environmental
damages. Some senators might seek a $10 billion cap instead of
no cap.

* Increasing civil and criminal penalties on industry for
illegal practices. Leases for offshore drilling would be
limited to companies with good track records.

* Imposing tougher safety controls on offshore drilling. An
initiative to encourage oil drilling off the coast of Florida
could be dropped.

* Setting a standard that would require utilities to meet
15 percent of their electricity sales through renewable energy
sources. Some senators might push for a 20-percent standard.

* Cutting domestic oil consumption by requiring more
energy-efficient, less polluting vehicles and eliminating some
oil industry subsidies.

(Editing by Paul Simao)

US Senate set for energy, environmental bill debate