Today, each energy subsector, fearing any legislation that might give it a disadvantage, is battling for favor. The gas producers, for example, have formed the American Natural Gas Alliance, which is spending heavily on advertising and lobbying to point out that gas emits roughly half the carbon dioxide of coal. The group has also helped organize its allies in Congress into a new natural gas caucus, with two dozen members.
“These fissures are happening because a policy is increasingly seen as inevitable,” said David G. Victor, an energy expert at the University of California, San Diego. “Old coalitions are splintering and fascinating new alliances are being formed.”
The most important fight is over whether companies have to buy pollution permits, called allowances, or whether the government hands them out free in the early years to help ease the cost of the transition.
President Obama has said the permits should be auctioned, an approach that would cost companies tens of billions of dollars. But after fierce lobbying from electrical utilities, the House made the permits free in the first decade of the program, to help finance the transition to cleaner fuels and to shield electrical consumers from higher prices.
Industry analysts say the utilities’ willingness to negotiate with Democratic lawmakers gained them a huge advantage when the House passed its climate bill in June. The oil and natural gas industries, by contrast, felt shunned in the House debate because they would not negotiate, these analysts say.
For example, oil companies complained that their mandated purchase of emissions permits would amount to a tax to be used to clean up dirty coal plants.
“There was an inherent flaw when Congress set off down the road of favoring one fuel source over another,” said J. Larry Nichols, chairman of Devon Energy, an independent oil and gas company, and also chairman of the American Petroleum Institute. “You knew there had to be a feeding frenzy among various competing fuels trying to protect themselves.”
Half of the nation’s electrical power is generated by burning coal, and emission limits are a long-term threat to the business. The coal industry, through a group it finances called the American Coalition for Clean Coal Electricity, is running a campaign to persuade the public that coal is affordable, abundant and can be cleaned up thanks to still-distant technology that would capture carbon emissions and store them underground.
Some coal executives aim to scuttle legislation in the Senate by continuing to cast doubts on the science of climate change.
“A lot of coal-using utilities seem to be on the wrong side of this issue,” said Don L. Blankenship, the chief executive of Massey Energy, the largest producer of Appalachian coal, who has called climate legislation a hoax and a Ponzi scheme. “How can they be so confident that man is changing the world climate?”
John Broder reported from Washington, and Jad Mouawad from New York. Clifford Krauss contributed reporting from Houston.