Business Spectator - Reality bites Barack

With Congressional elections to be held in 2010, the chance that Obama will embrace any high cost, radical stance on climate change is already zero.

Some idea of the political difficulty involved may be appreciated when you learn that, as part of this month’s national elections, a proposition in California to require the state’s power utilities to source half their supplies from renewable energy by 2025 (instead of the current 20 percent by 2010) was rejected by 66 percent of those who voted. And this is a state where Obama won 61 percent of the presidential vote.

Political hardheads among the Democrats already know that implementation of Obama’s promised emissions trading scheme would require a carbon cost of about $US25 per tonne. This would translate, according to recent research, into an increase in electricity prices of between a quarter and a third in the predominantly coal-fired 24 states in the midwest and south-east US.