Where now for Obama's climate change strategy?

It has been a tough week for the Obama administration, and setbacks on multiple fronts have left huge question marks over the future of its efforts to introduce restrictions on greenhouse gas emissions.

Firstly, the election of Scott Brown as Republican senator for the state of Massachusetts marked a huge shift of power in Congress. The significance of the election for both the chances of passing climate change legislation and Obama's wider agenda can hardly be over-stated. A 43-point swing dropped into Republican hands a seat that had been with the Democrats since 1953. That says a lot about the President's popularity, or current lack of it, and will serve to further weaken his influence on the Hill.

But, perhaps more importantly, it also weakens him logistically; the Democrats previously enjoyed a filibuster-proof 60 seat supermajority in the Senate, but are now vulnerable to having their proposals blocked. And with climate change being a particularly partisan issue, that does not bode well for legislation already stuck in the Senate.

The Clean Energy Jobs and American Power Act, also known as the Boxer-Kerry bill, was contentious from the start. Crafted by Senators John Kerry and Barbara Boxer, it features plans for a cap-and-trade scheme that would see carbon emissions reduced 20 per cent below 2005 levels by 2020. The proposals have proved anathema to the vast majority of Republican Senators who have fought the legislation tooth-and-nail, arguing that it will damage the economy, impose taxes on businesses and households, and in some cases even suggesting that climate change is not an issue that needs addressing.

Significantly, a number of influential Democrat Senators from states heavily dependent on the coal industry have also signalled opposition to the bill in its current form, arguing that it will result in job losses in their states.

The Obama administration secured a trump card in the increasingly fractious negotiations last month when the Environmental Protection Agency (EPA) finally issued an endangerment finding that would enable it to regulate carbon emissions. The move essentially gave Obama leverage over Congress, allowing him to warn Senators that emissions would be regulated regardless, and they could either shape new legislation or see rules on vehicle and power plant emissions imposed through the EPA.

However, that legislative gambit could also be blocked after Alaskan Senator Lisa Murkowski last week issued a disapproval resolution - an arcane and little-used measure - in an attempt to ban the EPA from using its new powers.

Murkowski's actions, which were supported by a handful of Democrat senators, provides further evidence that the Republican Party is set to oppose ambitious climate change legislation at every turn, and with the supermajority lost, the administration has no choice but to make sufficient compromises in order to secure the backing of not only all Democrat Senators (no easy task in itself), but at least one independent or Republican.

What sort of compromises could be made?

Kerry is working with independent Joe Lieberman and Republican Senator Lindsey Graham on a revised version of the bill that he hopes could draw suffcient support from the Republican party.

Details are scant, but it is expected to reduce the emissions target for 2020 from 20 per cent to 17 per cent and provide increased financial suport for both the nuclear industry and domestic oil drilling projects. Kerry's original bill at least tipped the hat towards the nuclear sector with some funds for workforce training, but he is now looking at significantly more generous sweeteners in an attempt to win over pro-nuclear Republican Senators.

The big question is cap-and-trade, which Kerry had seen as an immovable part of any climate change legislation. Leaving it in the new bill would be a calculated risk, reintroducing the issue to a highly politicised Congress with a Republican party all too eager to fight the issue. Taking it out, as some Democrat Senators have now advised, could get the legislation through, but in a diluted form, with the centre-piece carbon regulations left for another time.

Essentially, everything now rests on the Kerry-Lieberman-Graham proposals and their ability to scrape together 60 bi-partisan votes in the Senate. Experts on Capitol Hill reckon Murkowski's attempts to remove the EPA's right to regulate emissions are likely to fail, but with Obama' Super Majority gone and mid-term elections on the horizon it would be political Kryptonite for him to go over Congress' head and impose regulations.

Moreover, there is no desire from the administration to start over with a new bill as some Senators have suggested. The Brown election means that the President's other piece of flagship legislation, healthcare reform, is going to drag on further and North Dakotan senator Byron Dorgan argued last week that there is no appetite to address an issue as contentious issue as cap-and-trade so swiftly after the fight to pass healthcare reforms, recommending that Democrats instead work on a smaller energy bill.

But the ability of the US to pass climate change legislation is seen as one of the major tests of industrialised nations' ability to make good on their climate change commitments. In short, without US climate change legislation the chances of an international climate change treaty being agreed at the UN's Mexico Summit in December move from slim to negligible.

The world will be hoping that Kerry, Lieberman and Graham have the kind of proposals up their sleeve that can bring an end to the deeply partisan battles that have dogged Obama's first year in office. No one will be holding their breath.