April 16, 2010
Ken Silverstein
EnergyBiz Insider
Editor-in-Chief
Before his inaugural, Barack Obama spoke of healing the country's divisions and of lifting its spirits. But more than a year later, those lines have become entrenched, best illustrated by the bitter healthcare vote. That has left an irreconcilable gash between the two parties that might make future agreements impossible.
But the recent acrimony will not deter the president from tackling another contentious subject: climate change. His political tactics, however, will evolve. Instead of relying on floor leaders to push through his policies, the president is working in advance of a vote to make key concessions to opponents.
The goal is to pass a modest bill by summer's end using cap-and-trade by extending an olive branch to Republicans. By lifting a decades-long ban on oil and gas drilling in 167 million acres in the Atlantic Ocean, the president has just made a decisive move in that direction. The resolution coincides with the opening of 130 million acres in the Arctic Ocean in parts of Alaska.
It's atop the pledges that President Obama has already made to the nuclear and coal industries. His administration will likely tripled the level of loan guarantees provided to developers of modern nuclear plants while also restoring the funding to build near-zero emissions coal facilities that have the potential to sequester carbon.
During the presidential campaign, Obama had initially opposed the lifting of the oil and gas drilling moratorium. But he softened his position after gasoline prices had hit $4 a gallon and Americans were clamoring for relief. Still, he said that any new policy that his team would draft would be viewed in the context of a broad energy agenda.
To that end, the additional drilling rights have been granted. But now the other side must reciprocate by agreeing to a more modest cap-and-trade bill than what has been discussed in earlier bills. Instead of applying the free-market cap-and-trade approach across the board, a compromise measure would just address power companies.
Will it work? At the moment, President Obama must persuade the base of his party that he has not abandoned them and that this conciliatory approach will effectuate change. Each party can then ultimately stake a claim in the bill. And if one side would totally obstruct this common-sense approach, it could suffer at the polls in November.
In the meantime, both the partisans and the diehard believers will be dissatisfied. Some Republicans, for example, want unfettered access to oil and gas acreage now off-limits. And some Democrats, meantime, are opposed to any further drilling rights. They note that the time and effort it would take to bring new supplies on line could instead go into building out the nation's green energy portfolio.
Crossing the Aisle
At the same time, the differences over climate change are just as insurmountable. But once again, the answer is not to ignore the other's position; rather, it is to listen carefully to what their solutions are -- and to incorporate a practical bill that heads off the potential problem in a cost-effective manner.
The reality is that the nation's energy demand is going keep rising and that all energy sources must be harnessed. Natural gas is an essential element and it can be discovered using newer, environmentally-sensitive technologies.
Likewise, the country needs to pursue the technologies that will help curb carbon emissions. For sure, the science has never been exact with predictions that temperatures could rise by 1 degree Celsius to 6.4 degrees Celsius, all over the next century. But it would be highly irresponsible to disregard what many acclaimed scientists have said just because a few of them have released dubious findings.
"Plenty of uncertainty remains; but that argues for, not against, action," notes an editorial in the business-minded Economist. "The range of possible outcomes is huge, with catastrophe one possibility, and the costs of averting climate change are comparatively small. Just as a householder pays a small premium to protect himself against disaster, the world should do the same."
The central catalyst would be the cap-and-trade technique whereby government sets carbon emissions limits and companies decide how to achieve them. It's the approach used under the 1990 Clean Air Act to curb sulfur dioxide or acid rain -- one that has cut those pollutants by 50 percent from 1980 levels.
No doubt, the idea of trying to curtail those acid rain emissions was just as contentious in 1990 as the current administration's effort is to trim carbon dioxide emissions in 2010. Two decades ago, the nation began its shift away from one-size-fits-all mandates to more flexible, free-market alternatives that could achieve the same goals.
In the sulfur program, for instance, utilities were given the choice of installing scrubbers at their plants or implementing fuel-switching and using cleaner generation forms. But just as businesses were reluctant to invest in new technologies back then, they now have the same apprehensions given the economic climate. It all calls for moderation.
"We think cap-and-trade is the key element to reducing greenhouse gas emissions," says Manik Roy with the Pew Center on Global Climate Change. "Business will pick the winners -- not the government."
Seldom does one side have all the right answers. And while the political parties are vilifying each other, the president has decided to cross the aisle and to incorporate reasonable ideas espoused by the opposing party. Not only does the future of climate change legislation depend on such a tack but so too does the fate of many policies that are important to conservatives.
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