Friday, April 8, 2011

Obama's clean energy standards slip in budget battle with Republicans

You have to pity Barack Obama. Even before the imminent threat of today's government shutdown, he looked like a man on the wrong end of a turkey shoot. Dick Cheney isn’t holding the smoking gun this time, but other Republicans have the president in their sights from all angles. Attacks on the Environmental Protection Agency, battles over the budget, breaking the unions are all attempts to stymie the Obama administration’s progress in any policy area.

So away from Capitol Hill, it must have come as a refreshing change to announce his Blueprint for Secure Energy Future to an appreciative audience with intelligent and open minds at Georgetown University in Washington DC.

As the leader of the free world, the president is the most shackled person in American politics. So he must have enjoyed the the freedom finally of saying the words climate, pollution and quickly in the same paragraph:

“We’ve got to discover and produce cleaner, renewable sources of energy that also produce less carbon pollution, which is threatening our climate. And we’ve got to do it quickly.”
These were words noticeable by their absence from the president’s state of the union address in January – but he did go as far as to say that the US needed a clean energy policy.

Last week's Blueprint gave a few more details on what this energy strategy would look like: oil imports he said would have to be reduced by one-third by 2025.

“We consume about 25 percent of the world’s oil. We only have 2 percent of the reserves,” he admitted. 

But that means more drilling at home. Never mind that the Blueprint and the president's FY2012 budget also recommend shorter lease terms to encourage more rapid development which appears at odds with the increased safety standards in the oil industry as the Gulf of Mexico reopens for business after last year's BP disaster. On her show last night, Rachel Maddow pointed out that 9 permits had been issued since the end of February, the first after the moratorium on deepsea drilling was lifted in October last year, and suggested there might be a link between the speed of permitting and the price of oil.

Last week Obama proudly said:

"Now, today, we’re working to expedite new drilling permits for companies that meet these higher standards. Since they were put in, we’ve approved 39 new shallow-water permits; we’ve approved seven deepwater permits in recent weeks. When it comes to drilling offshore, my administration approved more than two permits last year for every new well that the industry started to drill. So any claim that my administration is responsible for gas prices because we’ve “shut down” oil production, any claim like that is simply untrue. It might make for a useful sound bite, but it doesn’t track with reality. "

But an increase in domestic oil production, he said, would have to be complemented by reduced dependence on oil. Homes, offices, factories and government buildings would become more energy efficient under his Blueprint, before giving more detail on the Clean Energy Standard he announced in January.

Around half the states in the US already have their own “clean energy” targets, but not all of them are binding targets. The Renewable Portfolio Standard mandates utilities to purchase a certain amount of electricity from clean sources, ie wind and solar. California’s RPS is 33% by 2020, but Utah's is a 25% voluntary target by 2025.

The CES would overcome that national variation by creating a federal target yet to be determined:

A Clean Energy Standard, or “CES,” is a flexible approach that taps American ingenuity and innovation – and channels it toward a clean energy future. The CES sets an annual target for electricity from clean energy sources, while allowing businesses and entrepreneurs to figure out the best way to meet it.

A CES would work by giving electric power plants clean energy credits for every megawatt-hour (MWh) of electricity they generate from clean energy. Utilities that serve retail customers would be responsible for making sure they had enough credits to meet their target. Utilities that generated more clean energy than they needed could bank their extra credits for later use, or sell them to other companies. This flexible, market-based approach ensures that clean energy will be produced wherever it makes the most economic sense. And by creating a market here at home for innovative clean energy technologies, we will unleash the ingenuity of our entrepreneurs – and ensure that America leads the world in clean energy.

But in his SOTU speech, the president also redefined clean energy to include nuclear, clean coal and natural gas.

Although some analysts interpreted the Fukushima disaster as a boon to renewables, last week Obama told the Georgetown students that the US could not afford to take nuclear off the table.

Jonathan Silver, the head of the Department of Energy loans programme, has said that Fukushima won’t derail Obama's nuclear project. Reactors have already been proposed in Maryland, Texas and South Carolina. But the DOE has said it needs $36bn in additional nuclear loan guarantee authority from Congress  before construction can begin.

If pitting credits from nuclear against those from solar and wind weren’t bad enough news for the renewables industry in the US, the CES would also include partial credits from fossil fuel generators such as natural gas and "clean coal."

Policies on oil and nuclear may have potential for agreement between the Republicans and the President. But most Republicans would never agree to other elements of Obama's budget FY2012 and Blueprint:

• Cutting fossil fuel tax subsidies by $46bn to invest in clean energy
• Mass transit investments that would "provide Americans with affordable transportation options that help reduce dependence on gasoline."
• Providing 80% of Americans with access to an inter-city rail system, including high-speed rail, in the next 25 years.
• Creation of the National Infrastructure Bank (I-Bank) for infrastructure projects of regional or national economic significance.
• Funding for a Livable Communities Programme, which aims to improve mobility and quality of life through better transport and access to services.
• Four commercial-scale cellulosic or advanced bio-refineries over the next two years
• Transformation of the existing $7,500 tax credit into a rebate
• In July, the administration plans to finalize the first national fuel economy and emissions standards for commercial trucks, vans and buses built in 2014 to 2018.
• Administration is also developing the next generation of fuel economy and emissions standards for passenger vehicles built from 2017-2025 and expects to announce the proposal in September 2011.

Republicans can’t even agree with Democrats on what cutlery to use in the House of Representatives. And given the rising levels of political rancour raging through Congress on the ideological and even religious aspects of the budget, there is little chance of the president's budget or the CES seeing the light of day. The presidential candidate who took office with the slogan “yes we can” is being told “oh, no you can’t”.

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