Related Articles
Forward article link
Share PDF with colleagues

Obama vows clean energy shift for US in State of the Union

If there were any doubts about US president Barack Obama’s determination to tackle climate change, it was put to rest in his State of the Union speech on 13 February

Continuing on themes touched on in his inaugural address, Obama vowed the world’s largest energy consumer would continue on the path to higher efficiency and lower greenhouse gas emissions. And, if Congress decides not to pass comprehensive climate change legislation, Obama pledged to exercise his executive powers and go it alone.

“We can choose to believe that superstorm Sandy, and the most severe drought in decades, and the worst wildfires some states have ever seen were all just a freak coincidence. Or we can choose to believe in the overwhelming judgment of science – and act before it’s too late,” he said. “If Congress won’t act soon to protect future generations, I will.” 

Development fund

The centrepiece of his proposals include an energy security trust fund “that will drive new research and technology to shift our cars and trucks off oil for good”. He also outlined plans to reduce energy use in homes and businesses by half over the next 20 years.

It’s an ambitious agenda from a president facing a divided house and senate. But it’s also some of the clearest policy statements to come from the White House regarding energy policy in more than four years.

However, it’s not clear what Obama could achieve without broad bipartisan support, which was lacking in his first term. Previous attempts to enact cap-and-trade regulations stalled due to opposition from within the Democratic party. Any attempts to resurrect it will likely meet the same fate.

Going green: Obama lays out his energy strategy

Nonetheless, Obama has had success using executive powers within existing legal frameworks. In 2011 he implemented the highest vehicle mileage standards in US history, 54.5 miles per gallon (MPG), which will eliminate 4 million barrels a day (b/d) of US oil demand by 2025.

Obama could use those same powers to toughen rules for coal-fired power plants, or begin phasing them out altogether. Coal supplies about 50% of the electricity generated in the US and accounts for about 2 billion tonnes of carbon dioxide (CO2) per year.

The Environmental Protection Agency (EPA) has placed limits on new coal-fired plants and is in the process of finalising new rules for existing facilities. Since the Supreme Court granted the EPA authority to regulate CO2 in 2007, Obama has been able to use the government agency as an instrument of policy.

But retiring the coal power generation fleet would require a massive shift to natural gas, as well as alternatives like wind and solar. In that regard, there was at least a tacit acknowledgement that Obama needs the oil and gas industry on board to meet his climate change goals.

Obama said “the natural gas boom has led to cleaner power and greater energy independence”, and was quick to take credit for the US’ rising oil and gas output, which climbed to the highest levels in 15 years under his watch.

According to the US government’s Energy Information Administration (EIA), domestic oil production climbed almost 1m b/d in 2012 and looks set to increase by a similar amount this year. At the same time, US greenhouse gas emissions have fallen to 20-year lows without any government prodding, as power producers switched to cheaper gas from coal.

Obama soften his rhetoric a little, however, calling for a “market-based solution to climate change”, that favours renewables as well as an “all-of-the-above” strategy of increasing domestic fossil fuel production.

To that end, Obama vowed to “keep cutting red tape and speeding up new oil and gas permits” on federal lands. He also vowed to rebuild ageing energy infrastructure, including the construction of “modern pipelines”.

It was not clear if it was a veiled reference to the 1m b/d Keystone XL pipeline from Canada, which critics say would increase US reliance on environmentally damaging oil-sands crude. It will be up to Obama to decide the fate of the pipeline, along with other potentially controversial issues such as allowing natural gas exports from US shores.

Critics worry large scale liquefied natural gas (LNG) exports from the Gulf of Mexico would drive up prices for consumers and discourage secondary manufacturing industries, such as petrochemicals.

There are other flashpoints that could put Obama’s environmental agenda at odds with higher natural gas and tight oil production. The EPA is in the process of finalising new rules for hydraulic fracturing, due for released in mid-2013 – it is a given that neither industry nor the environmental lobby will be pleased with the result.

Building a bridge

For all the conflict, energy policy is one area that Obama can bridge differences with his Republican opposition. American Petroleum Institute president Jack Gerard - often a harsh critic of the administration - welcomed Obama’s recognition of the oil and gas industry as “a robust economic engine” that generates billions in government revenue.

However, the head of the oil industry’s largest industry lobby group complained Obama “must follow through by implementing a national energy policy, lifting existing restrictions in support of responsible development of our vast energy resources... and standing up against unnecessary and burdensome regulations that chill economic growth”.

Also in this section
Iran's upstream sector battens down for survival
14 December 2018
Sanctions scrape the remaining shine off tarnishing sector
Middle East tensions rumbled on in 2018
13 December 2018
Oil prices recovered, but old conflicts remained unresolved
Sellers jockey to fill India's Iran void
13 December 2018
Iranian deliveries have dropped significantly despite exemption, but it is not as simple as Saudi Arabia stepping in