Hopes for stronger world action in 2010 to curb climate change have dimmed after the election of a US Republican senator opposed to caps on carbon emissions, experts said on Wednesday.

Backers of the existing international Kyoto Protocol, which obliges all industrialized nations except the United States to cut emissions until 2012, will be more reluctant to take on tougher new goals for 2020 unless Washington also joins in.

UN climate talks in Mexico in November are meant to build on a weak "Copenhagen Accord" worked out last month by nations including the United States that sets a goal of limiting warming to no more than two Celsius (3.6 F) above pre-industrial times.

But the Mexico meeting will be undermined if the United States, the top emitter behind China, has not set caps on carbon emissions. That might dash hopes for a Kyoto successor from 2013 and mean a system of domestic pledges instead.

"We can't afford climate to be a dysfunctional regime like trade," said Nick Mabey, head of the E3G climate think-tank in London. He said there were risks talks would stall, like the inconclusive Doha round on freer world trade launched in 2001.

Many nations have been sitting on the fence before deciding firm carbon policies, waiting for US legislation. US President Barack Obama wants to cut emissions by four percent below 1990 levels by 2020, or a 17 percent cut from 2005 levels.

Countries are supposed to propose carbon-cutting policies under the Copenhagen Accord by Jan 31.

The election of Republican Scott Brown on Monday in a special Senate race after the death of Democrat Edward Kennedy dims prospects for US action. Brown opposes cap and trade.

Once Brown takes office, Democrats will have 59 seats in the Senate and the Republicans 41. The bill needs 60 votes to overcome procedural hurdles.

Australia, Japan, Canada

Failure to pass US legislation could have a knock-on in countries such as Australia, Japan or Canada which are all considering stronger action beyond 2012, meant to avert ever more heat waves, droughts, floods and rising sea levels.

"2009 was fairly disappointing and 2010 could be another year of slow policy development to those trying to launch their own cap and trade schemes," said Trevor Sikorski, director of carbon markets research at Barclays Capital.

Still, he predicted that the value of global carbon markets would grow in 2010 - boosted by an increase in prices even though the growth of trading volume would slow.

"The issue of cap-and-trade does not go away. I expect banks will continue low-key capacity building as there is no downside if a market doesn't develop by 2011 or later," said Garth Edward, head of environmental products at Citi.

"They'll keep building the franchise," he said.

The European Union sees itself as a leader in combating climate change, and has set a goal of cutting emissions by 20 percent below 1990 levels by 2020, or 30 percent if others join.

"We need global cooperation and progress will only be possible with internationally binding commitments - but for everyone," German Chancellor Angela Merkel told the Bundestag lower house of parliament on Wednesday.

The Pacific island of Tuvalu fears rising seas could wash it off the map. Ian Fry, who represents Tuvalu in UN talks, said US. Carbon caps had to be passed by mid-year or would be put back into 2011 because of November elections that cover about a third of the Senate seats.

Also on Monday, a leading US Democrat in the Senate, Byron Dorgan, said it was unlikely the Senate would pass a climate bill in 2010. Instead, it would focus on a more limited energy bill that could expand offshore drilling and promote renewable energies such as solar and wind power.

Environmental activists said the Senate vote was bad news.

"On the international front, China is constantly looking to the US on climate bills ... This is definitely bad news. It doesn't bring new confidence to international negotiations," said Ailun Yang of Greenpeace in Beijing.