Audio Transcript:

MARCO WERMAN: Now, the second big piece in the developing U.S. environmental policy. Congressional hearings have begun on a bill to drastically cut greenhouse gasses produced by American industry. Here's our environment editor, Peter Thomson.

PETER THOMSON: It's called the American Clean Energy and Security Act of 2009. That title is all about the bill's domestic audience, the broad and fragile coalition that will have to be strung together if there's a hope that its 932 pages will ever make it to President Obama's desk. The bill is still a committee draft released late last week, but just getting to this point has taken enormous political wrangling. Starting with the election of Barack Obama last fall who promised strong action on climate change followed by the wresting of a key house committee chairmanship away from a long-standing opponent of strong climate legislation. Then months of horse trading among committee members, even among Democrats who represent sharp regional differences on climate and energy policy. To get agreement among Democrats on the energy and commerce committee, new chair Henry Waxman had to back away from some of the toughest short-term targets. And that's left a number of green groups saying that the bill has lost its teeth and is insufficient to meet the growing urgency of climate change. But the bill does include most of what President Obama asked for, a hard cap on emissions that would tighten over time leading to an 80% reduction in carbon emissions by 2050. A market based mechanism for trading the right to emit those greenhouse pollutants, and an auction for at least some of those pollution credits, which would provide revenue to subsidize clean energy and offset some of the costs of cutting pollution. And many say it's a compromise they and the rest of the world can live with.

TREVOR HOUSER: The Waxman Bill probably comes about as close as to what the current politics in the U.S. will allow.

THOMSON: That's Trevor Houser, a visiting fellow at the Peterson Institute for International Economics in Washington. The U.S. is the world's largest historic greenhouse polluter, but the country has been notoriously unwilling to sign the Kyoto Climate Treaty or otherwise limit emissions, and that's caused a log jam in international movement on the issue. Obama's election and the Congressional sweep by Democrats last fall raised hopes that would finally change and Trevor Houser says that quibbling over details aside a new bill would give much of the rest of the world what it's looking for from the U.S. Houser says that the Europeans, for instance, are eager for the U.S. to adopt a cap-and-trade system for pollution credits.

HOUSER: Because with the cap-and-trade system, which Europe has already adopted, the cost of that cap-and-trade system is in part affected by how big the system is. So the bigger the market you get, the lower your costs are. And so for the Europeans, they're very interested in seeing the U.S. adopt a cap-and-trade system in the hopes that they'll be able to integrate with our market.

THOMSON: Houser says that the developing world, meanwhile, is most concerned about guarantees of assistance from the U.S. and U.S.-based companies.

HOUSER: So there's quite a bit in the bill for a significant amount of international offsets and so those offsets are the mechanism by which financing of emission reductions in developing countries would occur.

THOMSON: And for William Chandler, the Director of the Energy and Climate Program at the Carnegie Endowment for International Peace, the biggest impact of the bill may be less in the details than in the fact that it's being brought up in Congress at all. He says that it's going to turn the tables on countries like China.

WILLIAM CHANDLER: The U.S. is no longer saying to China, "You have to tell us what you're going to do first before we're willing to make a commitment. We're gonna make a commitment because that's what a leader does and then we're gonna work with you to pull you into a global agreement because that's what's necessary to protect us all.

THOMSON: And Chandler says the U.S.'s willingness to move on its own gives it tremendous leverage heading into the new global climate negotiations in Copenhagen next winter. The fate of the Waxman-Markey Bill is very uncertain. It faces hostility on both sides of the aisle. But the Obama Administration holds a crucial card that could affect the outcome, the ability to unilaterally regulate greenhouse gases under the Clean Air Act. Even congress people who oppose Waxman-Markey may prefer its compromises to the potentially uncompromising fiat of the EPA. For The World, I'm Peter Thomson.