In his acceptance speech of November 6, Barack Obama at long last reaffirmed the need to address global warming.
But unfortunately he also reaffirmed the spurious goal of US oil independence, which can be at odds with climate policy when used to promote CO2-intensive options such as tar sands and shale oil. The fate of the Keystone tar sands pipeline will be an early test of Obama’s bona fides on climate change as distinct from his being hostage to the “oil independence” goal and Big Oil.
If US climate change policy is to be more than cosmetic, the real questions should be about its part in an internally consistent set of fundamental policies within a “whole of government” approach.
Pricing and regulating emissions
In the 2008 presidential elections, both Obama and John McCain supported cap-and-trade as a means of meeting designated abatement targets by 2050. But pricing US greenhouse gas emissions has been abandoned since the advent of the Tea Party’s power in the Congressional elections of 2010.
However, such political difficulties need not preclude regulatory policy action, such as by the Environmental Protection Agency. The EPA has closed down emissions-intensive, coal-fired power stations and blocked new ones. Total CO2 emission reductions have also reflected federally subsidised growth in wind-power and tightened vehicle efficiency standards.
The aggregate level of US CO2 emissions has in fact declined to mid-1990s levels. This is due also to the glut of natural gas which has displaced some coal-fired electricity generation. It is also an unintended side effect of the 2008 economic crisis, “off-shoring” (“deindustrialisation”) and the tripling of oil prices since 2003.
An integrated approach can address the above-noted political obstacles. Fiscal policy is a case in point.
“Green” investment and fiscal policy
To be effective, fiscal policy in the present deep slump needs expansionary investment programs but also to address the public debt concerns. Resulting sustainable economic growth helps the latter by augmenting tax revenues. Additional revenues can also be sourced from taxing the super-rich, as Obama is seeking to do, and by taxing beneficiaries of infrastructure programs. Retrenching wasteful military expenditures (especially foreign) will also help.
To facilitate such investment in assets that are both productive and ecologically sound, the US also needs institutions such as Skidelsky and Martin’s proposed National Investment Bank. Such a Bank (as the authors claim) “could take the lead in financing green technologies such as wind and geothermal power by evaluating and incorporating into its appraisals the value of their benefits to the broader economy”.
This proposal includes explicit criteria about due process and transparency, to prevent the kind of pork-barrelling evident in “Big Oil” and corn-based ethanol fuel supports.
A Republican-dominated House will no doubt seek to block such measures in favour of concessions to big business based on dubious “trickle down” or “sound finance” ideologies. The solution is not deals with economic libertarians in the re-arranged Tea Party.
Rather, the political challenge for the presidential arm would be to ensure that these elements bear the electoral consequences of seeking to grant further fiscal privileges to the rich at the expense of a sound macroeconomic strategy.
Effective policy and politics also need to include structural adjustment assistance to ensure fair burden-sharing as well as effective information programs about extreme climate events, imminent climate system “tipping points” and so on.
International action on climate change
Into Obama’s second term, it is a glaring anomaly that the three main long-run energy scenarios published by the US Energy Information Administration still do not even include a CO2-emission constrained case, such as the 450ppm scenario published by the International Energy Agency in its annual World Energy Outlook. The absence of such a scenario can only indicate that the US does not take this vital target seriously.
Regrettably, the US remains the only OECD member state that has not ratified the Kyoto Protocol. Given that such ratification requires congressional approval, this is not likely as long as Tea Party libertarian Republicanism holds sway in the House of Representatives. However, this obstacle does not mean the Obama administration is powerless internationally, any more than it is domestically.
Against this less than supportive political background, US performance regarding emissions abatement should be judged internationally on results and projected results rather than adherence to particular policy methods, optimal in theory but for now inaccessible for the evident political reasons.
Turning to the Pacific
Some commentators are calling for the US to “rebalance” toward the Pacific and reduce its footprint in the Middle East, oil-rich and otherwise. This cannot be achieved until the US begins to normalise its relations with both Israel and Iran.
Iran has the largest combined conventional oil and gas resource globally. It is the second largest holder of conventional gas reserves. Normalising Iran’s international relations would enable it to provide CO2-saving natural gas to coal-dependent China and India.
At the same time, the US is facing a bonanza in non-conventional gas supplies. In this context, US gas exports to China become an option. This could not only be profitable but also reduce China’s alarming and still increasing coal dependence.
But this will not and should not happen unless a US federal administration responsibly observes the International Energy Agency’s “Golden Rules” for regulating non-conventional gas, including not venting the potent greenhouse gas methane.
A similar option but with prospects of a lower carbon footprint is the commercially driven export of the relevant US extraction technology to China, which has its own large untapped resources of non-conventional gas.
In this eventuality, once again ensuring strict obedience to the above-noted “Golden Rules” is another reason for expanding IEA membership to include China and other major energy powers not yet in the OECD club of rich nations. Such inclusion is a policy that the US should strongly support as part of its foreign energy policy, and a general policy of getting China (and other potential or actual adversaries such as Iran) “more involved” in responsible global governance.
Leading by (whose) example to reduce growth in oil use?
Over the past 70 years, the US has not infrequently wielded the “oil weapon”, or at least threatened to do so by depriving other states of the ability to trade in this vital commodity. Examples have included importers (Imperial Japan, Nazi Germany in WWII, and as an ever-present threat to China) and exporters (Iran 1952-3, 1979-2012; Iraq 1991-2003). There is no doubt that China continues to hold these fears despite its symbiotic economic relationship with the US, and given the overwhelming global naval power of the US.
As Winston Churchill remarked, “safety and certainty in oil lies in variety and variety alone” - or as we would now say, “diversity” of both export and import. China is acting accordingly, through its so-called “going out” policy to access global supplies of oil and gas.
But such a policy also has its risks for regional and world peace. The planet, and certainly China, cannot sustain - ecologically or otherwise - the “American” model of escalating private motorisation, low rates of gasoline tax and consequent excessive oil use.
For Barack Obama, there is evidently much to be done in his second term to address climate change, both on a domestic and global scale. Whether he will take this responsibility seriously, however, remains to be seen.