Financial storm dims hope of tough U.N. climate pact | Special Coverage | Reuters

"There will be a shift in investments" toward energy efficiency, said Nick Mabey, director of E3G think-tank in London. Saving energy, such as by insulating buildings, gives quick returns and can help create jobs.

A year ago, many governments were billing the fight against warming as humanity's top long-term challenge after the U.N. Climate Panel said human use of fossil fuels would bring more floods, heatwaves, droughts and rising seas.

Now, with the United States caught in a financial storm that may cost $700 billion of taxpayers' money to fix, a plan to agree a new U.N. treaty to fight global warming in Copenhagen in December 2009 is looking ever more ambitious.

German Foreign Minister Frank-Walter Steinmeier said on Tuesday the market difficulties would make it harder to agree a climate deal, while U.S. Democratic presidential candidate Barack Obama said last week he may be forced to scale back his planned investments in energy.

"It's starting to weigh on peoples' minds that the whole process could go completely wrong," said Mabey. In the worst case, the negotiations could collapse, like U.N. trade talks.
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Diringer said the next U.S. president should re-cast the fight against warming as a way to break dependence on oil imports and as a tool to help economic recovery -- some revenues from future carbon trading could go to the Treasury.