By Keith Johnson

Crude oil futures rose over $70 a barrel as a weaker dollar counteracted yesterday’s surprise drop in inventories, Bloomberg reports. More fuel for the peak oil crowd—a report from the U.K.’s Energy Research Council sees peak production sometime before 2020, in The Guardian.

The worry for Conoco Philips is peak demand—the oil company will sell $10 billion in assets and scale back spending to try to adjust to a world of lower demand and lower energy prices, in the WSJ.

Dancing with the stars, Capitol Hill edition: The waltz over climate legislation begins in earnest. Republicans open the door to a compromise that offers more support for nuclear power and offshore drilling, and moderate Democrats say there’s more common ground on the climate bill than there is on health care, in Climate Wire.

Meanwhile, clean-energy executives blitz Washington to urge fence-sitting Senators to support what looks like a jobs bill, AP reports. Some senators on the fence are worried about jobs—but not in clean tech: Sherrod Brown reiterates that carbon tariffs to protect manufacturing jobs are they key to landing 60 votes, in the WSJ.

Don’t forget the natural-gas industry—it’s still lobbying to make gas a bigger part of the energy bill in the Senate than what came out of the House, at FT’s Energy Source.

Brad Plumer traces the Chamber of Commerce’s woes over climate policy back to the health-care debacle—the Clinton-era health care mess, that is.

Free Willy—er, the ethanol industry—urges Geoff Styles. A government report showing the industry doesn’t need cash subsidies suggests it might be time to sink or swim: “After 30 of assistance…it’s time to find out whether this industry can survive and compete on its own.”

Finally, remember the controversial Kingsnorth coal plant in the U.K. that got James Hansen so worked up? E.On has decided to shelve the plant for now, since electricity demand has gone south in the recession, in The Guardian.

At the risk of stating the blindingly obvious, it seems like the biggest problem with the Senate energy and climate bill is that nobody knows exactly what it’s for.

Clean-tech executives that descended on Washington this week see it fundamentally as a jobs bill, meant to kickstart the U.S. clean-energy industry. That’s a view shared by Energy Secretary Steven Chu: “The cost of not doing something is we will lose the chance to lead in this next Industrial Revolution,” Dr. Chu said Wednesday.

Couldn’t agree more, said Ohio Sen. Sherrod Brown—jobs are indeed the key to passing any legislation. Not clean-energy jobs, though—existing manufacturing jobs in the heartland.

“This bill is written to deal with climate change and it’s written as a jobs bill,” he said, explaining why protectionism is the key to curbing greenhouse-gas emissions. Which happens to be almost exactly the opposite approach of some big companies, such as General Electric.

Yes, it’s a jobs bill, says Sen. John Kerry; the bill’s title reflects that. But for the chairman of the Senate Foreign Relations Committee and President Obama, it’s about a lot more. “The message wanted to get over is he’s committed to moving forward,” Sen. Kerry said. “He views it as a critical. It’s a job creator. A national security priority.”

What does that mean? Does that refer to the possible national-security implications of climate change? Or does that mean national security as in energy security?

Republicans certainly like the energy-security idea. That gives more room for natural gas, nuclear power, and offshore oil and gas drilling in the bill. That trifecta is shaping up as one way to actually broaden political support for the bill.

Unless it erodes political support for the bill. “You’re trying to solve a climate crisis and you are going to drill for more oil?” asked Jim Riccio of Greenpeace. “How does that make any sense whatsoever?” (To be fair, Greenpeace lambasted Congressional efforts even without extra support for oil, gas, or nuclear power.)

Granted, the whole point of wrapping the energy bill and the climate bill together is to sweeten the environmental pill and give the bill at least a fighting chance of passage.

But the Senate bill, which isn’t even written yet, is turning into a Rorschach blot. Everybody’s projecting their hopes, fears and phantoms. That may be good politics. It’s not clear that’s good policy.

The head of the Chamber of Commerce, Thomas Donohue, blasted Apple Inc. on Thursday for “misstating” the chamber’s position on U.S. climate policy, and suggested some companies are quitting his group as part of an orchestrated campaign.

But Mr. Donohue also expressed regret that one of his aides called for a “Scopes monkey trial”-like hearing on the evidence that human activity is raising surface temperatures, saying he was “madder than hell” when the aide’s remark was reported over the summer. Calling global warming “an issue the world has to deal with,” Mr. Donohue also said his group doesn’t oppose the principle of requiring companies to pay for the right to emit carbon dioxide, though he attached numerous qualifiers to his statement. An aide said any proposal to curb emissions would have to avoid causing “undue” harm to the U.S. economy.

Mr. Donohue added that such a stance doesn’t reflect a change of heart on the group’s part, and that the group is “standing firm” in its opposition to recent congressional proposals to cap U.S. greenhouse gas emissions.

“If people want to attack us, bring ‘em on,” Mr. Donohue said during an hourlong press conference at the Chamber’s headquarters.

Mr. Donohue called the press conference following a series of high-profile defections from the Chamber over the group’s attacks on proposals in Congress to curb U.S. greenhouse gas emissions. On Monday, Apple Inc. became the latest company to quit the group, saying it “supports regulating greenhouse gas emissions, and it is frustrating to find the Chamber at odds with us in the effort.”

Check back for more updates on the never-ending saga.

German utility E.On’s decision to temporarily shelve plans for a big coal-fired power plant in the U.K. is clearly big news. The fun part is trying to figure out just why it matters so much.

For starters, the proposed Kingsnorth project is more than just another power plant. The 1,600 megawatt station would have been the U.K.’s first new coal plant since Margaret Thatcher was in office, and became a huge lightning rod for environmental opposition. Greenpeace centered anti-coal protests on Kingsnorth. Climate researcher James Hansen targeted Kingsnorth when he equated coal power with “death trains.” That’s why environmental groups are cheering E.On’s retreat—many see the decision as a green victory over coal, akin to the Sierra Club’s relentless campaign against coal in the U.S.

Officially, E.On says the decision to delay Kingsnorth for at least 2-3 years is due to the recession, which has kneecapped the demand for electricity. “This is based on the global recession, which has pushed back the need for new plant in the UK to around 2016 because of the reduction in demand for electricity,” the power company said.

While the slowdown has led to an “unprecedented” decline in U.K. electricity demand, it seems somewhat of a stretch to expect another seven years of famine just as the global economy is turning the corner. Especially when the U.K. government itself expects energy demand to grow relentlessly, and whose biggest worry is how to keep the lights on over the next decade.

More likely, E.On’s decision to park the yet-to-built power plant is about a yet-to-be-developed technology: clean coal. The U.K. desperately wants to make clean coal technically and economically viable; its other energy alternatives are basically imported natural gas or nuclear plants that have yet to be built either. E.On wants clean coal to work, too—it’s one of a handful of European utilities jockeying for British government funds for clean-coal development.

Which makes the Kingsnorth decision look less than a strategic retreat and more like a tactical withdrawal.

For all the bits of clean coal that have yet to be worked out—capture technology, for instance, and issues around storing carbon underground—one issue looms largest: Who’s going to pick up the tab? Power companies struggle to justify spending an extra $1 billion or so per power plant to clean it up; governments struggle to find the cash in the first place.

That’s why E.On’s decision looks more than anything like a shot across the bow—not at the current Labor government, but the opposition Conservative Party, which is giddy with a huge lead in the polls over Labor.

The Tories insist that any new coal-fired power plants—such as Kingsnorth—include carbon capture and storage technology. Conservative leader David Cameron also said today that the top Tory priority will be to rein in the debt and the deficit. Good luck.

Finding billions of pounds to underwrite clean-coal development will mean squeezing the political wish list elsewhere or increasing double-digit budget deficits. Skimping on clean-coal funding might mean spooking the very utilities needed to build the power plants to keep the lights on.

Crude oil futures slipped under $71 after the dollar strengthened in the wake of comments by Fed Chairman Bernanke, Bloomberg reports.

More on Chevron’s success squeezing out more oil from old fields in California, in the WSJ. And the Interior Department finally halts leases on 60 of the 77 parcels in the controversial Utah oil-and-gas lease program, in the NYT.

Shell is bullish on the future of natural gas, unveiling a massive floating LNG platform larger than an aircraft carrier that offers access to remote natural-gas reserves, in the WSJ.

So much for a climate bill in the Senate this year—now the bill is unlikely to even hit the floor until November, virtually ensuring the debate is pushed back to next year, in the WSJ.

What’s that mean for the prospects in Copenhagen? Top U.S. climate negotiator Jonathan Pershing, in Bloomberg: “It will be extraordinarily difficult for the U.S. to commit to a specific number in the absence of action from Congress.”

Balancing this energy and climate game is tricky business. The U.K. energy regulator says the country needs $320 billion over 15 years to keep the lights on and clean up, in the WSJ: “Britain faces a tough challenge in maintaining secure supplies whilst at the same time meeting its climate change targets,” the regulator says.

New paleo-climate studies suggest there is in fact a relation between high levels of CO2 and rising temperatures, and rising sea levels, and melting ice caps, in Scientific American.

So are exotic ideas like air capture the answer? While sucking CO2 out of the atmosphere sounds promising, it would require a storage infrastructure bigger than today’s oil business, at Yale’s Environment 360.

Maybe something more modest: Timber companies and environmentalists make peace to promote forest conservation and carbon offsets, in the WaPo.

Atlantic states are thinking of teaming up to develop offshore wind as a counterweight to Midwestern onshore wind, in Climate Wire.

The Economist dives into the “smart grid” debate. Leaving aside that no one really agrees what the term means, “smart grids are not a substitute for a proper energy policy,” the newspaper says. More on the technological, regulatory and even consumer hurdles a new grid faces.

Big Coal bristles at EPA regulations aimed at preventing companies from blowing off the tops of mountains, in the WSJ: “They’re trying to find a way to kill us a little bit at a time—death by a thousand cuts,” says a Massey Energy executive.

A pilot project in Wyoming shows new techniques for carbon capture work; now we just need to figure out how to store the stuff, in Greentech Media.

Finally, carbon capture comes to the oil sands: The Canadian government awards $800 million to Shell, Chevron, and Marathon to work out how to capture and store the greenhouse-gas emissions from oil-sands development, in the WSJ.

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