WASHINGTON -- Arizona Sen. John McCain ripped the White House cap and trade energy proposal on Tuesday as House Republicans said it is too early to debate a climate change bill because a major element of the legislation is missing.

The bill aimed to stop global warming by giving fossil-fuel burning industries a limit on greenhouse gas production is an "irresponsible, ill-conceived and distorted version of a cap-and-trade system."

"The president's proposal of auctioning 100 percent of the carbon credits is bad economic policy that would cost businesses billions of dollars and allow for little-to-no transition into a low carbon system," he said. "I am a supporter of a strong cap-and-trade system, but I will not and cannot align myself with a giant government slush fund that will further burden our businesses and consumers," McCain said at a Reform Institute Forum on energy reform. 

McCain, Obama's 2008 Republican presidential opponent who was an advocate for a cap-and-trade system during the campaign, said the proposal makes it more difficult to work in a bipartisan way on the issue.

The program as written will be used as a "giant government slush fund" to pay for the Obama administration's agenda, McCain said. 

Under McCain's approach includes "a combination of auctioning and allocating carbon credits" in a way "to accommodate the transition costs and allow businesses to stay open and prevent drastic increases in utility rates for costumers."

Meanwhile, all 23 Republicans on the House Energy and Commerce Committee sent a letter to Democratic leaders on Tuesday saying that the draft bill is not ready to be discussed because it does not address how permits to release greenhouse gases will be distributed.

The cost of the legislation to industry and consumers will depend on whether the permits are sold or given away for free. The Republicans said this issue and others warrant more hearings.

The committee has scheduled three days of hearings this week with more than 60 witnesses. Opening statements from panel members begin Tuesday afternoon.

FOX News' Mosheh Oinounou and The Associated Press contributed to this report.