Businesses would be able to buy and sell these permits, called allowances. To ease the transition to the new system, some of the allowances would be given to big polluters for free, at least in the early years, although the Senate bill leaves for later how the permits would be allocated.
Developing countries, including China and India, are unwilling to sign up to a new global climate change pact to replace the Kyoto protocol in 2012 because the rich world has failed to set a clear example on cutting carbon emissions, according to the UN's top climate official.
Ending some nine months of closed-door deliberations, Sens. Barbara Boxer (D-Calif.) and John Kerry (D-Mass.) will release global warming legislation Wednesday that they hope will be the vehicle for broader Senate negotiations and an eventual conference with the House.
The Obama administration has privately concluded that a cap and trade law would cost American taxpayers up to $200 billion a year, the equivalent of hiking personal income taxes by about 15 percent.
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