WASHINGTON (Reuters) - Senator Lindsey Graham said on Tuesday a proposed economy-wide cap-and-trade system for reducing emissions of carbon dioxide and other greenhouse gases was dead and would be replaced in a new bill.

Graham, a Republican, did not specify whether cap-and-trade might be used to control emissions in just one sector, such as utility companies, instead of earlier efforts for an economy-wide mechanism.

"The cap-and-trade bills in the House and Senate are dead. The concept of cap-and-trade is going to be replaced," Graham said.

Democratic Senator John Kerry told reporters he hoped a compromise climate control bill could be put together this month, although many meetings still must be held. Graham told reporters it will be "weeks" before a bill is ready.

But Senator Joseph Lieberman, an independent working with Graham and Kerry, said a detailed outline of a bill could come within days.

In June, the House of Representatives narrowly passed a climate change bill with cap-and-trade as its centerpiece.

As a way of bringing down industrial carbon dioxide emissions by 17 percent by 2020, from 2005 levels, the House bill would impose more restrictive caps on pollution levels and require permits for every ton of carbon put into the atmosphere.

Those pollution permits could be traded in a new, regulated financial market.

Kerry refused to provide any details on the bipartisan bill that he, Graham and Lieberman are spearheading.

But, as a result of work in the past few months, Kerry said he was feeling "more confident" that a climate change bill could be presented to the Senate for passage this year.

"We're looking at a new way of coming at this that we think can attract greater support," Kerry said.

Environmentalists have speculated the bill the senators will produce could impose a new carbon-pricing mechanism on utilities, which account for about 40 percent of the emissions blamed for global warming.

Sources also have said there is talk of a transportation tax. Pollution controls on manufacturers could be put off for a few years to give time for more affordable alternative energy sources to come on line, they have said.