US President Barack Obama’s plans for climate reform look dead and buried by the widespread Republican victories in the nation’s midterm elections.
His clean energy plans — a sweeping vision to rid the US of dependence on foreign oil and to generate alternative energy sources — also appear destined to failure. But at least he won’t be alone on that count.
Check out this video sent to me a few days ago by Arkx investment manager Tim Buckley. If you don’t have time to view it (though I recommend you do, it’s pretty funny — albeit discouraging), this is a quick summary: each and every one of the last eight US presidents has pledged to make America energy independent and pursue alternative energy. And each, of course, has failed. And how.
There’s President Nixon declaring the US will “meet its own energy needs from its own resources” by 1980. Even George W. Bush reckoned he could ween “most” of America’s energy needs off foreign oil by, well, 2025. And all of these presidents — Nixon, Ford, Bushes senior and junior, Carter, Reagan, Clinton and Obama — were all full of great ideas: solar, wind, hydro, energy efficiency, clean coal, nuclear, woodchips, stalks and switchgrass (that’s George W) and what Jimmy Carter described as plant products for “gasohol”.
Well, at least there’s California. The world’s eighth-biggest economy voted in Democrat Jerry Brown as governor to replace the outgoing Arnold Schwarzenegger (defeating Republican candidate, former Cisco CEO and perceived clean energy foe Meg Whitman), returned the liberal Barbara Boxer despite a strong challenge from ex-HP CEO (and even greater cleantech foe) Carly Fiorina, and voted overwhelmingly to reject Proposition 23, a measure put forward by US Big Oil to put the state’s climate bill and clean energy acts on hold.
It means that California’s Clean Air Act of 2006 remains in place and will now begin to do useful things. It will seek to reduce emissions to 1990 levels by 2020, introduce a cap-and-trade emissions trading scheme by 2012, and help ensure that the state remains the centre of cleantech development, particularly in the rapidly emerging sectors such as solar and algae.
In many ways, the US is a proxy for what is happening in global negotiations — a complete inability to generate a top-down approach to coordinated action on emissions reduction and clean energy, contrasted with vigorous “bottom up” efforts on an individual or a regional basis.
Still, even in California, the clean energy sector may find that it can’t get all it wants. It may turn out that it has been outsmarted and outflanked by Big Oil which, despite making a big noise about Proposition 23, quietly directed most of its campaign funds to another measure, Proposition 26, which changes the definition of environmental fees and taxes and will require all such measures to gain a two-thirds majority in the state legislature. Analysts fear this “evil twin” of Proposition 23 could inhibit the state’s ability to regulate carbon emissions.
There are also other dark clouds on the horizon for the US cleantech industry at the federal level. Washington’s cash grant program for alternative energy projects is due to expire next year — and even though Obama has vowed to try and get key components of his energy vision through Congress “piece by piece”, there is no certainty that any of this will pass.
The mood at the national level is in stark contrast with California. Many prominent Republican winners believe that climate change is either not caused by human activities, or is a complete hoax, and even Joe Manchin, the Democrat governor who won West Virginia’s Senate seat, based his campaign around a now infamous ad that had him firing a rifle at the carbon cap-and-trade bill. And while the new speaker of the House, Republican John Boehner, appealed for a spirit of compromise, he was referring mostly to Obama.
One of the biggest battles that will unfold in the coming year will be over the Environmental Protection Agency’s move to impose its own restrictions on carbon emissions — the blunt instrument that has been hanging over US business since Obama was elected. The US Chamber of Commerce has urged lawmakers to attach a ban on EPA regulation to spending legislation that must be passed during the lame-duck closing session of the current Congress. And industry has vowed to fight the EPA rules through the courts.
Still, while Congress may be able to stifle any movement towards a cap-and-trade scheme, and effectively hamstring any hopes of bold US initiatives at global climate change talks, it is unlikely to be able to ignore energy issues.
Just as in Australia, energy companies complain that they cannot invest in upgrading old and inadequate infrastructure unless they understand the investment climate going forward. And, just like in Australia, the conservative side of politics may rant and rave about the economic impacts of a carbon price, but no energy executive or banker seriously believes there will be no carbon price in the future. Which is why they won’t invest in much until they find out the rules.
The US is likely to see a greater push for nuclear power and clean coal investment. Some energy companies want it and Henry Waxman, the Californian Democrat who co-authored a cap-and-trade bill, is set to be replaced as head of the house energy committee by Michigan Republican Fred Upton, who is a strong supporter of nuclear power. That could be a key compromise in an energy bill that also promotes renewables.
*This article was originally published on Climate Spectator
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