Obama walks tightrope on climate change

U.S. President Barack Obama is walking a tightrope on climate change -- and so far appears to be achieving a delicate balance.

At Obama's urging, Congress is working on a bill to curb greenhouse gas emissions with a cap-and-trade system. The developed world is again looking to the United States to lead on the climate issue after eight years of Washington sitting on the sidelines.

The president is balancing those moves with efforts to address concerns of U.S. business and win support, including plans to give away most of the pollution permits under the program, rather than auction them as he first wanted.

Some major American corporations -- Duke Energy and Johnson & Johnson -- have come out for cap and trade

But despite these symbolic advances, nothing has really changed in U.S. climate policy so far except rhetoric. That has unsettled many in the U.S. business community, which may yet elbow Obama off the highwire.

It creates more economic pain than environmental gain, Ben Lieberman of the conservative Heritage Foundation think tank said of Obama's cap and trade approach, which has drawn significant business opposition.

Obama's basic stance on climate change -- the problem is real, humans make it worse, the United States must do something to slow it -- is diametrically opposite to that espoused under former President George W. Bush, to the delight of many international climate negotiators.

With an eye on a December meeting in Copenhagen that many hope will yield a new global deal on capping emissions, they say Obama's aggressive approach on climate change may persuade fast-developing economies like China and India to join in.

We're seeing in both countries ... the start of significant shifts in position and in behavior, said Reid Detchon, a climate expert at the non-partisan U.N. Foundation.

China and India are both recognizing the threat to their people ... from the effects of climate change and the enormous economic opportunity from being the suppliers of the new energy economy.

Todd Stern, Washington's top climate envoy, said preliminary talks may stop short of setting firm emissions targets, but that ultimately all sides were committed to advancing in Copenhagen. [nLL733729]

TOUGHER SELL AT HOME

At home, however, the policy remains a tough sell.

The Wall Street Journal's conservative editorial page took aim at this week's move by Obama to curb emissions from cars and trucks, which the newspaper said meant a move toward more fuel-efficient hybrids and electric cars and away from popular SUV's and pickup trucks.

One may ask: Once Detroit is forced to build these cars, will free Americans want to buy them, at any price? it asked.

The United States is the biggest per capita emitter of carbon dioxide, spewed by coal-fired power plants, steel foundries, automobile exhaust and other sources, including human breath. China has surpassed the United States as the world's biggest overall source of atmospheric carbon.

Many environmentalists believe one answer is a cap and trade system, that sets an ever-decreasing limit on carbon emissions and then offers permits for companies that emit more than the limit. Those without permits could trade with companies that emit less.

The U.S. Chamber of Commerce, the top business group, reckons that a cap and trade system would cost 1.9 million U.S. jobs and cost the average U.S. household $1,400 by 2020 -- a politically risky headline for Obama as he struggles to yank the economy out of a painful recession.

Detchon said the chamber's estimates overstate the potential burden on U.S. consumers. I think it will be unnoticeable to most consumers because it will start very low and be very gradual, he said.

The cap and trade bill now being considered on Capitol Hill would give away most allowances to emit climate-warming carbon, instead of auctioning them as Obama first proposed.

That was seen as a sweetener to help get business on board. But some analysts say even a gradual start to charging for carbon emissions could hit the economy, especially coal-fired power plants, steel manufacturers and other high-carbon businesses, including automakers.

One concern I have is that, in trying to sell it to the American public, there's a tendency to gloss over the true economic impacts ..., said Adele Morris of the Brookings Institution, a former U.S. climate negotiator. Putting a cap on carbon is costly. There is not a free lunch here.

(Editing by Cynthia Osterman)