While the US economy and share market are still reeling from the financial meltdown there are hopes the election of Barrack Obama as President will produce a burst of activity on climate change and the transition to clean energy. Recession and a slumping oil price, however, loom as threats to Obama’s renewable energy and emissions cap-and-trade visions, at least in a first term.
There are also, of course, great hopes for a new consensus on global climate action with the Copenhagen deadline just a year away. The President-elect appeared to reaffirm climate change as up there among his biggest issues. “As we celebrate tonight, we know the challenges that tomorrow will bring are the greatest of our lifetime – two wars, a planet in peril, the worst financial crisis in a century,” Obama said in his acceptance speech.
His headline commitments in climate and energy are reducing the US’s greenhouse gas emissions to 1990 levels by 2020, then by 80% by 2050; and targeting 10 per cent of electricity to be generated from renewable sources by 2012, then 25 per cent by 2025. There’s a doubling of research funding for clean energy, including subsidies for carmakers to come up with new-generation clean cars.
The head of the Intergovernmental Panel on Climate Change (IPCC), Rajendra Pachauri, has already called on Obama to make a new international climate deal to push on from Kyoto his biggest priority. It won’t happen. While Obama will be sending his own team of negotiators to this year’s UN climate meeting in Poznan, it’s clear his first priority will be getting the domestic economy on track.
That is not such a bad thing given how large clean energy figures in the $175-billion economic stimulus package promised during the campaign, and the potential many say it holds for job creation in America’s fledgling green economy.
Obama also spoke of “new energy to harness” in his speech, following similar sentiments expressed on the campaign trail: "A clean-energy economy can be the engine that drives us into the future in the same way the computer was the engine for economic growth over the last couple of decades.”
The Bush Administration has spent $1 trillion in bail-outs in the recent financial collapse but for one-tenth of that cost, $100 billion, more than two million new jobs could be created if it were invested in clean energy policies, according to the Center for American Progress Action Fund.
So, political analysts are backing an energy bill to come first, early next year, and a climate bill to come later, perhaps not until 2010. Obama has spoken of creating five million new jobs but also conceded that the financial crisis may mean some aspects of his green stimulus plans may have to be sidelined.
Increasing the budget deficit and consumer energy costs at a time of great economic pressure will be a hard sell, especially when the price of gasoline has fallen from over $4 at its peak earlier this year to $2.40 currently. And imposing new charges on industry while the economy is struggling, via the auction of emissions permits under the proposed emissions trading scheme, may be a political bridge too far.
Obama has also committed to a windfalls tax on oil companies to fund some of his clean energy plans and help compensate consumers for rising energy costs. But that measure is now out of the money given it only cuts in when oil prices exceed $80 a barrel.
Bloomberg, Reuters 5/11/08
Related stories:
Ominous signs for clean tech sector?CER market steadies after price hitBeat crisis with climate investment, bank saysCarbon finance holds up in crisis