US cap-and-trade bill moves forward following House victory

The House of Representatives narrowly passed the Waxman-Markey Clean Energy bill on Friday evening, after an extended debate and some extra help from the president.

Deep rifts over the bill resulted in a razor-thin margin of 219 to 212 votes, with 44 Democrats voting against it, and eight Republicans voting in its favour.

The bill will not come into effect in 2012, but it could have some shorter-term effects on US businesses, according to Emilie Mazzacurati, manger of the carbon market research team at analyst Point Carbon. "Every power, oil, energy-based company in this country is now waiting for a signal that says 'yes or no – there will be a price for carbon, and this is what you should expect'," she explained, adding that if the bill passes, investments in renewable energy and other low-carbon technologies should become instantly more attractive.

The agricultural lobby was one of several industry groups that opposed the legislation, though an amendment introduced temporary offsets for soil sequestration projects to sweeten the legislation for that sector. Offsets granted for those projects would expire after five years.

The bill has been broadly welcomed by environmental groups, but Greenpeace opposed it, arguing that the widespread use of offsets and weak emissions targets undermined its effectiveness. "The giveaways and preferences in the bill will actually spur a new generation of nuclear and coal-fired power plants to the detriment of real energy solutions," the lobby group said.

The vote, which was complicated by an extended debate speech from the minority leader, which delayed the vote for almost an hour, opens the door for a vote in the Senate, where it will face another tough battle to become law.

However, it could well be modified in the interim to grease the political wheels and achieve a stronger consensus.

"Pushing this bill through the Senate is going to be very difficult," warned Mazzacurati. "It is not impossible, but it will take all the energy of the Senate leaders, and Obama in person, to get it through."

The president has staked considerable political capital on the legislation passing and last week intervened directly to call on wavering Democrats to back the legislation.

The White House has set a target of passing the legislation before the end of the year to bolster US credibility ahead of the key UN climate change conference in Copenhagen in December.

In related news, Gordon Brown formally set out the UK's negotiating position for the Copenhagen process, calling for rich nations to hand over $100bn (£60bn) a year to developing countries to help fund climate adaptation and low-carbon growth.

Under the proposals, the funds would be raised from public and private sources, including a possible levy on carbon trading activities, and would be distributed from 2013.

Brown said the aim was to break the current deadlock between richer and poorer nations ahead of the key meeting in Copenhagen.

"If we are to achieve an agreement in Copenhagen, I believe we must move the debate from a stand-off over hypothetical figures to active negotiation on real mitigation actions and real contributions," he said, adding that developing nations should begin work on concrete project proposals that could be funded by the new investment.