(Reuters) – A compromise U.S. climate bill unveiled  on Wednesday will allow between 500 million and up to one  billion carbon offsets into an emissions trading scheme aimed  at cutting U.S. greenhouse gas pollution.

The bill, called the American Power Act, backs efforts to  fight deforestation in developing countries and to allow  offsets from projects that save forests from being chopped  down, preserve peat lands and rehabilitate forests.

The United States backs a U.N. scheme called reducing  emissions from deforestation and degradation (REDD) that could  usher in a global trade in carbon offsets from forest  preservation projects potentially worth billions of dollars a  year.

Deforestation is a major source of planet-warming  greenhouse gases and preserving the remaining areas of tropical  rainforest is regarded as a crucial way to fight climate change  because trees absorb carbon as they grow.

Following are some key points in the Act relating to  avoiding deforestation. — Scheme Administrator will, not later  than two years after the enactment of the legislation,  establish an assistance programme to drive reductions in  greenhouse gas emissions from deforestation in poor nations.

— The aims of the programme are to achieve emissions  reductions of at least 720 million tons of carbon  dioxide-equivalent in 2020, a cumulative amount of at least six  billion tons of CO2 equivalent by end-2025, and additional  emissions reductions in subsequent years.

— It would also aim to help poorer nations build the  capacity to reduce deforestation at a national level, preserve  existing forests, improve measurement, reporting and  verification of efforts to fight deforestation and illegal  logging. Steps to prevent forest clearance that might simply be  pushed into another location is another focus.

— The Act reinforces it is U.S. policy that climate change  is a potentially significant national and global security  threat that is likely to exacerbate competition and conflict  over land, water and other resources.

Protecting Americans from the impacts of rising greenhouse  gas emissions meant fighting deforestation and its causes in  poorer nations is a key policy objective, it says.

— Projects eligible should improve the livelihoods of  forest communities, maintain natural biodiversity and carbon  storage capacity of forests, promote native forests and  ecosystems and give due regard to the rights of local  communities and indigenous peoples.

Projects should also be transparent in the sharing of  profits and benefits from the sale of offset credits with local  and indigenous communities.