Investors want proof of Obama "green" change

By Gerard Wynn and David Fogarty - Analysis

LONDON/SINGAPORE (Reuters) - President elect Barack Obama faces demands for proof of a change in U.S. tack on the climate from "green" investors and businesses around the world.

Obama said in his acceptance speech Tuesday that climate change was a top priority, alongside wars in Iraq and Afghanistan -- marking a sharp shift with President George W. Bush, criticized for downplaying the threat from global warming.

Obama's other priority was to revive a wilting economy and that will take top spot on his agenda before dealing with national carbon trading and clean energy.

"Green" investors, analysts and bankers were not expecting miracles overnight but want early proof of Obama's climate credentials, when he takes office on January 20.

"The first is that he is seriously looking for a quick way through for national cap and trade in the United States," said Henry Derwent, head of the Geneva-based International Emissions Trading Association (IETA), the carbon market lobby group.

Cap and trade is one way to drive investment in low carbon technologies, by putting a ceiling on greenhouse gases using a fixed quota of tradable emissions permits, an approach Obama backed during his campaign.

Obama could threaten to use existing U.S. clean air laws to force through a cap and trade scheme, widely considered a messy approach which may then encourage the Senate to back a climate bill, said Derwent.

More green proof would be regular mention of climate change in bilateral meetings in coming months, he added.

Analysts were wary of Obama's campaign promises, not convinced he will deliver on cap and trade nor plans to invest $150 billion over 10 years in low-carbon energy sources.

"A cap and trade system is by no means a done deal," said Guy Turner at London-based New Carbon Finance, given that would need Senate support.

"I'd like to see the first $15 billion (of low-carbon cash) funded in his first budget," said Mark Diesendorf, environmental and sustainable energy analyst at Australia's University of New South Wales.

The Australian government was elected last year partly on promises to cut greenhouse gases and expand renewable energy. "However, in its first budget in May 2008, it funded almost none of its promises to renewable energy," said Diesendorf.

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"A U.S. cap and trade scheme will provide a strong stimulus for the development of (low carbon) technologies," said David Russell, co-head of responsible investment at the London-based USS pension fund, which has 30 billion pounds under management.

The world's biggest wind turbine maker Vestas Wind Systems A/S would invest more in the United States if renewable energy targets were made stronger, said Ditlev Engel, chief executive of the Danish company.