Lewis Hay, chief executive and chairman of FPL Group Inc. (FPL), joked Wednesday that he couldn't believe he was on the same side of major energy legislation as James Rogers, the chief executive of Duke Energy Corp. (DUK).

The two men joined a handful of other senior executives from energy firms to endorse a wide-ranging climate-change bill introduced Wednesday by Sens. John Kerry (D., Mass.) and Joe Lieberman (I., Conn.)

FPL Group owns Florida Power & Light as well as NextEra Energy Resources, and is one of the largest U.S. operators of wind and solar energy. Duke Energy is one of the nation's largest coal electricity companies.

Kerry said that, in addition to those present at the bill's introduction, the measure had the backing of such major oil companies BP PLC (BP), ConocoPhilips (COP) and Royal Dutch Shell PLC (RDSA, RDSB). It is the first time, he added, these companies had signed off on a bill aimed at tackling climate change.

The legislation would target a 17% reduction in U.S. carbon pollution by 2020 and over 80% by 2050. It would focus on addressing the largest carbon-emitting sectors of the economy: heavy industry, power plants and transportation infrastructure.

Just 7,500 of the largest U.S. companies would be caught by the cap-and-trade system the legislation proposes, Kerry said, noting those companies are responsible for 75% of U.S. pollution.

The cap-and-trade system would levy a tax against those largest emitters, but not until 2016. Initially, the cost of the right to emit a ton of carbon would be $12 a ton, increasing at three percentage points above inflation annually.

In a bid to address industry concerns about the cost of the plan, the cap-and-trade program wouldn't kick in until 2016. After that point, there would be funds made available to help cover compliance costs.

One of the criticisms levied against the introduction of a cap-and-trade system is that utility companies would simply pass on the cost to consumers. Kerry said two-thirds of revenue raised through the measure would be passed back to consumers in the form of rebates on home electricity bills

The legislation would allow offshore oil exploratory drilling to continue. However, because of concerns about its safety spurred by the ongoing spill at a well in the Gulf of Mexico, it would let coastal state governments opt out of allowing drilling up to 75 miles from their shores.

The bill would piece together incentives for the construction of new nuclear energy power plants, as well as for the development of clean-coal technology and cleaner vehicles. Large truck and heavy vehicle fleets would be encouraged to make the switch to natural gas.

Hefty subsidies would be included for alternative energy sources.

Even as the legislation is introduced, it faces significant political head winds in an election year. The bill will need the support of at least one Republican.

The two lawmakers had been working with Sen. Lindsey Graham (R., S.C.) but he left the negotiating table, frustrated that it appeared Senate Democrats planned to move forward with an overhaul of the country's immigration laws first.

Wednesday, Graham said the repercussions of the oil spill combined with "the uncertainty of immigration politics, have made it extremely difficult for transformational legislation in the area of energy and climate to garner bipartisan support at this time."

Senate Minority Leader Mitch McConnell (R., Ky.) was even more blunt in his reaction to the bill's introduction.

"This bill is little more than a job-killing national energy tax," he said in a statement.

Kerry said that he had spoken to Republicans who said they would review the bill.

"We would not be here today if we didn't feel that we can and will adopt the America Power Act in this session of Congress," Lieberman said.

Senate Majority Leader Harry Reid (D., Nev.) said he would work with the White House and Democrats in the Senate, but said they would need "significant bipartisan cooperation" to pass the legislation.

President Barack Obama said he would engage senators in order to complete the bill this year.

-By Corey Boles, Dow Jones Newswires; 202-862-6601; corey.boles@dowjones.com
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