US President Barack Obama's administration said Thursday it will regulate greenhouse gas emissions from power plants, setting up a climate change battle with a skeptical new Congress.

The Environmental Protection Agency (EPA) said it would set standards for fossil fuel power plants and petroleum refineries, which together emit nearly 40 percent of the gasses blamed for climate change in the United States.

The decision comes after a bill to set up a "cap-and-trade" program to restrict emissions in the world's second largest polluter died in the Senate, although the EPA insisted it was not trying to replace action by Congress.

"We are following through on our commitment to proceed in a measured and careful way to reduce greenhouse gas pollution that threatens the health and welfare of Americans and contributes to climate change," EPA chief Lisa Jackson said in a statement.

"These standards will help American companies attract private investment to the clean energy upgrades that make our companies more competitive and create good jobs here at home," she said.

The EPA did not go into specifics about the new standards, saying it would make a proposal in the new year and finalize it in 2012 after public comment.

The regulator suggested it would not impose an outright figure for emission standards but instead would ask companies to embrace cleaner technologies.

"This is not about a cap-and-trade program," senior EPA official Gina McCarthy told reporters on a conference call.

"It is not in any way trying to get into the areas in which Congress will be establishing law, at some point in the future we hope," she said.

McCarthy did not say which technologies would be favored, although the Obama administration has been promoting wind, solar and other low-emission renewable energies. Fossil fuels, particularly coal, are much dirtier.

Representative Darrell Issa, who is set for a prominent role in the Republican-led House of Representatives that takes over next month, was "disappointed" by the EPA decision, said his spokesman, Kurt Bardella.

"The fact is there are serious questions about the wisdom of EPA's recent efforts to impose multiple job-killing regulations that only serve to raise costs on a manufacturing industry trying to overcome a bad economy," he said.

The National Petrochemical and Refiners Association, an industry group, vowed to fight the EPA move and accused the Obama administration of usurping the authority of Congress.

"Regulations can't create technology that doesn't exist or change the laws of physics and economics, so the only way to comply with EPA's proposals would be to inflict massive increases in energy costs and massive increases in unemployment on families across our nation," it said.

But advocates of action on climate change believe that the United States can open up a new green economy, creating jobs, if it moves away from fossil fuels.

Joe Mendelson of the National Wildlife Federation criticized "polluters that want to hold hostage America's clean energy future and our public health with bullying and unfounded threats of doom and gloom."

The upcoming rules could also trigger a battle with oil-producing Texas, which emits far more greenhouse gases than any other state and has adamantly opposed Washington restrictions.

Obama last year pledged that the United States would curb emissions by 17 percent by 2020 compared with 2005 levels. The goal is modest compared to the actions of other developed economies, particularly the European Union.

Most scientists say the world is far off track at meeting a goal -- codified at UN climate talks in Mexico this month -- of keeping temperatures from rising more than two degrees Celsius (3.6 Fahrenheit) above pre-industrial levels.