Major oil company Royal Dutch Shell urged the U.S. Senate on Wednesday to give oil refiners a bigger share of free pollution permits under a cap-and-trade plan to fight global warming than the House of Representatives provided in its climate change legislation.

U.S. oil refineries received only 2 percent of the allowances, or pollution permits, in the House bill passed last month, even though they account for much more of the total carbon dioxide emissions produced by the United States.

The oil sector says it was short-changed compared to other big carbon dioxide emitters, like electric utilities, which were given 30 percent of the permits.

Shell is particularly concerned that the current allowance value allocated to the U.S. refining sector in the (House) bill does not cover direct emissions as fully as other sectors are covered, Steven Fries, the company's chief economist, said at a Senate Foreign Relations subcommittee hearing on climate change.

Under the House bill, companies would get pollution permits. Those companies that use cleaner energy and reduce their emissions could sell their permits to companies that pollute more.

The Senate is developing its climate change bill.

Fries said the House bill is a strong start toward an acceptable cap-and-trade program, but there is more work to be done to protect industries that would be affected the most by efforts to fight climate change.

The subcommittee's chairwoman, Sen. Jeanne Shaheen, expressed concern about the global competitiveness of U.S. industries that produce cement, steel and refined petroleum products if they are required to cut their emissions.

These industries will be affected under a climate change program because their ability to pass along costs will be limited, she said.

However, Shaheen said enacting policies to fight global warming and move the U.S. economy into a clean energy future will be a net benefit for our country.

The House bill would slash U.S. carbon dioxide and other greenhouse gas emissions by 17 percent by 2020 from 2005 levels.

The legislation sets further pollution reduction goals: 42 percent fewer emissions by 2030 and 83 percent less by 2050.

Under the House bill, about 85 percent of the pollution permits would be given out free to affected industries and about 15 percent would be sold.

(Reporting by Tom Doggett; editing by Jim Marshall)

Climate change