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Obama sets ambitious energy agenda for his second term

The US president used his inaugural address to reaffirm his commitment to tackling climate change

In his strongest statement on the direction of US energy policy, US president Barack Obama used his inaugural address to reaffirm a commitment to fighting climate change and advancing a shift from fossil fuels. 

“The path towards sustainable energy sources will be long and sometimes difficult, but America cannot resist this transition; we must lead it,” he said.

Obama devoted 150 words of his 2,000-word text to energy and the environment, compared with 38 for gun control. More revealing was the level of emphasis placed on climate change as a guiding principle of future decision-making. He said the US will continue to invest in alternative energy, even as it strives to increase domestic oil and gas production.

Obama said the US “cannot cede to other nations the technology that will power new jobs and new industries”, but it was not clear what he had in mind.

Attempts to pass cap-and-trade legislation stalled in 2010 amid opposition from his own Democrat party. Obama has had more success using executive orders to introduce the highest fuel economy standards in US history. These will come into play in the next decade.

Meanwhile, domestic oil and natural gas production has climbed to 25-year highs under Obama’s watch, as demand has fallen. Since he was elected in 2008, US oil output has risen 25% to 6.8 million barrels a day (b/d) in October 2012. At the same time, US oil demand fell 2% last year, to 18.56m b/d, the lowest in 16 years.

Despite those successes, Obama still has much to do. Now he must appoint new heads for the Environmental Protection Agency (EPA), the Department of the Interior and the State Department. Each will play defining roles in shaping energy policy over the next four years. John Kerry is expected to replace Hillary Clinton as secretary of state.

EPA administrator Lisa Jackson will resign from her position this year, as will interior secretary Ken Salazar. The EPA is carrying out a comprehensive study of hydraulic fracturing (fracking), which is due to be finalised in 2014. On 18 January, the Bureau of Land Management (BLM) delayed plans to implement tough new fracking rules on 700m acres of federal land that were due to take effect in April.

Other developments are coming to a head. On 22 January the state of Nebraska approved a re-routing of the Keystone XL pipeline, which would carry bitumen from the oil-sands to the US Gulf coast, and formally submitted the file back to Obama. A final decision one way or the other will fall to the incoming secretary of state within the next three to four months.

Assuming he is approved, Kerry brings green credentials to the post. But the Canadian Press reported he also holds shares of Canadian oil-sands producers in a blind trust.

This is technically not a conflict of interest under US law; however it illustrates the dilemma facing the new administration as it balances a tougher environmental stance with higher oil and gas production; and whether it can pursue both at the same time. 

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