– John Kemp is a Reuters columnist. The views expressed are his own –

Prominent U.S. senators are set to substantially re-write climate legislation in a bid to secure the 60 votes needed for passage before Congress is engulfed by the mid-term election campaign.

According to well-sourced media reports that emerged at the weekend from conversations with aides engaged in the process:

(1) The single economy-wide cap-and-trade programme proposed by the American Clean Energy and Security Act (HR 2454) could be ditched in favour of sector-specific programmes for utilities, transportation and manufacturing. Utilities would be covered by an allowance trading system. Motor fuels would be subject to something like a tax. Energy-intensive manufacturers would eventually be covered by a trading programme but with a delayed start date.

(2) Free allocations of allowances to power and gas utilities to cushion the impact on household bills could be abandoned in favour of full auctioning, with revenues rebated directly to households. Proposals could resemble the cap and refund system advocated by Senators Maria Cantwell (D, Washington) and Susan Collins (R, Maine) (S 2877). They would also be consistent with the rebate approach recommended by California’s Economic and Allocation Advisory Committee (EAAC) for the state’s own cap and trade scheme.