By Greg Peel

Exactly what was Kevin Rudd doing in the US recently?

We know that he was in New York talking to Ban Ki-moon about a possible part-time job on the UN climate change panel, but did he pass up on an offer to advise the Democrat party on ETS policy?

The Democrat leader in the US Senate last night announced the party would be shelving its attempts to pass a bill limiting carbon emissions and introducing a cap and trade system for carbon. The Democrats have failed to win any support from Republican senators, bar one. With the senate mid-term elections looming in the northern autumn, the decision was made to hold off for the time being.

Instead, the Democrats would simply amend the current proposed bill to ensure only that BP is held responsible for the impact of the Gulf oil spill.

The similarities are remarkable. An Emissions Trading Scheme was a cornerstone of Kevin Rudd's election platform, but he could only rustle up support from one Malcolm Turnbull. Faced with constant rejection in the Senate, Rudd simply gave up with an election not far off. The ETS was deemed to be “shelved” with only a vague notion of when it might be back on the agenda.

A US president can't be rolled mid-term like an Australian prime minister (just shot, it would seem), but with mid-term elections looming Kevin Rudd might have warned Barrack Obama of the dangers of reneging on a cornerstone commitment. Though one assumes Obama is not about to introduce a mining tax.

It has also been a policy of the Obama Administration, as part of a carbon emissions bill, to encourage via a cap and trade scheme the greater consumption of natural gas, which is abundant in the US, over oil, which isn't. But the lobby groups have won out on that one as well, warning of higher electricity prices, so it, too, has hit the Too Hard basket.

More deja vu.

The move in the US is yet another blow to the fledgling alternative energy industry, whether in the US, Australia or elsewhere. The concept of there ever being a global ETS, or anything outside of Europe, is slipping further away.

Leaving aside any argument of whether climate change is real or not, such vacillation is actually just as frustrating for the big polluters as it is is for the likes of solar, wind, etc. Clearly the big polluters would prefer to have no price put on carbon, but by the same token they have been investing millions of dollars in restructuring their portfolios and preparing for a carbon-priced world. They need to know whether an ETS is on or off, not that any scheme is hanging around in vague limbo. One cannot plan.

In the meantime, the alternative energy industries in both the US and Australia can only hope that federal governments at least make good on various emission reduction rebates and incentives which have been slated, and that state governments lead the charge where federal governments are failing. As one of the biggest consumers of fossil fuels, the state of California is now leading the Union, and arguably the world, in strict carbon reduction targets. At least the Governator's on to it.

In the case of natural gas, there are nevertheless problems to be solved in any ETS or other proposed carbon-pricing system. Under immature ETS proposals, natural gas is simply branded a fossil fuel and thus subject to carbon penalties. But then natural gas is much cleaner than oil or coal, so one can argue gas should actually generate carbon credits.

The world still has a long way to go, which again is disappointing for the alternative energy industry. I noted at least one US-listed solar company's shares lost 25% overnight. All anyone is looking for is a decision, and one will never be forthcoming when the world is ruled by self-interested lobby groups and spineless politicians.

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