Obama, Announcing Clean Energy Standard, Looks for Compromise

President Obama's pursuit of a clean energy standard reflects the heightened political challenges facing his administration and makes it more apparent that his campaign promises to cap carbon emissions will be unfulfilled before he runs for re-election.

Obama unveiled a plan to promote renewable energies from sources like wind and the sun by slashing $4 billion annually in government subsidies to oil and gas companies. The cash would finance an effort to obtain 80 percent of the nation's electricity from renewable sources and also nuclear, "clean coal" and natural gas by 2035.

"Some folks want wind and solar," Obama said in his State of the Union address. "Others want nuclear, clean coal and natural gas. To meet this goal, we will need them all -- and I urge Democrats and Republicans to work together to make it happen."

The president is adjusting to circumstances. The plan is far more modest than his call in the same address a year ago for Congress to pass an aggressive climate package aimed at restricting carbon dioxide in the nation's industrial sectors: transportation, electric utilities and manufacturing plants.

It also nods to Republicans' expanded power by including fuels barred by a Renewable Electricity Standard, which was passed in the Senate Energy and Natural Resources Committee last Congress with cooperation from both parties. The tune now, with Republicans controlling the House, is compromise.

"I am encouraged by the president's continuing commitment to clean energy," said Sen. Jeff Bingaman (D-N.M.), who as chairman of the energy committee resisted suggestions, just months ago, to include nuclear power in a renewable electricity standard. "Congress has a real opportunity to work together on bipartisan legislation to achieve his goals."

Despite the reduced goals, Obama placed clean energy investments at the top of his agenda, saying it "will strengthen our security, protect our planet and create countless new jobs for our people."

"We're not just handing out money," he said. "We're issuing a challenge. We're telling America's scientists and engineers that if they assemble teams of the best minds in their fields, and focus on the hardest problems in clean energy, we'll fund the Apollo Projects of our time."

$4 billion isn't that much

The president's budget, to be released next month, will propose new funding for electric vehicle manufacturers, consumer rebates to make those cars more affordable, and research and development. The plan is meant to advance Obama's goal of putting 1 million "advanced technology" cars on the road by 2015, reducing oil consumption by about 785 million barrels by 2030.

The White House also said the president's budget would redirect the $4 billion in oil and gas subsidies annually toward increased research in energy efficiency for consumers and industrial businesses, renewable energy, and funding for scientists and engineers focusing on the "hardest problems in clean energy."

That level of funding could help renewable energy become more affordable -- and competitive with cheap natural gas and coal-fired electricity -- but much more is needed, said Michael Greenstone, former chief economist of the president's Council of Economic Advisers. He said between $10 billion and $20 billion will be needed annually in five years.

"Four billion dollars is a move in the right direction, but it's probably less than is necessary to quickly bring down the cost of clean energy," he said.

But the centerpiece of Obama's plan is the clean energy standard.

Analysts have been saying for months that it might represent the best chance for legislation in the new Congress. It could lure Republicans and conservative Democrats in the Southeast, where renewable energy is perceived as scarce, by allowing nuclear power to count toward part of the minimum requirement of low-emission fuel on utilities.

Including "clean coal" technologies could persuade lawmakers from West Virginia, Pennsylvania and other coal states to support passage. Placing natural gas in the equation could attract others.

"I'm absolutely amazed and impressed that he spent so much time at the beginning of the speech talking about clean energy," said Manik Roy, vice president of federal government outreach at the Pew Center on Global Climate Change. "It potentially offers something for people on both sides of the aisle."

No mention of climate

Sen. John Kerry (D-Mass.), who helped lead the failed climate effort last year, called Obama's pitch a "pragmatic vision."

"This year we need to double down instead of walking away," Kerry said in a statement. "I want to get serious bipartisan energy security legislation passed this year."

The president's speech comes at an awkward time. He's pinned between weakened Democrats, who failed to use their majorities last year to pass aggressive climate legislation, and Republicans, who were thrust into power by a vigorous electorate demanding less spending.

Last night, Obama did not mention climate change. That didn't surprise some environmentalists.

"We still have to make that case to the American public," Roy said of climate change. "While we make that case, let's see if we can move forward on clean energy that also has the benefit of reducing emissions."

But the absence will likely disappoint other green groups, who see warming temperatures as a threat caused by human consumption and bad public policy.

"President Obama should use the bully pulpit of the presidency to call Americans' attention to this [climate] challenge and the fact that while time is running out, solutions are still attainable," Friends of the Earth said in a statement before the speech.

Obama also did not address the contentious regulations being developed by U.S. EPA to restrict greenhouse gases at major emission sources, like utilities and factories.

Recycling the 'energy tax' attack

Prominent Republicans, however, were connecting the failed cap-and-trade effort last year with those regulations, even before the speech began. They believe they can frame the regulation as a job-slashing overreach that can be used to attack Obama's re-election effort next year.

Rep. Fred Upton (R-Mich.), chairman of the House Energy and Commerce Committee, warned in a joint statement that he will attempt to "permanently eliminate" EPA's ability to reduce carbon emissions through the Clean Air Act.

"This Congress has no intention of allowing the administration to regulate that which it has been unable to legislate," Upton said in a statement with Sen. Jim Inhofe (R-Okla.) and Rep. Ed Whitfield (R-Ky.), who chairs a subcommittee on Upton's panel. "The cap-and-tax scheme was soundly rejected last year, and the Clean Air Act must not be used as a backdoor route to impose the same costly national energy tax."

Some environmental groups had hoped Obama would firmly defend the agency from legislative derailment by promising to veto any measure seeking to block the regulations.

But with few options left on energy and climate, Obama said his plan for a clean energy standard would ramp up demand for low-emitting sources of power.

Demand is exactly what the wind industry needs, said Denise Bode, CEO of the American Wind Energy Association. Come-and-go tax incentives for wind developers have caused the industry to move in lurches. Still, jobs are being created, as seen by the rise in turbine components being built in the United States, now at about half of all parts needed.

But Bode expressed some concern that a clean energy standard might minimize the growth of wind power, by fueling a rise in natural gas, for example.

"If you pile in basically all of the sources of generation that already have 80 or 90 percent of market share in with renewables ... you're not going to achieve the goal of having cleaner energy," she cautioned.

Click here to watch E&ETV's post-speech coverage.

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