Democrats in Congress worked on Thursday to win over U.S. lawmakers skeptical of climate change legislation, while climate leader California took another major step with low-carbon rules on fuels that could be copied nationwide.

The two moves signaled growing political momentum behind efforts to curb greenhouse gases, which President Barack Obama, a Democrat, has made a policy priority after years of slow going by his Republican predecessor, George W. Bush.

U.S. Special Envoy for Climate Change Todd Stern told Reuters in an interview Thursday that what happens in our own legislative process will determine the country's commitment to cutting emissions in a global climate deal.

In California, where climate change legislation was passed in 2006, regulators on Thursday adopted a landmark rule to slash carbon emissions in motor fuels and spur the market for cleaner gasoline alternatives.

It marks the first attempt by a government anywhere in the world to subject transportation fuels -- as opposed to the cars and trucks they power -- to limits on their potential for releasing greenhouse gases blamed for global warming.

California's first-in-the-world Low Carbon Fuel Standard will not only reduce global warming pollution -- it will reward innovation, expand consumer choice and encourage the private investment we need to transform our energy infrastructure, Gov. Arnold Schwarzenegger said after the landmark decision.

Schwarzenegger said 16 states, Obama and members of Congress support a national standard modeled on California's. Environmental groups say the state may also influence European Union policy.


In Washington, the House Energy and Commerce Committee held its third consecutive day of hearings on Thursday on a proposal to drastically limit emissions of carbon dioxide and other greenhouse gases spewed from factories and utilities.

In the face of staunch opposition from most Republicans and the concerns of several moderate Democrats, Representative Edward Markey announced on Thursday that industries would be allowed some free pollution permits under the legislation, to be written in coming weeks.

There has been a spirited debate on Capitol Hill and within the environmental movement over whether firms should have to pay for all their emission permits, which could affect the price of permits auctioned by the government.

There are going to be some free allocations of allowances, Markey told reporters, without specifying what entities would receive the allowances or what percentage might be free.

In acknowledging some permits would be free under the bill, Markey may have taken a major step toward enticing some wavering Democrats to support the measure.

House Energy and Commerce Committee Chairman Henry Waxman, who wrote draft climate control legislation with Markey, wants his panel to complete work on the bill by the end of May, teeing up a vote by the full House later in the year.


The measure faces its toughest hurdle in the 100-member Senate, where 60 votes are needed for passage. But climate envoy Stern said he thought it would be possible to get enough support to pass the bill.

I don't think the problem's too insurmountable, he said.

The crux of the bill is a cap-and-trade system, favored by Obama, to cut U.S. emissions by roughly 15 percent by 2020 -- back to 1990 levels. That commitment would be welcome by many nations frustrated by U.S. stonewalling on carbon cuts for a decade.

The message of a new climate strategy at the White House echoed abroad in Italy on Thursday, where the top U.S. environment official said her government would work tirelessly toward a deal on global warming. [nLN259261]

I bring from President Obama his message of hope, his message of change, his message of common purpose for the environment, Lisa Jackson, head of the U.S. Environmental Protection Agency (EPA), told environment ministers from rich and poor nations on her first overseas visit.

(Reporting by Deborah Zabarenko, Jeff Mason and Ayesha Rascoe in Washington, Suzanne Hunt in Sacramento and Steve Gorman in Los Angeles; editing by Todd Eastham)