Today's top story at Climate Wire is "Wall Street sees national carbon market at least five years away" (subscrip. req'd):

Pessimism is beginning to creep its way into the hearts and minds of players in the U.S. carbon market as credit generators and traders take a closer look at the political climate for climate change legislation in Washington.

While almost everyone still expects the federal government to eventually develop a nationwide carbon emissions cap-and-trade system that covers most of the economy, greater uncertainty is building about what that eventual scheme will look like and how effective it will be. While the industry had anticipated 2012 as the start date for federal cap-and-trade, most now see that timeline as unrealistic.

"We're really uncertain what's going to replace Lieberman-Warner," Lou Pai, managing director of Element Markets, told his industry cohorts at a gathering here Wednesday. "We don't know what will happen in a new regime. ... It's very much up in the air."

Lai and others now believe that a compliance carbon market can only come online in the United States by 2013 at the earliest, with 2014 and even 2015 as new probable dates the industry is considering... carbon market enthusiasts now appear to be taking a step back, discouraged by the gridlock in Washington and the seeming inability of Congress to make quick headway on important legislative prerogatives. The delay in producing a new energy bill, and in particular the still pending renewal of investment tax credits and production tax credits that have been the lifeblood of renewable energy investments in the United States, is helping fuel this new skepticism.

Executives discussing the future of carbon regulations and trading at a clean energy conference hosted by Cowen and Co. in Manhattan on Wednesday voiced doubts over the speed with which Congress could actually pass cap-and-trade legislation next year, especially after considering how quickly the U.S. Senate killed the popular Lieberman-Warner bill.

Richard Domaleski, chief executive of World Energy Solutions -- the firm hired to managed the upcoming Regional Greenhouse Gas Initiative (RGGI) -- said his firm is now making plans on the assumption that a federal cap-and-trade system will go live after 2013, with 2015 perhaps a more likely start date. His firm noted that it took the Northeastern states four years to hammer together RGGI, and said it believes Congress would draft a bill that gives at least a three- to four-year grace period for industries to prepare.

Carbon market insiders are also growing discouraged by the slow pace of progress in international talks over developing the Kyoto Protocol's replacement. While the latest negotiating session under the U.N. Framework Convention on Climate Change (UNFCCC) in Accra, Ghana, made some headway on some technical issues, governments are still nowhere close to achieving any real breakthrough in the talks.

This is just one more indication that the political environment for action on global warming has undergone a dramatic setback since 2006, when so many declared a "tipping point" for climate legislation. The events of this past summer -- cap and trade failing badly for the third time, rapidly escalated energy prices, and Republicans pounding Democrats on offshore oil drilling -- have been a major game-changer.

Will the greens wake up to these new political realities and change their strategy from stringent capping and carbon pricing to an investment-centric approach to make clean energy cheap and achieve a legislative success next year? Stay tuned.