Don’t expect the President to implement sweeping plans to decarbonise the US economy
By Steven F. Hayward
Political partisans are always faced with disappointments from their heroes, and Barack Obama is no different. In his first term, Obama was unable to deliver “card check” (a scheme to force automatic enrolment in labour unions), the top item on the wish list of his key backers in organised labour. Although he did manage to get Obamacare through Congress, its unpopularity cost his party its majority in the House of Representatives while disappointing many on the left who think it didn’t go far enough towards single-payer universal coverage. His failure to close the Guantanamo detention facility while expanding several other aggressive Bush-era national security policies, including the controversial drone program, has many leftists gritting their teeth. By far, however, the biggest disappointment for Obama’s left-liberal coalition has to be his handling of energy and environmental issues.
Obama is the author of the near-messianic expectations the climate enthusiasts held for him, proclaiming on the night he clinched the Democratic Party nomination in 2008 that “generations from now, we will be able to look back and tell our children that this was the moment ... when the rise of the oceans began to slow and our planet began to heal.”
Right now, however, honest environmentalists are telling their children that Obama stood aside while the House of Representatives’ legislation on climate mitigation died a slow death in the Senate, despite impassioned pleas for him to make an effort to push the bill across the finish line. (These pleas fell on the deaf ears of Obama’s first-term chief of staff, Rahm Emanuel, who one account described as “an obstacle to meaningful climate legislation”.) Despite Obama’s 11th hour intervention in Copenhagen in 2009, the UN Kyoto process hit the wall anyway.
The result of Obama’s lavish push for “green energy” in his 2009 orgy of stimulus spending ranges from pathetic job creation numbers to serial bankruptcy to outright crony corruption (such as Solyndra, the politically connected solar power company that soaked up $535 million in subsidies before going belly up). Add to this other Obama environmental decisions, such as cancelling a new ozone standard and delaying a new mercury regulation. Imagine the response from environmentalists if a Republican president had taken the same steps.
True, environmentalists are partially mollified over the one thin bone Obama has held out for view: the delay in deciding on the Keystone XL pipeline, the proposed conduit for the massive amount of new Canadian tar sands oil that has rapidly come online over the last decade. Environmentalists remain nervous that Obama may yet capitulate on Keystone, hence the continuing highly visible protests and civil disobedience outside the White House and wherever Obama travels. Obama’s feckless performance over Keystone summons forth every stale cliché of political journalism: he’s caught between a rock and a hard place, trying to fend off a perfect storm of tipping points that are sure to offend one or another of his key constituencies. (Pro-Obama labour unions have been vocally in favour of building Keystone, along with expanded hydrocarbon production on government-owned land.)
The Keystone fight, however, is merely symbolic of a much larger dilemma facing Obama — the politically convenient but ideologically inconvenient fact of the hydrocarbon energy boom currently underway in the US. The natural gas boom delivered by new drilling technology employing hydraulic fracturing (“fracking”) gets most of the notice, but US oil production is also unexpectedly soaring, dramatically reversing a steady 20-year decline. The 40 per cent increase in US oil production over the last five years — the largest increase of any nation — has had the concomitant effect of reducing US oil imports by one-third. The US is within striking distance of importing zero oil from the Middle East if it chooses. The fall in natural gas prices — from nearly $14 per thousand cubic feet a few years ago to around $3 today — is rejuvenating American chemical and manufacturing industries, and lowering energy costs for consumers.
Whereas the US thought ten years ago it would soon need to import natural gas to meet it needs, it is now facing the prospect of becoming a major exporter. Meanwhile, the spread of advanced drilling technology around the world has brought the popular “peak oil” hypothesis to disgrace. All of the recent projections, such as those of the International Energy Agency, now forecast that the age of hydrocarbon dominance (including coal) will last several decades longer than previously thought.
This hydrocarbon boom was completely unexpected and came as a surprise to Washington. In fact, had the political class and environmentalists known it was coming, they surely would have done something to stop it. It has been politically convenient for Obama to claim credit for the boom with the general public, even though it is occurring mostly on private and state-managed land rather than federal land. (The President’s bureaucracy continues to strangle or slow-walk permits for drilling on public land.)
But Obama has drunk so deeply of the anti-hydrocarbon Kool Aid that the hydrocarbon boom is a deep embarrassment at some level. He told more than one corporate CEO member of his private sector jobs council (since abolished now that the election is safely behind him) that he has been assured by outgoing energy secretary Steven Chu that America is only a few short years away from completely replacing hydrocarbon energy sources and hence it did not need to be expanding conventional energy production. Word around Washington before the election was that Obama was telling environmentalists privately that he is fully committed to putting a price on carbon in his second term, and he made all the right noises in his second inaugural address and State of the Union speech to assuage environmentalists.
In his inaugural on January 21, Obama promised that “we will respond to the challenge of climate change”, and in the State of the Union a few weeks later he called for Congress to pass a cap-and-trade bill “like the one John McCain and Joe Lieberman worked on together a few years ago”. But cap-and-trade is not coming back, even if Democrats reclaim the House and hold the Senate in the 2014 elections. House Democrats never want to hear the phrase again; next to Obamacare, voting for the Waxman-Markey cap-and-trade bill was the most unpopular vote they cast in 2009, contributing significantly to their historic wipe-out in the 2010 midterm election. And the White House has specifically ruled out proposing the superior fallback position — a carbon tax — though it is possible Obama would gleefully accept one if Republicans proposed it as a part of a tax reform deal. Republicans may be the Stupid Party much of the time, but they aren’t completely suicidal. The likelihood of any climate legislation passing the Republican House is as remote as Republicans suddenly declaring their love for Obamacare.
So what options remain for Obama?
The President telegraphed his next moves in the State of the Union speech: “But if Congress won’t act soon to protect future generations ... I will direct my cabinet to come up with executive actions we can take, now and in the future, to reduce pollution, prepare our communities for the consequences of climate change, and speed the transition to more sustainable sources of energy.” This formula is just a slight variation on the inaugural rhetoric of his primary presidential model, Franklin Roosevelt, who in his first inaugural address in 1933 said: “But in the event that the Congress shall fail to take one of these two courses, and in the event that the national emergency is still critical, I shall not evade the clear course of duty that will then confront me. I shall ask the Congress for the one remaining instrument to meet the crisis — broad executive power to wage a war against the emergency, as great as the power that would be given to me if we were in fact invaded by a foreign foe.” American liberals can’t resist appeals to expand executive power on behalf of the “moral equivalent of war”.
Obama went on to call for an “energy security trust”, funded with royalties from oil and gas production on public lands, to conduct research on next-generation energy sources, a reasonable idea that may nonetheless have been poisoned by the billions squandered already on green energy boondoggles like Solyndra. Obama or his new energy secretary Ernest Moniz will need to explain why this initiative will be any more effective than similar initiatives for breakthrough research by every president back to Richard Nixon. Since the 1970s, the federal government has spent nearly $200 billion (in current dollars) on energy research, but there have been few commercialised energy products for this effort. Why continue tilting at this windmill?
Speaking of windmills, Obama also called for continued subsidies for renewable energy, such as wind and solar power, currently running around $10 billion a year depending on how you sum up the complex patchwork of fiscal props. Renewable tax preferences and subsidies survived the “fiscal cliff” deal on January 1 — the work of some clever backroom dealing months ago by renewable energy lobbyists — but are likely to be scaled back or abandoned in the budget tightening that is going to take place in Washington over the next few years. The mandate to produce cellulosic ethanol (begun by President George W. Bush) has been a complete fiasco, and even environmentalists have turned on corn ethanol. But even if the subsidies are continued, the share of non-hydropower renewable energy remains pathetically small — stuck in the low single digits as a percentage of total US energy output.
Left unsaid in any of Obama’s grand pronouncements is the real action — regulation of greenhouse gases through the Environmental Protection Agency and the Clean Air Act. Understanding how this might work requires understanding a little about the arcane process of American administrative law that governs regulatory activity. US environmental statutes (and many other kinds too) delegate large amounts of discretion to the regulatory agencies to decide what concrete targets to meet and what policy means should be used to achieve those targets. But there’s a catch: the process is very slow, and broad rulemakings are usually challenged in court by industry or environmental groups, slowing down the process even further.
It is not unusual for a major EPA rulemaking to take ten years or more from inception to conclusion, after which a long implementation period begins. For example, it took eight years for new ozone rules first proposed in 1997 to clear the procedural and legal hurdles to final adoption, and the proposed mercury emission rules that Obama delayed again last year have been in the works since the Clinton administration. Small wonder that even environmentalists regarded EPA regulation of greenhouse gases as the worst possible outcome for climate policy, and throughout the debate over the Waxman- Markey cap-and-trade bill in 2009, the prospect of having the EPA step in was used as a cudgel to intimidate opponents. That the EPA is now the main venue of climate action for Obama shows ironically how completely he and the environmental movement have been routed.
Can it work? The EPA typically wins these long, grind-it-out rulemaking fights in the end, chiefly because American administrative law grants generous presumption in the agency’s favour most of the time. That appears to be the case with EPA regulation of GHGs, too: in 2007, the Supreme Court ruled by a 5–4 vote that the EPA had the authority to regulate GHGs if it wants to under the 1990 Clean Air Act, even though Congress at the time opposed including GHGs in the text of the Act, and the mechanisms of a law designed for noxious conventional air pollutants is ill-suited for GHGs. (For example, a strict application of the Clean Air Act to GHGs could conceivably require an EPA permit for every fast food restaurant and apartment building in America — a paperwork nightmare the EPA itself estimated would require increasing its manpower tenfold.)
But even the Supreme Court’s green light doesn’t make it a slamdunk for the EPA. Since this narrow win, the EPA has been slowly taking the necessary steps to introduce a regulatory regime for GHGs, but it isn’t going well. Last year the EPA announced proposed performance standards for new coal- and natural gas–fired power plants that would have the effect of making it impossible to build any new coal-fired plants in the future. And rules for new coal plants were just a precursor to new rules for existing coal plants that would slowly constrict the future of coal-fired electricity. Killing off coal, the highest emitting GHG energy source, is the number one object of the climate campaign, so the proposed rules were met with a frisson of excitement among climate enthusiasts when it was announced.
The trouble is that proposing an emissions standard that only natural gas plants could meet runs the risk of failing the one legal test the EPA might lose in court — that it is “arbitrary and capricious”. In April, at the last minute, the EPA withdrew the “final rule”, and will start over again. It declined to announce a new timetable for the revised regulations. But although the EPA usually wins regulatory fights in court, the Obama EPA has recently been losing in court, which suggests it has overstepped even its lenient bounds. For example, the agency recently lost a Clean Water Act case at the Supreme Court by a 9–0 vote, meaning even the Court’s liberal justices found the Obama administration’s position to be unreasonable. Someone at the White House has probably noticed this.
The basic problem for Obama and the climate campaign is that they are pushing uphill against public opinion as well as the basic economics of energy. The best public polls, such as Pew and Gallup, that ask the same questions year-on-year find public belief in catastrophic climate change continues to ebb. Pew’s annual issue poll continues to rank climate change last out of the 20 most important issues facing the nation. Obama has lately taken to quoting Abraham Lincoln’s famous remark that “public sentiment is everything. With public sentiment, nothing can fail; without it nothing can succeed.” This is a movement that has run completely out of gas, so to speak.
Substantial climate policy progress in the US was supposed to be the key to reviving the UN Kyoto process. Instead, the Kyoto Protocol has now expired without a successor, and its meagre results justify considering it to be the climate diplomacy equivalent of the Kellogg-Briand Pact that promised to end war back in 1928. Ironically, the unravelling of Kyoto shows that the Bush administration’s opposition kept it alive well past its sell-by date. As long as Bush was around to serve as the handy scapegoat, the UN climate circus could avoid facing its inherent problems. Quite unnoticed or unacknowledged by the climate campaign, the Obama administration has quietly embraced the diplomatic framework of the Bush administration. The main defect of Kyoto, as the Bush administration saw clearly, is that it omitted the fastest growing and now largest emitters of GHGs, especially China and India. Obama’s climate negotiators have quietly adopted the Bush administration’s “Asia-Pacific Partnership”, which the UN crowd and climate campaigners hated, and renamed it the “Major Economies Forum”. But without serious policy action from Washington, it is unlikely that rearranging the diplomatic deckchairs can save this sinking ship.
If you’d told environmentalists on election day in 2008 that more than four years later there would be no successor treaty to Kyoto, that a Democratic congress would not have enacted any meaningful — or even symbolic — climate legislation, and that domestic oil production would soar (even after a catastrophic offshore oil spill), they’d have suspected that Dick Cheney had stolen (another!) election. Yet environmentalists, who have tended to be the cheap dates of the Democratic Party for several decades, continue to plight their troth. Carl Pope, the recently retired executive director of the Sierra Club, has called Obama “the best environmental president since Theodore Roosevelt”. Yet if you look at the matter honestly, you’d have to conclude that it’s not just in national security policy where Obama has turned out to be the third term for George W. Bush. It turns out to be the case with climate policy as well.