WASHINGTON (CNN) - President Obama's push for a new energy policy got a major boost Thursday when a key House panel approved a plan aimed at addressing climate change.
The House Energy and Commerce committee passed the bill largely along party lines, 33-25. One Republican, Rep Mary Bono Mack, of California, voted with the Democrats in favor of the bill.
The bill, drafted by Democrats, would create a so-called "cap and trade" system for U.S. businesses to sell credits for pollution.
It sets a target for cutting greenhouse gases by 17 percent from their 2005 levels by 2020. An auction for the credits, which effectively starts in 2014, allows businesses who meet the new energy standard to sell their credits to those who are still working to become more energy efficient.
"We are now one step closer to delivering on the promise of a new clean energy economy that will make America less dependent on foreign oil, crack down on polluters, and create millions of new jobs all across America," Obama said in a written statement.
Faced with opposition from fellow Democrats, committee Chairman Henry Waxman agreed to divide up free permits or "allowances" to various industries such as electric utilities, coal and natural gas companies.
The allowances give businesses more time to make the transition and protect consumers from sudden rate hikes in energy costs.
The bill also sets aside a portion of the auction proceeds to subsidize energy bills for low and moderate income families.
According to an analysis by the Congressional Budget Office, when the auction goes into full effect it could yield an average of about $100 billion a year. Democrats argue this will spur a new marketplace for clean energy technologies and generate new "green" jobs.
"Today we have chosen bold action to preserve good paying jobs here in America and preserve our planet," said Rep. Edward Markey, a Democrat from Massachusetts who cosponsored the bill with Waxman.
The legislation also includes a new requirement that energy suppliers generate a total of 20 percent of their energy from more energy-efficient sources by 2025.
Governors of states who are unable to meet this standard using renewable sources can petition for an additional 3 percent to be met through other energy-saving means.
Most House Republicans maintain that the bill amounts to a "national energy tax," arguing that as utility companies work to meet the new standards, they will pass on the costs of the new mandates to consumers.
Four Democrats on the committee - Rep. Mike Ross, of Arkansas, Rep. Jim Matheson, of Utah, Rep. Charlie Melancon, of Louisiana, and Rep. Jim Barrow, of Georgia - voted against the plan.
House Democratic leaders have pledged to have a vote on the House floor before the month-long congressional break in August. President Obama has called for Congress to send him an energy bill this year.