Financial Times
Obama’s big oil spill speech: An opportunity only half-seized

Wednesday, June 16, 2010

June 16, 2010

When word came that President Barack Obama was going to use the oil spill in the Gulf to push the clean energy agenda on which he came to office, those who support such a future grew excited. Anyone who believes that carbon dioxide emissions are not only polluting but adding to the problem of global warming began contemplating the action the president might take.

Forcing government vehicle fleets onto hybrid vehicles or natural gas, ensuring all new government structures are energy efficient, and so on, were all floated as potential plans. But there were warnings that none of this might come to pass.

Amy Myers Jaffe, energy expert at the James A Baker III Institute for Public Policy, said former President George W Bush missed a similar opportunity to move toward alternate sources of energy and promote energy efficiencies following the September 11 attacks, when he very easily could have done so under the guise of promoting energy security. And yet he took no action. Jaffe said in an interview that the spill in the Gulf presented President Obama with the same opportunity to forcefully move the country in that direction in a matter of three short years, not the decades lawmakers have been talking about:

If President Obama misses the same window, he will go down in historical ignominy the same way. The spill should be the impetus (to move toward clean energy). It has to be aggressive. All we talk about is what we are going to do in 50 years.

But after listening to President Obama come up with few details on Tuesday night, it seems he has missed his opportunity. Here are a few excerpts from the speech (full text here):

The tragedy unfolding on our coast is the most painful and powerful reminder yet that the time to embrace a clean energy future is now…. When I was a candidate for this office, I laid out a set of principles that would move our country towards energy independence. Last year, the House of Representatives acted on these principles by passing a strong and comprehensive energy and climate bill — a bill that finally makes clean energy the profitable kind of energy for America’s businesses. Now, there are costs associated with this transition. And there are some who believe that we can’t afford those costs right now. I say we can’t afford not to change how we produce and use energy — because the long-term costs to our economy, our national security, and our environment are far greater.

He did refer to the House climate bill, but not to ‘climate change’ itself, let alone pricing carbon.

As demanding as President Obama got was insisting he would not allow the status quo to continue:

So I’m happy to look at other ideas and approaches from either party — as long they seriously tackle our addiction to fossil fuels. Some have suggested raising efficiency standards in our buildings like we did in our cars and trucks. Some believe we should set standards to ensure that more of our electricity comes from wind and solar power. Others wonder why the energy industry only spends a fraction of what the high-tech industry does on research and development — and want to rapidly boost our investments in such research and development. All of these approaches have merit, and deserve a fair hearing in the months ahead. But the one approach I will not accept is inaction.

Tough words but they would have had more impact if backed up by demands for a specific course of action. Those who follow the oil industry believe it will be decades before renewables can have any meaningful impact. They urge aggressive energy efficiency measures as the fastest way to reduce carbon emissions. And also the use of natural gas wherever possible.

The US has abundant gas resources, thanks to new technology enabling it to be extracted from shale rock. And the country already has the infrastructure across the country to move and use gas. Natural gas is about 30 per cent less carbon intensive than oil and 50 per cent less than coal. But E. Russell (Rusty) Braziel, Managing Director of BENTEK Energy, which provides natural gas market analysis, said in an interview it is still a fossil fuel:

All fossil fuels tend to get tarred with the same brush.

Nonetheless, Credit Suisse said in a research note the oil spill should lead to lawmakers giving natural gas a chance:

The combination of the oil spill and the Masey coal accident should further shine a light on gas. The administration HAS to think more about incentivizing use of clean, available, domestic natural gas, given the identification of massive shale resources in recent years.

This could have been something the president advocated in his speech to the nation. But it appears he is going to stand to the side waiting for others to bring ideas to him. Like I said, a missed opportunity.