US President Barack Obama's drive for ambitious energy and climate policies started well last year with the passage of the cap-and-trade bill in the House of Representatives.
But it then slowed down as the healthcare debate took centre stage, and the green bill is now stalled in the Senate, where it requires the support of 60 out of 100 senators.
With mid-term elections approaching, scepticism about the chances of passing major legislation is growing as Republicans are expected to gain seats in Congress.
US analysts viewed as symptomatic of the waning support a decision by three large corporations last week to quit the US Climate Action Partnership, which has been lobbying in Washington for a cap on greenhouse gas emissions. Oil and gas giants BNP and ConocoPhillips and equipment manufacturer Caterpillar said they preferred to influence the bill from outside of the environmental coalition, which they felt was too focused on passing the bill regardless of its content.
In the meantime, Obama enraged environmentalists by announcing an $8 billion loan guarantee to restart the country's nuclear industry after three decades without building a nuclear reactor. The move was seen as fishing for Republican votes in favour of the climate package and was strongly criticised for overlooking the problems of nuclear waste security and storage.
Europe is observing the developments amid growing concern that the global community will have to bury all hopes of securing a new international climate treaty if the US fails to pass its climate bill.
"Obama's troubles with the climate legislation package naturally raises concerns on this side of the Atlantic," said Green MEP Satu Hassi (Finland).
"If the US doesn't manage to pass legislation limiting greenhouse gas at federal level, this would of course impact on the climate negotiations and make it more difficult to achieve an international climate agreement. The US would then give among others India and China an easy argument to refuse binding actions," she added.
The MEP felt that the industry is starting to understand the need for climate protection and moving faster than regulators.
"Many companies are much more progressive than the lobby organisations representing the industry in question, whose message reflects the most conservative wing of the sector," Hassi said. "For some time now, the climate protection situation has seemed to me to be that new technology and related businesses have forged ahead, but political decision-making has made less progress."
Russel Mills, global director of energy and climate change policy at US chemicals company Dow, suggested that the US should go more for a "hybrid approach" to cutting emissions.
"In the US, the opportunity for one big economy-wide cap-and-trade system is probably not feasible this year. Rather than just do nothing, it's better to start sooner on something which is manageable," he said. He suggested it might be more palatable to make a cap-and-trade system work first amongst power utilities, which have had successful experience with SOX and NOX trading.
Europe faces domestic choices
Christian Egenhofer, head of the energy and climate programme at the Centre for European Policy Studies (CEPS), warned that the EU risks falling behind on new technologies and innovation if it bases its climate strategy on the assumption that the US will help seal a binding international deal in Mexico at the end of the year.
"I don't think the US position is immediately important for the EU directly, but of course, if the US doesn't have a deal domestically, there won't be an international deal. And that is of course the situation which Europe is worried about," he said.
The analyst argued that it is now almost certain that there won't be a binding deal in Mexico. He added that the Copenhagen Accord had confirmed that commitments by all countries are based on domestic politics.
"The big driver at the moment cannot be international, because it's clear that the international deal is on hold until at least two years," Egenhofer said.
Instead, Europe will face difficult questions about how to ensure a carbon price that is high enough to stimulate the development of new low-carbon technologies, he said. He argued that the US and other countries will not care whether the EU raises its 2020 emissions reduction target from 20% to 30% but the decision might be taken for domestic reasons, as the price under the EU's emissions trading scheme is not high enough to give incentives to decarbonise the economy.
"The EU will have to have a very difficult discussion about where we want to take it: do we want to ensure that innovation benefits, technology benefits will be reaped and whether with a minus 20% target this is possible. I would say it's not possible."
He was echoed by Socialist MEP Jo Leinen (Germany), who advised against getting bogged down in prolonged debates about domestic policy.
"I believe Europe should not stop in progressing with its own climate policies, which include a framework for a low-carbon economy, and should not wait for the US, China, or other countries to move forward," he said.
Leinen pointed out that despite troubles with cap-and-trade legislation, the US has already passed legislation allowing for the development of a green economy and is investing much more than Europe in renewable energies and R&D into low-carbon technologies.
As for the negotiations, the MEP urged the EU to concentrate on climate diplomacy, working closely with Mexico, Brazil, Indonesia and South Africa while building trust with Africa.
"We should also be realistic on what we can achieve in Mexico. It is certain that a lot will depend on progress in the US," he concluded.
