The ambiguity of how EPA regulations will affect industry is exacerbating the investment problem, he said. The EPA has said it would delay regulation of the largest emitters, planning to phase in other sources later. The regulations are expected to be challenged, and it's unclear if, like rules for air pollutants such as sulfur dioxide, they will later be discarded.

"There's significant concern that as we're trying to get the economy up and going again, that this kind of uncertainty may stall things some," Aldy said.

Kevin Walsh, managing director of power and renewable energy at GE Energy Financial Services, said the financing community is "grappling for a steady footing to invest" under policy confusion. Legislation or regulation that puts a price on carbon would be a "shot in the arm" for the low-emitting energy industries. But the failure of lawmakers to pass a low-carbon electricity standard--tied up in the politics of the climate bill--is also arresting investment.

Conventional energy sectors are also affected. Although Congress is increasingly unlikely to pass a climate bill this year, the Energy Information Administration has lowered its forecast for new coal-fired power plants based on a future carbon price risk. The EIA historically bases its long-term forecasts only on existing laws, but this year it factored in a three-percentage point rise in the cost of capital for coal-fired power plants based on the "implicit hurdle" of potential policy.

Senior officials at both American Electric Power and BP have said the planned EPA greenhouse-gas regulations may delay refinery plant modifications and accelerate coal-fired power plant closures.

For example, Bruce Braine, head of strategic policy analysis at American Electric Power, said the Clean Air Act rules are "going to be litigated like crazy." Without certainty on the rules or flexibility to use market-based programs, many companies are likely to wait for the courts before making modifications, including those that would improve pollution controls.

The White House is also concerned that without the climate bill spur, the U.S. may lose capital and competition for clean energy to countries in Europe and Asia, particularly China.

"People need to realize this is a global market for our capital," GE's Walsh said. "Our money is going to go where we see long-term certainty ... and if Europe has a better framework, that's where our money's going to go," he said.


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