The proposed legislation would establish what has become known as a cap-and-trade system for reducing carbon pollution by electric utilities and factories.

Oil hurdle

The bill, which would also expand US nuclear power generation and offshore oil drilling, is expected to be a tough sell because of the oil spill crisis in the Gulf of Mexico that is threatening to unleash an environmental disaster along the US coast.

"The Gulf of Mexico spill has turned offshore drilling – an issue that once greased the wheels of the grand bargain – into a political toxin"

Kevin Book, ClearView Energy Partners analyst

Kevin Book, an analyst at ClearView Energy Partners, told Reuters that "the Gulf of Mexico spill has turned offshore drilling – an issue that once greased the wheels of the grand bargain – into a political toxin".
Lindsey Graham, a Republican senator who worked with Kerry and Lieberman on the bill, was absent from the unveiling event.

He reiterated in a statement that it was not the time to press a climate bill because of the oil spill and differences between Republicans and Democrats over unrelated immigration reform legislation.

But Lieberman said he believed Graham would "vote for this bill".

"If we get to 59 [votes], he'll be 60 without hesitation, that's my view," he added, referring to the 60 votes needed in the senate to overcome procedural hurdles.

The bill still has provisions to encourage offshore drilling but would allow US states to prohibit offshore oil activity within 121km of their coasts. It also allows coastal states to reap some revenues from drilling.

If the bill does advance, a fight over offshore drilling is expected to spill on to the floor of the full senate.

"This part of the bill would be written on the floor," Lieberman said. "We're making a proposal here, but there would be extensive floor debate."

Kerry and Lieberman are banking that a strong lobbying effort by the business community will propel undecided senators to back the effort.

"Many of them are Republicans and many of them represent a significant component of the Republican base," said Kerry.

He said legislators most concerned about offshore drilling "came away assured".

"There are protections they don't have now," he added.

Wednesday's unveiling comes as legislators face two important deadlines.

For the Democrats faced with a possible loss in congressional elections less than six months away, this could be their last chance to push the bill through.

And in the event congress fails to act, the US Environmental Protection Agency is prepared to implement regulations in January to reduce carbon dioxide pollution from power plants and factories.

Earlier versions of the climate bill had relied more on boosting alternative energy.