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The American mid-term election has nailed shut the coffin of Barack Obama’s version of Australia’s emissions trading scheme — at least until after the next presidential election.

The early conservative view of the outcome is that voters have sent a clear message to DC that cap-and-trade, top-down, command-and-control regulation of fossil-fuelled power is a losing argument with them. “They understand that cap-and-trade is a national energy tax.”

However, this does not mean that Congress and the President can’t find a way to pursue a national renewable energy program or other measures, provided they do not impose large extra costs on American power bills. This step will be pushed by Senator Jeff Bingaman, chair of the Senate’s energy & natural resources committee. Direct subsidies, loan guarantees and extended tax breaks for zero emission generation will be the key areas for attention.

The American right is already focusing on this prospect and warning that any such steps would “increase energy costs, reduce electricity reliability and transfer money from end-users to wind and solar companies.”

An early target for Republican attention in the new-look Congress will be the US Environmental Protection Agency’s attempt to regulate greenhouse gas emissions under the Clean Air Act. Any move by the Republicans to take away the EPA’s capacity in this area could attract a presidential veto and heighten tensions over carbon policy.

A given for the medium term, at least, is that better than 65 per cent of US electricity supply will continue to be fossil-fuelled, with nuclear energy and hydro-electricity accounting for most of the balance.

Despite this, Todd Stern, Obama’s global carbbon negotiator, says that the administration will stand by its pledge to cut emissions 17 per cent by 2020 when the next UN summit convenes in Cancun, Mexico, in December.

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