A comprehensive US law to address the challenges of global climate change is at least two years away, the analysts said. Wall Street, however, has begun to prepare for possible changes, including a US market on greenhouse gases.

Bush's position on climate change has evolved, from questioning the science linking human activity to global warming in 2001 to agreeing last month to work with the world's biggest emitters of greenhouse gases and others to formulate international goals by the end of 2008, shortly before his White House tenure ends.

He remains opposed to mandatory limits on emissions linked to global warming -- the key to most of the climate bills. Hard limits would provide the essential trigger for a market in which industry would be forced to clean up or pay for the right to pollute, experts say.

LIMITED BILLS HAVE THE BEST CHANCE

"What we are left with now is probably the path of less resistance, with some sector-specific bills ... but this is not the end game, which is having a more comprehensive approach to dealing with greenhouse gases," Ray Kopp, a climate expert at the nonprofit research group Resources For the Future, said in a telephone interview. Kopp looked to the next US administration to help formulate a comprehensive climate change policy.

One expert who advises investors about the energy sector said a limited bill to cap and trade carbon emissions from stationary sources like power plants has a slight possibility of getting through Congress this year.

"It doesn't have a very high chance, but it has a chance ... (because) it doesn't rule out other bills that address other sectors," said Kevin Book, an analyst at Friedman, Billings, Ramsey Group Inc.

A comprehensive bill to tackle emissions from all sectors that emit greenhouse gases -- manufacturing, agriculture and transportation, in addition to power generation -- would need "a hospitable advocate in the White House" and would probably happen in 2009 at the earliest," Book said by telephone.

WALL STREET PREPARES

Regardless of where the bills stand, many Wall Street banks are developing US teams to work with their European carbon desks, where CO2 emissions are already traded.

Citigroup and Credit Suisse both have carbon desks in New York. Citi, which is directing US$50 billion over 10 years to address global climate change, has also invested in Sindicatum Carbon Capital, which develops projects that cut greenhouse gases.

Bank of America will add a carbon desk later this year as part of its pledge to invest US$20 billion over 10 years in green business.

JP Morgan Chase has a New York desk of less than five traders that deals in existing voluntary markets.

"JP Morgan is positioned to understand the market and provide voluntary emissions reductions credits to clients," Amy Davidsen, the bank's environment director, said in an interview.

CARBON CAP BY END OF 2008?

Elizabeth Thompson, legislative director of the green group Environmental Defense, was optimistic about the chance for a carbon-capping US law by the end of 2008. While Thompson favored several bills now circulating, she pointed to possible legislation from two surprising environmental lawmakers.

Rep. Rick Boucher of Virginia, whose district includes big coal producers, and Rep. John Dingell of Michigan, a longtime advocate for the car companies based in his state, have worked together on energy legislation and could be important Democratic players in the climate change debate, Thompson said by telephone.

"Dingell was a longtime skeptic of climate change, skeptical on the science and just wanting to forestall action, but in the past six or seven months, he's really become a true believer," Thompson said.