While international attention is focused on Bali, where the successor agreement to the Kyoto Protocol is being discussed, action in the Senate could be more important in determining the United States’ course in addressing climate change. The Senate Environment and Public Works Committee is finalizing a bill, co-sponsored by Sen. Susan Collins, that would, for the first time, cap greenhouse gas emissions in the U.S.

The bill, the American Climate Security Act, faces many hurdles. Republicans on the committee, notably Ohio’s Sen. George Voinovich, say they will oppose the legislation because it may harm business. Environmental groups warn that the measure allows power companies to avoid emissions cuts, while reaping huge profits, by giving away too many emissions allowances.

Still, the bill remains an important vehicle for a critical debate about what steps the U.S. is willing to take to address climate change and, further, what the country’s role will be in any international agreement.

Now that the U. S. is the only industrialized country to not sign onto the Kyoto Protocol – Australia did so just days after Prime Minister Kevin Rudd took over from Conservative John Howard – much of the talk in Bali will focus on the U.S. role. The U.S., in turn, will point to quickly developing countries, such as China and India, for not doing enough to limit their own emissions.

Just as the U.S. is right to suggest India and China need to rein in their emissions, these countries are right to expect leadership from the U.S. The Climate Security Act gives the U.S. a chance to show that leadership.

The bill calls for a 15 percent reduction in greenhouse gas emissions by 2020 and a 70 percent reduction by 2050. Companies would trade emissions allowances, which would enable efficient companies to sell their allowances to those that couldn’t meet the targets. Such cap and trade systems have worked for other pollutants.

As with the debate over emissions allowances under the Northeast’s greenhouse gas reduction program, known as the Regional Greenhouse Gas Initiative or RGGI, much of the discussion will focus on whether allowances are given away or sold. Giving away too many allowances to utility companies could allow them to continue to operate highly-polluting units while charging for all the allowances would not take into account recent upgrades.

The bill is not perfect, but it represents a huge step forward in the climate debate.