The head of one of the energy industry's most powerful trade associations criticized several alternatives for stalled climate legislation yesterday.

Edison Electric Institute President Thomas Kuhn expressed concern about the idea of capping emissions and returning the resulting revenue to consumers via a dividend or rebate, one of many so-called "Plan B" alternatives to the cap-and-trade approach to greenhouse gas emissions reduction. He also criticized a sector-only approach that would only cap the emissions of utilities.

"I think it has major downsides," Kuhn said to reporters about the utility-only idea. "How much would be expected from utilities if we had a sector-only approach? "

In order for the institute to get behind such an idea, it would have to be clear that utilities would not pay more in costs than their actual emissions, he said. He also questioned "when the rest of the economy" would be required to participate in such a program.

A climate bill that passed the House last June offers financial breaks to utilities based partially on their historic emission levels and partially on their retail sales. A sector-only approach could upset that formula, which EEI helped devise.

Kuhn's comments highlight the challenges facing lawmakers trying to deal with influential business lobbies wanting different outcomes when it comes to a global warming law. At the same energy conference in Washington, D.C., where Kuhn spoke yesterday, Joe Nipper of the American Public Power Association said he backed movement of an energy-only bill that doesn't include a mandatory cap on greenhouse gases.

Throw out existing bills

Jack Gerard, the head of the American Petroleum Institute, said he would like to see Congress throw out all existing bills and "restart" the process. The president and CEO of the Natural Gas Supply Association, Skip Horvath, said that an energy-only bill was "playing around with the fringes."

Horvath said he was worried about natural gas getting squeezed out of the fuel mix altogether if coal subsidies stay as they are and Congress passes a renewable mandate that is "too high."

"There is this misperception out there" that natural gas will automatically win out with climate legislation, he added.

Many environmentalists, meanwhile, are pressing hard for a mandatory cap-and-trade program like the House bill as the only option to prevent environmental catastrophe. They say that a tough cap-and-trade regime is the only way to ensure that emitters actually stop spewing heat-trapping gases into the atmosphere.

Multiple alternatives to cap and trade are getting attention, though, as the House bill lingers in political purgatory while Senate lawmakers grapple with health care.

Legislation introduced last month by Sens. Maria Cantwell (D-Wash.) and Susan Collins (R-Maine) incorporates the cap and dividend model. Sen. Richard Lugar (R-Ind.) is examining the sector-only idea, although his office has not released legislative language.

"There's a lot of discussion about a more incremental approach," said Mark Helmke, an aide to Lugar.

He suggested that the president speak more clearly about climate benefits of policies when announcing things such as clean-energy grants to clarify things for the public. He also said that any proposal with the word "cap" in it would have a hard time gaining traction in Congress.

For Kuhn, a big problem with both cap and dividend and the sector-only plan is their current level of political support.

"Environmentalists are not interested in it, and the administration's not interested in it," he said.

Reporter Peter Behr contributed.