As the World Economic Forum wrapped up in Davos last week, six international business groups, representing over 200 multinational firms, issued a letter to world leaders to demand they deliver "clarity and certainty" to drive the transition to a low-carbon economy. The groups include the Climate Group, Business for Innovative Climate and Energy Policy, Carbon Markets and Investors Association, Clean Economy Network, Combat Climate Change, and Copenhagen Climate Council. This comes as no surprise, because if there's one thing businesses hate more than government regulation, it's uncertain regulation that they can't build business plans on.

Unfortunately, less than a week after the letter, President Obama delivered a speech that delivered anything but clarity and certainty. Speaking at a town hall meeting in Nashua, New Hampshire, on Tuesday, the President stated that a cap and trade scheme was his preference, but may not make into law. "The only thing I would say about it is this: We may be able to separate these things out. And it's conceivable that's where the Senate ends up." It was the first acknowledgment from the President that he may be willing to give up carbon cap and trade, and it sent the press into a frenzy of speculation.

The very next day, however, the administration appeared to backpedal. Speaking in front of renewable energy representatives in Washington D.C., she strongly defended an emissions cap and pressed Congress to continue working on a comprehensive energy bill to include a cap and trade provision. According to Browner, the press misinterpreted the President's remarks.

So has the administration given up on cap and trade? I think those who believe that are mistaken. In spite of the President's speech, my sense is that the administration is committed to carbon reduction, as evidenced by the US submission to the UN that carbon will be reduced 17% by 2020. My guess is that the President was actually referring to carbon caps coming out of the Senate bill to ensure passage in the Senate, but still being implemented by the EPA, which would not require Senate approval. This would allow him to deliver on a clean energy bill while still meeting international commitments to carbon reduction.