Obama’s Climate Action Strategy

President Obama today released his long-awaited climate action strategy. This strategy addresses three elements of U.S. climate policy: domestic actions to reduce pollution leading to climate change; investments in U.S. physical infrastructure and institutions to improve resilience to extreme weather and climate hazards; and increased engagement with the international community in a global approach to reduce the impacts of climate change.

While this is the first time that the Obama administration has released a comprehensive climate strategy, most of the individual policies described within it represent repackaged ideas that have already been either proposed or enacted (see my earlier note on “What to Watch for” for additional details).  There were no major surprises, although several new goals and minor initiatives were introduced.  Overall, then, the strategy’s value is in synthesizing the many individual actions that have been initiated by the president, thereby creating a comprehensive picture and roadmap for the current American approach to climate change.  In itself, then, the strategy adds additional clarity for U.S. businesses, state and local governments, and the international community about the direction and ambition of U.S. federal policy for the next few years.

The strategy is laid out in a 21-page document with—depending on how you count them—over 60 policy proposals.  Several of these stand out:

1. Regulations for power plant emissions. This is probably the item that was most discussed in advance, and it is no surprise that Obama is pushing for these rules.  The new strategy says simply that Environmental Protection Agency will “work expeditiously” to enact standards on both existing and new sources.  These rules (see “What to Watch for”) would preclude the construction of new coal-fired electricity, unless it has carbon capture and sequestration (CCS) technology and would likely mandate some moderate efficiency upgrades for the most egregious existing electricity generators.
2. Electricity grid upgrades.  New infrastructure investment in the nation’s electricity grid and expansion of the capacity to transport power is important not only for energy security but also for enabling certain approaches to demand management and renewable energy generation—both of which would contribute to emissions reduction goals.
3. Targeted support for CCS.  Carbon capture and sequestration technology, which captures and buries CO2 from fossil fuel combustion, is technically proven but remains expensive.  The strategy proposes loan guarantees for technology development and deployment.
4. Quadrennial energy review.  The strategy establishes a periodic review of the nation’s energy situation and energy policies. While it seems relatively mundane, this exercise might be valuable for allowing some strategic oversight of the nation’s widely disparate energy-related activities and their consequences for energy security and the environment.
5. Increased fuel economy standards for heavy-duty vehicles.  The past four years have seen increased stringency for fuel efficiency for cars and light trucks out to 2025 and for heavy trucks to 2018.  This new initiative will set standards for heavy trucks out to 2025.
6. Reducing emissions of HFC. Hydrofluorocarbon is a potent greenhouse gas and the U.S. is already working with other international partners to limit and gradually reduce its use.
7. Reducing methane emissions.  The U.S. is a heavy user and producer of natural gas, and this usage is likely to continue expanding with increased utilization of shale gas.  The methane in natural gas is also a potent greenhouse gas, so reducing leaks can help lower climate impacts. The strategy sets out an interagency process to improve the national gas system through regulation and industry partnerships.

In addition, there are a few programs that should be useful but are somewhat more moderate in scope:

1. An explicit strategy for organizing federal, state and local institutions to prepare for hazardous or damaging climate and weather events.  It is clear that there will likely be some consequences for the U.S. due to climate change and continued weather variability, and the new approach seeks to systematize the planning and response strategies across the wide number of agencies and institutions that will have to be involved.
2. Clean energy permitting.  The strategy calls for an additional 10 gigawatts of new renewables to be permitted on federal lands.  In addition, it encourages the upgrading of existing dams with new hydroelectric capacity.
3. New energy efficiency goal.  The U.S. has had a long track record of success with low-cost efficiency improvements due to gradually ratcheting federal standards. This new policy sets an aggregate target to reduce carbon emissions by at least 3 billion tons by 2030 through the standards set under Obama’s two terms in office.
4. New federal goals for renewable energy. The strategy increases the U.S. federal government’s target for renewable energy use from 7.5 percent to 20 percent by 2020.
5. Standardized energy efficiency contracts.  While it seems potentially niche, this small provision buried in the strategy has great potential.  One of the barriers to energy efficiency investment is not its financial payback—which tends to be quite healthy—but rather the difficulty in aggregating finance for what amounts to millions of small but profitable changes.  Advocates hope that standardizing contracts will do for energy efficiency what standardized mortgages did for the housing market—make the investment attractive for big financial institutions who need to invest large sums easily.
6. International finance for clean energy.  The strategy clearly prioritizes clean energy for international energy assistance.
7. Continued engagement in international discussions.  The strategy expects any international post-2015 climate agreement to have legal force and be applicable to all countries—not just developed ones.  In addition, it outlines continuation of existing engagement across multiple negotiation forums such as the Major Economies Forum and various bilateral discussions with key global emitters.

There is one more new item apparent from Obama’s speech: A sharper focus on the broader human values side of climate change.  Obama used this event to situate our response to rising emissions not only in the policy realm of technology and economics, but also in the area of religious values and a responsibility to others within and outside the U.S.  Given that a broad-based congressional response is needed to go beyond the policy elements sketched out in Obama’s new climate strategy, this anchoring of climate change within human values may prove to be a particularly helpful direction toward building the necessary support.

Interestingly, while the official strategy released by the White House has no mention of the controversial Keystone XL pipeline, President Obama did mention it during his speech.  He promised that if the administration found that Keystone would “significantly” increase U.S. CO₂ emissions, they would not find it in the national security interest of the United States and would reject it.  It is important to note that much of the discussion within the U.S. government so far has revolved around the likelihood that if Canadian oil sands petroleum were not exported to the U.S. via the pipeline, it would migrate to the U.S. in other ways (such as via rail and through various sea ports). Much therefore depends on the calculation of what would happen to the oil if the XL pipeline were not built.  Overall, this statement does not seem to change the tone substantially from what we have heard before, although it is a clearer statement of the carbon criterion.

The new climate strategy therefore succeeds in presenting the Obama administration’s activities in a comprehensive framework—touching on reducing domestic emissions, preparing for weather-related impacts and engaging with the international community.  While most of the policies presented are extensions of existing work, the consolidation and communication of the approach as an overall strategy can help place these individual policies in their broader context and therefore undergird the logic for pursuing them.  The power plant pollution standards are clearly a central element of this strategy, and this makes it more likely that we will see both existing and new source standards in the coming years.  The standardized energy efficiency contracts are a small piece of the strategy, but deserve careful monitoring because of their potential to be innovative for bringing in new sources of finance.  In addition, several new initiatives like the new coordination on resilience, the interagency process for methane and the quadrennial energy review are likely to help improve the clarity and efficiency of our federal government’s response to climate change.

The net result of these many administration actions could be to help U.S. domestic emissions meet Obama’s stated target of a 17 percent reduction, relative to 2005 levels, by the year 2020.  For that, the strategy provides a solid approach that is likely to succeed.  The bigger question, of course, is whether this strategy brings the U.S. in line with where we would ideally want to be either up to 2020 or beyond it.  Unfortunately, to reach the levels of emissions necessary for climate stabilization—on the order of a 50 percent global reduction by 2050 and up to an 80 percent reduction by 2100— his strategy is insufficient.  With this strategy, the president is essentially pulling out all the stops that are available to him.  Unfortunately, with an uncooperative Congress, that is not enough.  Only Congress really has the power to implement the fundamental regulatory and fiscal changes—such as carbon taxes or broad-based energy policy—that would put the U.S. on an aggressive path toward a low-carbon pathway.  As such, Obama’s strategy is best seen as a push to keep us close enough to that pathway so that, if Congress does choose to implement some more substantive measures, the costs of making the transition will be relatively moderate, particularly compared to the likely damages from climate change.