Michael Grubb: Russia and the United States hold the key to Kyoto

Global responses to climate change are approaching their most critical hour since George Bush rejected the Kyoto protocol. Negotiations on the next round are due to start by 2005 - if the agreement enters into force. But the Russians, who hold the key to final endorsement, have made it plain that they are in no hurry to do so. Putin's economic advisor has publicly opposed Kyoto, claiming that the long-term costs of saving the global environment might impede Russia's resurgent economy - and questioning whether the global environment should be of serious concern to Russia.

Meanwhile, the US has slowly developed its approach, which is to avoid the whole nasty business of capping emissions by talking about technology instead. The US is starting to pour billions of dollars into research on technologies like carbon sequestration and hydrogen.

Unfortunately, pursuing climate technology while eschewing emission caps is like designing a fancy car while opposing all efforts to put an engine in it. Fossil fuels enjoy the benefits of a century's development, and it will be a long time before low-carbon industries are mature enough to compete unaided. Indeed, some options are inherently more expensive - notably carbon sequestration, which adds expensive additional kit to clean up existing fossil-fuel technologies.

Governments are not good at delivering industrial technologies: there has to be a market for them. Carbon caps create such a market for low-carbon technologies.

The survival of Kyoto as the instrument for creating global low-carbon investment incentives is paramount. But time is running out. The companies at the forefront of low-carbon investment are getting restless. Six years after signing Kyoto, the diplomats are also tired of treading water.