UPDATE 2-Obama seeks US carbon emissions cap, clean energy

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WASHINGTON, Feb 24 (Reuters) - U.S. President Barack Obama on Tuesday called on Congress to send him legislation that places a market-based cap on U.S. carbon polluting emissions and pushes the production of more renewable energy.

In his first speech to a joint session of Congress, Obama said that “to truly transform our economy, protect our security, and save our planet from the ravages of climate change, we need to ultimately make clean, renewable energy the profitable kind of energy.”

He said his budget proposal to be released on Thursday will invest $15 billion a year on wind and solar power, advanced biofuels, clean coal and American-built cars and trucks that are more fuel efficient.

“We know the country that harnesses the power of clean, renewable energy will lead the 21st century,” said Obama, who took office five weeks ago.

However, he said while the United States invented solar technology, America has fallen behind Germany and Japan in producing it.

While new plug-in hybrid vehicles roll off U.S. assembly lines, Obama said they must run on advanced batteries made in South Korea.

To address those shortcomings, he reiterated his goal to double U.S. renewable energy production over the next three years and touted the billions of dollars his administration will invest in energy research.

“We will soon lay down thousands of miles of power lines that can carry new energy to cities and towns across this country. And we will put Americans to work making our homes and buildings more efficient so that we can save billions of dollars on our energy bills,” Obama said.

John Kilduff, senior vice president at MF Global in New York, said electricity price deregulation never met its promise because surplus power could not be shipped to regions of the country where supplies were constrained.

“If there is finally a commitment to updating the electricity grid, consumers could see electricity prices akin to what they pay for long distance telephone service,” he said.

As for Obama’s call for capping U.S. carbon emissions, Kilduff said buying and selling the permits among companies and industries to spew the emissions “could become a new boom for the financial services industry…that could rival foreign exchange trading and oil trading itself.”

Obama, a Democrat, succeeded Republican George W. Bush on Jan. 20, raising high hopes among environmentalists concerned over climate change and critical of Bush’s environmental policies.