Carbon caps dropped from diluted US Energy Bill
Plans to set carbon caps for most sectors of US industry have been dropped due to lack of cross-party support.
Democrats pushing for a national carbon market and greenhouse gas targets have conceded defeat citing a lack of support for such measures.
These concessions mean that a watered-down version of the legislation looks set to be passed.
This will include a crackdown on offshore oil exploration and billions of dollars of incentives to use less carbon intensive natural gas over other fossil fuels.
It is also expected to include measures to make electric vehicles a more attractive prospect for consumers and businesses.
Although the Democrats have an overall majority in the Senate - 59 of 100 seats - several Democrats are refusing to back the bill because they feel it may further damage an economy already reeling from recession.
Critics have said that this weakened stance makes any global UN-led deal on climate change an unlikely prospect.
With the US responsible for some 20 per cent of global emissions, the developing world at least will be expecting indications of stronger leadership and a commitment to cut greenhouse gases.
Majority leader Harry Reid has said the Senate could revisit climate legislation following the August recess.
But most observers believe this is an unlikely prospect as mid-term elections are due to be held in November and the Democrats have taken a battering in recent polls with President Obama failing to capture public support on the issue of the day - the oil leak in the Gulf of Mexico.
Environmental non-governmental organisations - until now supportive or at least silent on the Obama administration - are beginning to question the President's commitment to tackling climate change.
Influential civil society body the Environmental Defence Fund is running a campaign on the front page of its website comparing the current President's inaction with that of Nixon and George Bush.