Allowances are permission slips to release emissions, and they function as a currency in the market the cap-and-trade legislation would create. For Boxer (D-Calif.) and Kerry (D-Mass.), they are chits to use to negotiate support for their bill as they attempt to form a winning coalition.

{mosads}The Boxer-Kerry strategy repeats the one that Reps. Henry Waxman (D-Calif.) and Edward Markey (D-Mass.) used to build a coalition that passed the cap-and-trade bill in the House.

The two senators are expected to release their bill on Wednesday, but some details emerged on Monday.

The Senate bill is expected to call for slightly more aggressive reductions than the House bill — a 20 percent cut by 2020 instead of the 17 percent Waxman and Markey eventually settled on.

The Senate version will also include a price collar that is designed to constrain the price of carbon between a floor and a ceiling. Where exactly the parameters are set will be the subject of a vigorous lobbying campaign among an industry that wants greater cost-control assurance and environmental groups that worry a strict collar will undermine the “environmental integrity” of the bill.

The draft is also expected to have “placeholders” for some additional subsidies for coal and nuclear power.

The bill’s release on Wednesday will be followed by a series of hearings and a markup by the Environmental and Public Works Committee that is now expected in late October. Boxer is the chairwoman of that committee.

Most energy lobbyists expect the bill to pass Boxer’s committee but not get much further this year.

That would give President Barack Obama some progress on climate to show off in Copenhagen, Denmark, where world leaders will discuss what to do about global warming, but leave a final push in the Senate for early 2010.

Several Democratic senators are already on record as being uneasy about the climate bill. The distribution of the allowances is one way to ease those concerns.

Some sectors, namely the oil and gas industry, feel like they weren’t treated fairly under the allowance system Waxman and Markey eventually settled on. Jack Gerard, the president and CEO of the American Petroleum Institute, said the sector was seeking more “equitable” treatment.

Refiners got 2 percent of the allowances to cover emissions at their own facilities. But the sector is also responsible for the emissions that come from the use of their products — in total, around 44 percent emitted by human activity in the United States.

The Institute is flying in Hispanic workers this week as part of its grassroots push to change its image from that of the corporate fat cat. The group was preceded by a group of women and African-Americans who work in the industry, and will lobby on taxes and access issues beyond climate.

“We want to show the human face of the oil and gas industry in the United States,” Gerard said.

Another utility exits Chamber

Meanwhile, the climate bill continued on Monday to cause difficulty for the U.S. Chamber of Commerce. Exelon, a large, Chicago-based utility, said it was leaving the business trade group over its opposition to climate legislation, becoming the third power provider in a week to exit the Chamber.

John Rowe, the chairman and CEO of Exelon, made the announcement in Chicago during the American Council for an Energy Efficient Economy’s national conference.

“Inaction on climate is not an option,” Rowe said.

Previously, Pacific Gas & Electric and PNM Resources left the Chamber over the trade group’s opposition to the climate bill.

Big week for defense

It isn’t all climate legislation this week. Congress will tackle a defense-heavy agenda with debates on Pentagon spending and policy, missile defense strategy and the missions in Iraq and Afghanistan.

The leaders of the House and Senate Armed Services Committees were scheduled to meet on Tuesday to iron out some big differences, like whether to pay for a second engine for the F-35 Joint Strike Fighter. The House authorized funding the second engine built by General Electric and Rolls-Royce, but the Senate did not.

Another funding issue is whether the Pentagon should buy 10 more Boeing-built C-17 cargo aircraft.

The administration says no.

Also, Gen. Ray Odierno, the top U.S. commander in Iraq, is set to testify before the House Armed Services Committee on the status of U.S. efforts in that country.

Roxana Tiron contributed to this article.