U.S. House lawmakers are targeting a 20% reduction in greenhouse gases by 2020 in a draft climate bill unveiled Tuesday that promises to raise energy costs for the country, but leaves many of the most important details for later negotiations.

The draft document, published by the Energy and Commerce Committee, omitted specifics on a key determinant of how much such a program will cost: the percentage of carbon dioxide credits to be auctioned off versus given freely to industry.

Facing a fierce political fight over a measure that will have a wide-reaching impact across the economy, the decision by House Energy and Commerce Committee Chairman Henry Waxman, D-Calif., and Ed Markey, D-Mass., will buy time for further negotiations on the issue.

"What we're trying to do is achieve a broad consensus of support behind legislation on energy independence and global warming," Waxman said in a telephone interview. The allocation of credits "is an issue with so much member interest that I want to have further discussions," he said.

A measure of the type of consensus the bill could gather, it broadly follows suggestions by the U.S. Climate Action Partnership, a coalition of companies such as Alcoa Inc. (AA), Duke Energy Corp. (DUK), Royal Dutch Shell PLC (RDSA) and PG&E Corp. (PGE).

The draft bill - the American Clean Energy and Security Act - establishes a decreasing cap on greenhouse gases and creates a market where businesses could buy and sell the right to emit those gases. Calling for a cut of 20% from 2005 levels by 2020, the bill is more aggressive in the near term than President Obama's call for a 14% cut by 2020, but the proposal's long-term goals of 83% cuts by 2050 parallel the administration's target.

The 648-page draft legislation also includes measures written by energy subcommittee chairman Markey that set a federal mandate for an increasing percentage of electricity to come from renewable sources, an efficiency standard and new performance standards for coal-fired power plants.

Environmentalists applauded the draft, but said there was still much work ahead. "It's still a work in progress and we have a lot of challenges yet to go through," said Frank O'Donnell, head of the advocacy group, Clean Air Watch.

"It's the high-water mark, and may be the best hope we have for passage of climate change in Congress," O'Donnell said, acknowledging that the proposal is likely to be weakened in later iterations as it moves through the legislative process into the Senate.

Waxman said if he's able to achieve the consensus he's seeking in a bill that meets lawmaker concerns about competitiveness and cost, "it will give us a lot of momentum going into the Senate and will greatly enhance our chances" of passage in the chamber.

Industry groups such as the U.S. Chamber of Commerce believe that too aggressive emission cuts without safety valves that can alleviate price pressures could force businesses overseas and will raise energy prices to unsustainable levels.

"It's a good starting point, and there are some positives," said American Electric Power Co. (AEP) spokesman Pat Hemlepp. "But one of our concerns is that the timetable is very ambitious." The company helped draft provisions in the bill to help protect U.S. industry.

GOP lawmakers highlighted the cost burden. "The Democrats' plan ... would raise taxes on every American who drives a car, flips on a light switch, or buys a product manufactured in the U.S.," said House Minority Leader John Boehner, R-Ohio.

Energy and Commerce ranking member, Joe Barton, R-Texas, said the draft "marks a triumph of fear over good sense and science, and it couldn't come at a worse time because it proposes to save the planet by sacrificing the economy."

At the same time, many companies that could take advantage of a price on emitting greenhouse gases - such as wind-turbine manufacturers, nuclear power companies and investment banks that can capitalize on the creation of a multi-trillion dollar market - will likely be encouraged by the milestone of progress the proposal represents. Such companies desire the longer-term investment certainty a climate bill could create.

Waxman's omission of allocation details indicates that Obama's plan for an auction of 100% of the credits is unlikely, and a later version of the bill will most likely include allocation of credits to energy-intensive industries such as steel, aluminum, paper and chemicals. In the president's 2010 budget proposal, Obama estimated the auction could have raised nearly $650 billion in climate revenue over eight years, though Treasury officials estimated it would likely raise two to three times that amount.

So while the emission cut targets may be tougher than the President's, it could prove to be more lenient on some sectors.

Hounded by an army of lobbyists, lawmakers - particularly those from manufacturing and coal-powered states - will likely lock horns in the coming weeks over the percentage of allocations given to industry and the distribution of climate revenue.

Obama wants to give most of the revenue as tax credits to consumers to help ease the rising cost of energy, while many companies and lawmakers whose manufacturing constituencies are likely to be hardest hit want the money funneled to the utilities and their energy-intensive businesses.

Few believe that the Senate, where the biggest battle looms for a climate change bill, will pass legislation this year to cut greenhouse gases even if the House approves a version of Waxman's bill.

But House passage would give the president substantial leverage in international climate treaty talks to be conducted through the year. Waxman has said he wants to pass the bill out of his committee by the end of May, and the House could approve the bill before a meeting of major economies in July, leading up to the December United Nations negotiations in Copenhagen.

One of the key measures to mitigate costs will be the "offset" program, which allows companies to offset their emissions through other emission-reduction projects such as re-forestation or updating technology at foreign power plants. The offset program is designed to leverage greater emission reductions, however, and requires a certain amount of emission cuts to buy offset credits.

Emily Figdor, Environment America's Federal Global Warming Program director, said that while Waxman's bill helped to fuel momentum for climate law, "we're disappointed that the bill includes sky-high levels of carbon offsets."

The bill also tries to prevent the migration of energy-intensive industries to cheaper countries that don't have the same climate standards - a process called "carbon leakage" that wouldn't reduce the total world-wide emissions - by providing rebates to energy-intensive industries. If that didn't work, it could also require importers of energy-intensive goods from countries that don't have similar greenhouse gas reduction goals to purchase emission credits.

Waxman's draft includes:

- A new source performance standard for coal-fired power plants that cuts carbon dioxide emissions by 50% by 2015 and 65% by 2020

- Renewable electricity standard from 6% by 2012 up to 25% by 2025

- An energy efficiency standard, up to 15% in electricity savings and 20% in natural gas savings by 2020.

- A low-carbon fuel standard designed to drive development of electric vehicles and biofuels

- A required $10 billion utility charge to fund carbon dioxide sequestration projects

- A mandate for a 30% increase in building efficiency for new buildings by 2012 and a 50% increase by 2016

-By Ian Talley, Dow Jones Newswires, 202-862-9285; ian.talley@dowjones.com