19 april 2011

Obama’s green credentials tarnished

By Stephanie Kirchgaessner in Washington, Financial Times, April 18 2011

Ask proponents of clean energy what the Obama administration’s biggest policy achievement has been to date, and they will probably mention auto standards passed by regulators last year to reduce greenhouse gas emissions by new cars and light trucks.

Steven Chu, the Nobel Prize-winning physicist and energy secretary, usually expounds on the leaps the US intends to make in the production of advanced chargeable batteries, thanks in part to government investments, in response to the same question.

But however promising, the achievements do not measure up to the aspirations of those who believed that Barack Obama’s election to the White House in 2008 put comprehensive climate legislation, including a cap and trade programme to limit carbon emissions, within reach.

“For a variety of reasons, it didn’t happen. The recession, the fact that the administration’s priorities put it behind a lot of other controversial items like healthcare and financial services reform,” says Eileen Claussen, president of the Pew Center on Global Climate Change. “We are now in a world where there is a crying need for an energy policy but I don’t see how we can get there in the next two years.”

The picture has been further complicated by two energy-related catastrophes: the BP oil spill that wreaked havoc on the Gulf of Mexico last year and put a moratorium on deepwater drilling, and the nuclear disaster at the Fukushima plant in Japan, which for financial reasons has put in doubt the chances of a significant rise in nuclear plants being built in the US in the near future.

Energy experts say Republicans’ sweeping victory at the polls last year, in which they gained control of the House of Representatives, locked the US into a state of paralysis on energy. Republicans and conservative Democrats are opposed to new energy-related mandates that would force companies to adopt carbon sequestration policies, and there is no appetite on Capitol Hill to increase funding for energy incentives that prod companies into action. Fights over the future of ethanol subsidies are even breaking out among Republican lawmakers, with legislators from corn-rich states resisting suggestions by colleagues that it is time to phase out billions of dollars in government giveaways for the technology.

Today, the future of US energy policy looks less like a sweeping blueprint for the future and more like a patchwork of bite-sized programmes designed to lower US dependence on foreign oil and expand the use of alternative sources of energy. Even those are riddled with potential problems.

For now, the White House appears to be betting on natural gas as the most promising alternative to traditional energy sources, both because of its abundance and the support it has garnered from Democrats and Republicans on Capitol Hill.

Mr Obama has hailed recent innovations that would make it possible to tap “a hundred years” of natural gas reserves in shale. But the president also faces growing questions from liberal members of his own party about the safety of hydraulic fracturing, in which companies’ blast a high-pressure mix of water, chemicals and sand into rocks in order to release oil and gas.

A probe by Democrats on the House energy committee recently found that oil and gas groups had injected hundreds of millions of gallons of carcinogens into wells from 2005 to 2009, potentially contaminating drinking water.

Additionally, Republicans and the oil industry claim that, despite a recent demand by the president that companies ramp up on- and offshore drilling for fossil fuels, regulators have brought to a virtual standstill the issuance of new drilling permits in the wake of the Macondo spill.

The White House, which denies the charge, at the same time face accusations from environmentalists that it has resumed issuing permits to drill some oil wells without having established a fail-safe programme for containing possible catastrophic spills.

Although the administration has said it remains committed to “clean coal”, some energy experts see coal-fired plants slowly but surely becoming a relic in the US.

It is no wonder, then, that Mr Obama homed in on the “groundbreaking” national fuel efficiency standards the White House agreed last year in his recent speech on the future of US energy policy. The standards were implemented not through legislation but through an agreement between the White House, US carmakers, autoworkers, industry and environmental groups.

On Monday, Ford announced at an auto show in Shanghai that it hoped sales of electric cars would account for 10 to 25 per cent of its total revenues by 2020, from 1 per cent currently. For a White House grappling with soaring petrol prices and few good options, it was the silver lining around a dark cloud.

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