Senate Environment and Public Works committee Chairwoman Barbara Boxer (D-California) said last week that the Senate climate change bill is written and ready to be debated before the committee, and that it will mirror cap and trade legislation passed by the House in late June with, she noted, “a few tweaks.”

Senate Finance Committee Chairman Max Baucus (D-Montana) also plans to draft legislation dealing with the pollution allowances.

Last week, the Environmental Protection Agency released a “long-suppressed report by the George W. Bush administration officials who had concluded – based on science – that the government should begin regulating greenhouse gas emissions because global warming posed serious risks to the country.” The White House refused to make public the report, known as an “endangerment finding,” because “it opposed new government efforts to regulate the gases most scientists see as the major cause of global warming.”

Saudi Arabia is trying to enlist other oil-producing countries to support a provocative idea: if wealthy countries reduce their oil consumption to combat global warming, they should pay compensation to oil producers. The kingdom has pushed this position for years in earlier climate-treaty negotiations, with no success thus far, its efforts have sometimes delayed or disrupted discussions. The kingdom is once again gearing up to take a hard line on the issue at international negotiations scheduled for Copenhagen in December.

Senate opposition to a cap-and-trade climate change bill primarily comes from Republicans who don’t want to restrict carbon emissions; however, there is growing criticism by a faction of Democrats who like the cap – but not the trade.

Democratic Senator Maria Cantwell of Washington is drafting her own climate change bill that she will offer as an alternative to the cap-and-trade model. Cantwell’s proposal would restrict emissions and require polluters to buy government permits, but it would not allow the permits to be traded as commodities.

Cantwell’s bill would create what has been called a “cap and dividend” structure. The government would still cap emissions and sell carbon permits, but the polluters – such as coal producers and oil companies – could trade the credits only among themselves.  No outside market could trade in the credits.

Under Cantwell’s plan, 25 percent of the revenue from selling allowances would be spent on projects such as clean energy technology research and development. The remaining 75 percent would go straight back to U.S. taxpayers in the form of monthly electronic payments made directly to their bank accounts.

Senator Cantwell would vote against legislation that would create a new financial market in carbon pollution credits – even though she is committed to addressing global warming and boosting renewable energy.

If a version of the House or Senate climate bills were enacted, it would create a financial market in carbon credits that would likely become the largest commodities market in the world – worth as much as $2 trillion, according to some estimates.

Carbon trading is at the core of the House and Senate climate bills (HR 2454, S 1733). Both the House-passed bill and the Kerry-Boxer legislation would establish a cap-and-trade system. Overall emissions of carbon dioxide would be limited and polluters would have to hold government-issued emissions allowances, which could then be traded in the market.

The allowances could be given or sold to polluters, with most versions of the model calling for the bulk of revenue to be rebated to taxpayers to offset higher energy costs.

Congressional Budget Office Director Douglas W. Elmendorf told the Senate Energy and Natural Resources Committee that the House version of the climate bill, which includes a cap-and-trade provision, “would slow the nation’s economic growth slightly over the next few decades and would create ‘significant’ job losses from fossil fuel industries as the country shifts to renewable energy.” According to the CBO head, cap-and-trade “would cut the nation’s gross domestic product by 0.25 percent to 0.75 percent in 2020 compared with ‘what it would otherwise have been,’ and by 1 to 3.5 percent in 2050.” His message contrasted sharply with those of President Obama and congressional Democratic leaders, who have suggested that a cap on carbon emissions would help revive the US economy.”