It'll be later this year before the U.S. Senate takes up its version of the massive climate change bill the U.S. House of Representatives has already narrowly approved.

Work on that legislation does continue on Capitol Hill.

The U.S. Senate Finance Committee heard testimony on different ways to distribute carbon allowances, permits for carbon emissions, on Capitol Hill on Tuesday.  It's the cap and trade part of the bill.

"Let us see if we can figure out how to distribute emission allowances in a way that one might call 'just' and let us see if we can figure out how to give all Americans what they deserve," U.S. Senate Finance Committee Chair Max Baucus said to open up that hearing.

It's the fourth hearing on the climate change legislation in the Senate Finance Committee, of which Senator Jay Rockefeller is a member, so far.  Markup of the bill is set to start this Fall.

This hearing focused on allowance and revenue distribution, cap and trade.  In other words, it dealt with how many permits for carbon emissions to sell and how many to give away and how the money, if any, generated through that process should be spent.

The Obama Administration supports selling 100% of the available emissions permits at auction.

"There are a number of ways to use allowance revenues to mitigate the cost of climate legislation on consumers and businesses," Senator Baucus said.  "For example, Congress could use the money from auctioning allowances to cut taxes by cutting marginal rates, by cutting capital gains rates, by cutting payroll taxes or by doing all of the above."

In the House approved version of the bill, the Congressional Budget Office estimates that selling off the allowances could generate $6 billion in the first year, Year 2012.

Senator Charles Grassley, the ranking Republican member of the Senate Finance Committee, says selling permits for carbon emissions will not come without consequences.

"There is no such thing as a free lunch and the government cannot create wealth through regulation," Senator Grassley says.  "It is not free money, rather it is, in effect, a national energy tax on all Americans."

The following people testified at the Tuesday hearing:  John Stephenson who is Director of Environmental Protection Issues with the Government Accountability Office, Resources for the Future Senior Fellow Doctor Dallas Burtraw, American Enterprise Institute for Public Policy Research Resident Scholar Doctor Alan Viard and Environmental Defense Fund Director of Economic Policy and Analysis Doctor Nathaniel Keohane.

The August recess for the U.S. Senate begins on Friday.