April 22 (Bloomberg) -- Legislation to put the first U.S. limits on carbon-dioxide emissions will jump-start the economy and reduce the nation’s dependence on overseas oil, Obama administration officials told Congress.

“The development of clean, renewable sources of energy will be the growth industry of the 21st century,” Energy Secretary Steven Chu told the House Energy and Commerce Committee on the second day of hearings on a so-called cap-and- trade plan.

Environmental Protection Agency Administrator Lisa Jackson said clean-energy legislation would create “millions” of jobs and help “catapult American innovators past the foreign competitors” who have a head start in advanced energy technology.

The Democratic draft legislation would set up a system similar to one in Europe in which factories and power plants must get emission credits that they can sell on a market if they reduce their pollution. Republican Representative Joe Barton said the Democrats don’t have the votes to pass their proposal and he plans to offer an alternative.

The plan, sponsored by energy panel Chairman Henry Waxman of California and Edward Markey of Massachusetts, is designed to reduce greenhouse gas emissions 20 percent by 2020 and 83 percent by 2050. The cuts are from 2005 levels. Scientists say the discharges contribute to global warming.

“This bill includes strong targets and moves us toward addressing global warming,” Jackson said.

Create Jobs

Democrats on the panel also said the measure and other clean-energy proposals in the draft will create jobs, lessen U.S. dependence on foreign oil and curb global warming. Republicans said the draft was short on detail, would raise energy costs for businesses and consumers and may cripple the economy.

“I don’t believe that mankind is the primary cause of climate change,” said Barton of Texas, the top-ranked Republican on the committee. A cap-and-trade system “will de- industrialize the United States of America,” he said.

Barton said all estimates he’s seen show “energy costs are going to go up across the board” under a cap-and-trade proposal. His alternative measure would set standards requiring a certain level of environmental performance solely for power plants while rewarding companies that exceed the standard.

Speaker Nancy Pelosi, a California Democrat, said yesterday the House would pass a climate-change measure this year.

President Barack Obama, who backs limits on carbon emissions, marked Earth Day today by promoting clean energy and jobs at a factory in Newton, Iowa, that makes towers for wind- power generation.

Government Sales

The EPA said in a report yesterday that a preliminary assessment of Waxman’s proposal found it would have a “modest” effect on consumers if the revenue from government sales of pollution credits are returned to U.S. households.

At the same time, the measure would “drive the energy transformation of the U.S. economy by making it more economically attractive to invest in renewable energy, energy efficiencies and climate friendly technologies,” the report said.

Markey said today that failure to pass legislation would leave the U.S. behind other nations in developing clean-energy technology.

Chu said he is “very concerned” that the U.S. is losing the battle against other countries in developing clean-energy technologies.

“We need to bring those manufacturing jobs back to the United States,” Chu said.

Renewable Sources

Several Democrats, including John Dingell of Michigan, raised concern yesterday that provisions in the draft would require the U.S. to generate 25 percent of electricity from renewable sources by 2025. He called that target “aggressive,” and said it “might be more than states can handle.”

Representative Ralph Hall, a Texas Republican, said the draft legislation lacks detail and “leaves American businesses and consumers in the dark as to just how much this bill is going to cost.”

He and other Republicans said it was impossible to estimate the true cost of the legislation because it doesn’t spell out the percentages of pollution credits that would be given away free or sold.

John Shimkus, an Illinois Republican, said the panel should hold a separate hearing on how the credits should be distributed.

“It’s critical you get this part right,” Charles O. Holliday Jr., chairman of chemical-maker DuPont Co., told the panel.

Climate Partnership

Holliday testified on behalf of the U.S. Climate Action Partnership, a coalition of business and environmental groups that supports climate-change legislation.

“The reason we are concerned about an allowance allocation is the assumption that we can pass along 100 percent of our costs to the consumer, and we can’t,” said Red Cavaney, senior vice president of government affairs for oil company ConocoPhillips.

The House panel is scheduled to hear from more than 50 witnesses this week. Former Vice President Al Gore, who won the Nobel Peace Prize in 2007 for his efforts on global warming, is scheduled to testify April 24.

Give Away

In addition to debate on whether to auction or give away the proposed pollution credits, there will be discussion of what to do with any money raised from the permits, and how to keep U.S. companies competitive with rivals in countries that don’t have similar environmental restrictions.

The hearings follow the EPA’s finding last week that greenhouse gases pose a danger to the public. That conclusion opens the way for new U.S. regulation of cars, power plants and factories and prods Congress to craft its own rules.

The 648-page draft bill, released last month by Waxman and Markey, adds new energy efficiency requirements and promotes clean transportation fuels, while offering financial support to car companies to build electric vehicles.

It incorporates a proposal to fund projects that capture and store carbon dioxide emissions from power plants that burn fossil fuel, including coal.

To contact the reporters on this story: Catherine Dodge in Washington, at Cdodge1@bloomberg.net; To contact the reporter on this story: Daniel Whitten in Washington at dwhitten2@bloomberg.net

Last Updated: April 22, 2009 16:31 EDT