U.S. vote dims hopes for stronger world climate pact

Republican U.S. Senator-elect Scott Brown holds up a copy of the Boston Herald announcing his victory over Democrat Martha Coakley in Boston, Massachusetts January 19, 2010.

SINGAPORE/OSLO (Reuters) - Hopes for stronger world action in 2010 to curb climate change have dimmed after the U.S. Democrats lost a key Senate seat to a Republican opposed to capping emissions, experts said on Wednesday.

Backers of the existing international Kyoto Protocol, which obliges all industrialised nations except the United States to cut emissions until 2012, will be more reluctant to take on tougher new goals for 2020 unless Washington also joins in.

U.N. climate talks in Mexico in November are meant to build on a weak "Copenhagen Accord" worked out last month by nations including the United States that sets a goal of limiting warming to no more than 2 Celsius (3.6 F) above pre-industrial times.

But the Mexico meeting will be undermined if the United States, the top emitter behind China, has not set caps on carbon emissions. That might dash hopes for a Kyoto successor from 2013 and mean a system of domestic pledges instead.

"We can't afford climate to be a dysfunctional regime like trade," said Nick Mabey, head of the E3G climate think-tank in London. He said there were risks talks would stall, like the inconclusive Doha round on freer world trade launched in 2001.

Many nations have been sitting on the fence before deciding firm carbon policies, waiting for U.S. legislation. President Barack Obama wants to cut emissions by 4 percent below 1990 levels by 2020, or a 17 percent cut from 2005 levels.

Countries are supposed to propose carbon-cutting policies under the Copenhagen Accord by Jan. 31.

The election of Republican Scott Brown, an opponent of cap and trade, to the Senate after the death of Democrat Edward Kennedy dims prospects for U.S. action. Once Brown takes office, Democrats will have 59 seats in the Senate and the Republicans 41. The bill needs 60 votes to overcome procedural hurdles.

U.S. House Majority Leader Steny Hoyer said the legislation might have to be split in two to ensure that less controversial parts encouraging use of alternative energies can pass. Tougher elements limiting emissions could then be handled separately.

"I don't believe that cap and trade is dead," he said.

MOMENTUM

Yvo de Boer, head of the U.N. Climate Change Secretariat, said U.S. willingness to act had built since ex-President George W. Bush took office in 2001 and said Kyoto would cost jobs and wrongly omitted carbon curbs by poor nations.

"I don't think that any political development in the United States means turning back nine years on the climate change agenda," he said. Many Americans were concerned, for instance, with energy security and hoped for jobs in a greener economy.

But some experts said failure to pass U.S. legislation could have a knock-on in countries such as Australia, Japan or Canada which are considering stronger action beyond 2012 that aims to avert ever more heatwaves, droughts, floods and rising sea levels.

"2009 was fairly disappointing and 2010 could be another year of slow policy development to those trying to launch their own cap and trade schemes," said Trevor Sikorski, director of carbon markets research at Barclays Capital.

Still, he predicted the value of global carbon markets would grow in 2010 -- boosted by an increase in prices even though the growth of trading volume would slow.

"The issue of cap and trade does not necessarily go away. I expect banks will continue low-key capacity building as there is no downside if a market doesn't develop by 2011 or later," said Garth Edward, head of environmental products at Citi.

"They'll keep building the franchise," he said.

The European Union sees itself as a leader in combating climate change, and has set a goal of cutting emissions by 20 percent below 1990 levels by 2020, or 30 percent if others join.

"We need global cooperation and progress will only be possible with internationally binding commitments -- but for everyone," German Chancellor Angela Merkel told the Bundestag lower house of parliament on Wednesday.

The Pacific island of Tuvalu fears rising seas could wash it off the map. Ian Fry, who represents Tuvalu in U.N. talks, said U.S. carbon caps had to be passed by mid-year or would be put back into 2011 because of November elections that cover about a third of the Senate seats.

Environmental activists saw only bad news from the Senate.

"On the international front, China is constantly looking to the U.S. on climate bills ... This is definitely bad news. It doesn't bring new confidence to international negotiations," said Ailun Yang of Greenpeace in Beijing.

(With extra reporting by Michael Szabo in London, Pete Harrison in Brussels, Bappa Majumdar in New Delhi, Ralph Jennings in Beijing, Madeline Chambers and Paul Carrel in Berlin; Editing by Jon Boyle)