Aug. 18 (Bloomberg) -- Cap-and-trade legislation to limit U.S. carbon dioxide emissions has “gotten out of control” and needs to be scaled back in Congress, said former Democratic Senator Timothy Wirth.

“The Republicans are right -- it’s a cap-and-tax bill,” Wirth, a climate-change negotiator during President Bill Clinton’s administration, said in an Aug. 14 interview. “That’s what it is because they are raising revenue to do all sorts of things, especially to take care of the coal industry, and it makes no sense.”

A system to cap carbon emissions and then create a market for the trading of pollution allowances is the centerpiece of President Barack Obama’s proposal to fight global warming. Wirth, who helped craft a successful emissions-trading market two decades ago that cut sulfur-dioxide pollution causing acid rain, is among Democrats questioning House-passed legislation set to be taken up next month in the Senate.

“I’m not critical of cap-and-trade,” said Wirth, head of the UN Foundation, a philanthropy established in 1998 with $1 billion from medial mogul Ted Turner. “But it has to be used in a targeted and disciplined way, and what has happened is it’s gotten out of control.”

Wirth, who represented Colorado in the Senate, says the House-passed plan is “too broad across the economy.” Instead of capping carbon pollution generally, the measure should focus solely on coal-fired power plants, he said.

The proposal echoes a campaign pledge made in 2000 by then Republican presidential candidate George W. Bush, who vowed to control carbon emissions from utilities. As president, he changed his position, arguing that a mandatory cap on such heat- trapping pollution would cost jobs and harm the economy.

Since then, an increasing number of companies, such as Duke Energy Corp., the owner of utilities in the U.S. Southeast and Midwest, have called for federal rules on greenhouse-gas pollution so they know how to plan future business investments.

Duke, based in Charlotte, North Carolina, is part of the Climate Action Partnership, a coalition of companies including General Electric Co. and Ford Motor Co., calling for “swift legislative action” to reduce greenhouse-gas emissions from “major emitting sectors,” not only power plants.

“We have said for a long time that we believe that any climate bill should be economywide to be most effective and fair and not target a specific sector, such as electric utilities,” Duke spokesman Thomas Williams said today.

‘Focus on Utilities’

The House of Representatives passed its climate bill in June on a 219-212 vote. House Democrats won passage over the opposition of most Republicans by giving away 85 percent of the initial pollution allowances to energy producers and users.

Wirth also takes issue with auctioning permits as a way to generate federal revenue. Obama’s original plan called for auctioning all the permits to bring in about $650 billion by 2019, much of it for a middle-class tax cut.

“Just focus on the utilities and don’t use it as a revenue-raiser,” Wirth said. The trading permits will become “a narcotic for aging power plants.”

The measure faces more hurdles in the Senate, where regional and philosophical differences over its provisions divide Democrats.

The legislation would require 60 votes in the 100-member Senate. Most Republicans have said they oppose the cap-and-trade measure, and at least 15 of the Senate’s 60-member Democratic majority have said the House-passed version would hurt the economy and needs to be revamped to win their support.

Critics such as billionaire investor Warren Buffett say cap-and-trade would amount to a regressive tax and burden businesses and consumers.

Renewable Energy

Wirth says concentrating solely on a cap-and-trade system for power utilities, without an auction, would help resolve such concerns.

“The current cap-and-trade is just too much,” he said.

Four Democratic lawmakers have said the Senate should scrap attempts to pass the cap-and-trade provisions of the legislation this year, and focus instead on a narrower bill requiring the use of renewable energy. Senate Majority Leader Harry Reid, a Nevada Democrat, said he is confident an energy bill will be passed this year including climate provisions.

To win passage, the Senate legislation must include more agriculture-related provisions, a “better package” for nuclear power, a carbon-emissions standard for new power utilities, and a strong “natural gas piece,” Wirth said.

The former lawmaker says he and others are working “slowly but surely” to persuade lawmakers to alter the legislation, an effort that would fail “without the help of industry.”

EPA Awaits

The Senate remains under pressure to pass a cap-and-trade bill because failure to act would leave regulation of carbon emissions in the hands of the Environmental Protection Agency, according to Nikki Roy, who monitors Congress for the Pew Center on Global Climate Change in Arlington, Virginia.

The agency said in April that greenhouse gases such as carbon pose a danger to the public, opening the way for U.S. regulation of power plants, cars and factories. The proposed finding marked the first formal action by the federal government toward limiting carbon emissions that climate scientists say contribute to climate change.

The so-called endangerment finding, which is subject to public review, is based on an April 2007 Supreme Court ruling that said the government could restrict heat-trapping gases under the federal Clean Air Act if it found them a risk to public health and welfare. The court ordered the EPA to make a determination.

EPA rules are less desirable than legislation because they would trigger a raft of lawsuits, “delay regulatory certainty” for companies and postpone the unleashing of low-emissions energy technology needed for a new, carbon-constrained world, according to Roy.

“If you are a company and you want to build a plant, you are on thin ice until we get this law,” Roy said.

To contact the reporter on this story: Kim Chipman in Washington at KChipman@bloomberg.net.

Last Updated: August 18, 2009 17:20 EDT