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The U.S. Senate’s failure to pass a comprehensive climate and energy bill this summer could spell doom for startups founded to help reduce carbon-dioxide emissions. Others will limp on, limited to markets much smaller than they originally expected to target.

“For companies depending on some type of CO2 subsidy, this is probably the death knell,” says James Kim, a partner at Khosla Ventures who has carefully reviewed the business plans of several such companies.

Last year, Congress seemed on track to pass legislation that would make it progressively more expensive, over the next two or three decades, to emit carbon dioxide. (Economists often call this “putting a price” on carbon.) That was good news for a stampede of companies developing technologies that would reduce carbon-dioxide emissions–technologies such as solar panels, wind turbines, and biorefineries for producing biofuels–or capture carbon dioxide from smokestacks or the atmosphere.

But a version of the bill that once seemed headed for success faltered and was abandoned for much more modest energy legislation that itself hasn’t attracted enough votes to pass. There is little prospect that a comprehensive bill will be passed this year, in spite of efforts by some senators to push through a bill after the midterm elections. If Republicans, who generally oppose carbon restrictions, gain seats in Congress this fall, it could be years before such legislation is passed.

David Victor, director of the International Law and Regulation Laboratory at the University of California, San Diego, says that at the federal level in the U.S., “political forces for a price on carbon are spent.”

The worst-off companies will be those that plan to capture carbon dioxide without making a useful by-product–at least at costs that are competitive with conventional manufacturing. Among these companies are Climos, which has plans to reduce carbon-dioxide levels in the atmosphere by fertilizing the ocean to promote algae growth, and Global Research Technologies, which is developing chemical means of capturing carbon dioxide from the atmosphere. (Neither company responded to requests for comment.)

Some companies whose business plans counted on climate legislation may still last. For example, Skyonic, based in Austin, TX, has developed a method for capturing carbon dioxide from smokestacks and using the CO2 in the production of such products as hydrogen, chlorine, and baking soda. But without a price on carbon, the company is likely to be limited by the size of the markets for these products and competition from existing producers.

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Credit: Skyonic

Tagged: Business, Energy, climate change, biofuel, greenhouse gases, wind, carbon emissions, carbon dioxide emissions, legislation, cap and trade, carbon tax, climate bill

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