Cleantech Market Intelligence
In Obama’s Second Term, Hopes For a Meaningful Climate Change Policy
In the wake of super-storm Sandy and President Obama’s re-election, the subject of climate change and even the term “global warming” are back on the table, if not fully on the political agenda. Speculation as to whether the United States will finally adopt a national climate policy abounds in the media. During his acceptance speech, Obama proclaimed: “We want our children to live in an America that isn’t burdened by debt, that isn’t weakened by inequality, that isn’t threatened by the destructive power of a warming planet.”
The possibilities range from extracting natural gas through hydraulic fracturing or “fracking” without causing environmental harm, to cementing the EPA’s role in regulating carbon emissions from new power plants, to stricter federal oversight of deep-water oil exploration and production, to a final decision about the Keystone XL oil pipeline, and even to a carbon tax as part of tax code reform. Given the mounting federal deficit, the possibility of a cap and trade policy is not to be easily dismissed: a new report from the Congressional Research Service (CRS) cites one study that claims that a modest carbon tax of $20 per metric ton would generate approximately $88 billion in 2012, rising by 64% to $144 billion by 2020.
Yet the general consensus is that carbon tax won’t be enacted, though there will most likely be a significant debate about various alternatives. At least, the subject is no longer taboo. The day after the election, Senate Majority Leader Harry Reid (D-NV) expressed his expectation that Congress would make progress on climate change action. “Climate change is an extremely important issue for me and I hope we can address it reasonably,” Reid continued “… as we’ve seen with these storms that are overwhelming our country and the world, we need to do something about it.”
Despite the renewed hopes that the United States will finally take meaningful climate change action, it will undoubtedly be an uphill battle for the White House. Opposition to any form of climate change initiative that might affect U.S. businesses has not wavered in the GOP-controlled House, and a number of Democrats from oil-producing states have joined Republicans in opposing climate legislation. Instead, it’s more likely that lawmakers will push for less controversial proposals, such as expanding green energy and energy-efficiency programs to help reduce carbon emissions.
Although the prospect for any major change on climate policy on Capitol Hill looks slim, it’s not hopeless. With no re-election worries, Obama should be free to tackle environmental issues in his second term. Yet, when asked about climate change at a November 14 press conference, he endorsed taking action to mitigate carbon emissions, especially if it would create more jobs, but provided no details. Moreover, international pressure is mounting, as the second Kyoto Protocol (Kyoto 2) is under consideration. In this new round of the Kyoto Protocol, nations are asked to commit to a target of 5% reduction of carbon emissions between 2000 and 2020. While Australia has joined the European Union and smaller economies by announcing its commitment to this goal, the United States, together with China – the two highest emitters of greenhouse gases – have merely signed a non-binding pledge and are working toward a new agreement that will not take effect until 2020. One wonders how many natural disasters it will take before all nations face the facts and take action.