Wednesday, June 16, 2010

Did Obama oil spill speech reveal hidden White House energy agenda?

Last night, as more oily goo descended on the beaches of the Gulf Coast of the United States, the president announced his willingness to entertain various modest initiatives from same people who strongly advocated increased drilling just two months ago.  Rather than use a major televised energy speech from the oval office to rouse Americans to embrace decisive action on pollution, climate change, and US dependence on fossil fuels, Obama declared his willingness to compromise with the naysayers.  Sound incredible?

Consider what the president actually told Americans last night.  Reading Obama's own words, it certainly sounded to me as if the president has proposed taking a step back from pursuing truly meaningful action on energy and climate change.   I thought this passage of Obama's speech was particularly troubling:
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 some believe 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.

So I am 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 fear hearing in the months ahead. But the one approach I will not accept is inaction.
"Some believe we can't afford those costs now."  Does Obama disagree?   He certainly does not take the opportunity to entirely dismiss this perspective, which is shared by opponents of energy reform.   Note that none of the examples of "other ideas and approaches" -- that Obama is open to hearing about -- represent  sufficient or credible alternatives to either a carbon tax or a serious carbon trading scheme.  Tinkering with the problem of pollution and carbon emissions through rebates, efficiency standards, and research grants is  insufficient.  We desperately need an economy in which market pricing rewards clean energy use.

Only by taxing pollution can market forces be efficiently harnessed in support of clean energy development.   Properly executed,  revenues from a carbon tax could subsidize the cost associated with the transformation to a clean energy economy.   As Royal Dutch Shell Chairman Jorma Ollila told the IPI World Congress in Helsinki last June, "Firstly, we need a cap and trade system [essentially a carbon tax] that a puts a cost on emissions, that credibly commits us to a path of energy reductions by creating incentives to cut emissions."
Although Obama wants "action," Obama has no plan of his own -- no apparent convictions of his own -- concerning the most pressing crisis of the day.  He says he wants to see something done.   But he has no apparent notion as to what that something should look like.  The fact that Obama did not push for a carbon tax, a gasoline tax, or a carbon trading plan last night was surely significant.

Yet, let's not be fooled into thinking last night's speech was some kind of "overlooked opportunity."  It was a missed opportunity alright, but I would argue that the White House knew what it wanted -- and how to get it.

Obama's position on energy and climate change is reminiscent of his negotiating tactic during the  health care debate.   Back then, Obama announced at the onset that the "public option" -- generally accepted as the best means of controlling spiraling costs short of a Canadian-style single payer system-- was merely "on the table."  From early on Obama made it clear that the public option was negotiable.

Sure enough, it was negotiated away. 

Similarly, last night, rather than seizing the historic moment, Obama let it be known that he is willing to compromise with "some [who] believe we can't afford those costs right now."    From my reading of Obama's statement, he would be willing to substitute "a strong and comprehensive energy and climate bill" -- one that by definition must include either a carbon trading scheme or carbon tax -- for an array of industry-targeted benchmarks, incentives, and research subsidies.

Think about that for a moment.  Effectively, Obama announced last night that a carbon trading mechanism or carbon tax is negotiable If that's what just happened, it's a major development.  Just as the public option was an ideal way to control costs on behalf of taxpayers and consumers, a carbon tax -- or  carbon trading mechanism -- in which proceeds of a tax or trade are returned to consumers is an ideal way to cut greenhouse emissions while helping citizens pay for the cost of the transition to clean energy. 

It's déjà vu.  We saw this all before with respect to the healthcare bill. Obama's comprising stance was critical to shepherding a bill through Congress that did not anger the insurance and pharmaceutical industries.  We saw it early in 2009 with respect to Obama's position on legislation that might have protected mortgage holders from asset siezure by the banks. I think it's no mystery how the Obama Administration juggles public pressure for political change with the interests of powerful corporate donors.  I think it's no accident that this president never quite seems to "seize the moment" in a crisis.   I strongly suspect the administration wants to hold out for some kind of compromise energy bill: a bill that will have consumers and taxpayers subsidizing the profits of big energy companies.

Update:  See my next post concerning questions raised in this post.

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