What Will Obama 2.0 Bring For Climate Policy?

Will President Obama be able to push more aggressive climate policy in his second mandate?
Newly re-elected President  President Obama gave a nod to climate change in his acceptance speech on election night, but reducing the United States’ greenhouse gas (GHG) emissions is still not very high on the President’s agenda for his second term. Yet the looming debate on fiscal reform combined with recent weather events could create an opportunity to introduce a carbon tax.

While global warming was one of Obama’s top priorities going into his first mandate, in 2012, Obama stayed as far away from the topic as he could. Not only was the economy the main issue for both candidates, but it’s also likely that Obama felt vulnerable to attacks against his energy policy record following the high-profile Solyndra bankruptcy in September 2011.

Hurricane Sandy, and maybe more importantly, Mayor Bloomberg’s open editorial tying Sandy to global warming and to presidential politics, brought climate change back on the agenda – though it’s still not very high on the list. Even after Tuesday’s victory, Obama is going to have to tread carefully – the suffering of millions on the East Coast is very real and the path to recovery is going to be a long one, so any attempt (or perceived attempt) to push a political agenda on the back of Sandy’s destruction may not be well received. In addition, the state of the economy remains the absolute top priority, and Obama will not be able to focus on other high profile issues until the economy gets better and the budget deficit gets somewhat under control.

So what, if anything, can we really expect from a second Obama mandate? Well, don’t get too excited. Caution has been the operating concept since Congress’s attempt to pass a cap-and-trade bill went down in flames, and more cautious progress is all we can reasonably expect.

Obama’s biggest success with regards to GHG emissions is undoubtedly the new fuel efficiency (CAFE) standards, set in agreement with the auto industry, which requires new automobiles to meet a fleet-wide average of 54.5 mpg standard by 2025. There is a lot of expectation from the environmental community that he could do the same to address emissions from stationary sources – power plants, industrial facilities – also under the Clean Air Act. Of course, there is also a lot of opposition from those potentially regulated – the power sector in particular – against such a move. Forcing GHG emission reductions under the Clean Air Act via EPA regulations has historically been seen as a second-best solution, even by the EPA administrator, compared to the flexibility afforded by a federal carbon market. If Obama does proceed with EPA regulations, the latest thinking is that states may be able to comply with those standards through their existing cap-and-trade programs, which would provide welcome support to the Regional Greenhouse Gas Initiative and California. As EPA has been under fire from the Republicans over the past two years, I’d expect Obama and Democrats in Congress to explore other solutions before they go the regulatory route.

What other solutions, you ask? Well, cap-and-trade is out of the picture for the foreseeable future, but a carbon tax, which I would not have bet a nickel on a year ago, may be back from the dead. In the context of the looming fiscal cliff, the grown-up solution to address budgetary issues would involve a so-called “grand bargain” between Democrats and Republicans on tax increases and budget cuts. Should this grand bargain take place, it could open a window of opportunity to revamp the overall tax structure of the country, and possibly introduce a carbon tax into the picture. (More on how a tax structure would work on Resources for the Future’s website). And while climate change is not very high on the agenda, fiscal reform is indeed the top priority for both Congress and the President. Sadly for the climate and for the U.S. economy, reaching this grand bargain is still a ways away. Much will depend on whether Congress starts on a fresh, constructive dynamic in January, or if partisan bickering continues to prevail.

Now, none of this may be exciting to those waiting for more aggressive climate policy, but compare to what a Romney administration would have brought: Romney was eager to unravel the new CAFE standard and certainly would have stopped any further rulemaking from the EPA. Cautious progress and “no regrets” investments in clean energy are still better than climate denial and a handcuffed EPA.

Yet, in my view, the most interesting part of Obama’s re-election may lie in what we don’t know. After a summer of drought that brought the Midwest to its knees, and Hurricane Sandy’s freak destructions on the East Coast, having a second-term President who recognizes climate change as an issue and is bent on leaving a positive legacy means more could actually happen. The public opinion in the U.S. has been slowly shifting back, with two-thirds now saying there is solid evidence of global warming, up 10 points from 2009, according a survey by the Pew Research Center. Stay alert for surprises. Nobody wishes more extreme weather events, but they might happen anyway, and may eventually drive the point home in D.C. In the words of the President himself: there is more than one way to skin a cat.


Emilie Mazzacurati is Executive Director at Real Options International, a carbon advisory firm, and an expert on U.S. climate policy and carbon markets. Emilie has published extensively on federal climate legislation, regional programs and the interaction of carbon with other commodity markets. Previously, Emilie was Head of Carbon Analysis at Point Carbon Thomson Reuters, where she managed a portfolio of research and trading analytics products for North American and global markets.

[Image credit: Flickr/The U.S. Army]

Emilie Mazzacurati

Emilie Mazzacurati is CEO of Four Twenty Seven (www.427mt.com), an award-winning market research and advisory firm that brings climate intelligence into economic and financial decision-making. Founded in 2012 and based in the San Francisco Bay Area, Four Twenty Seven helps Fortune 500 companies, investors and government institutions understand how to quantify and monetize climate change impacts on operations as well as social factors that affect their value chain.

10 responses

  1. Global warming stopped 16 years ago, reveals Met Office report quietly released… and here is the chart to prove it

    The figures reveal that from the beginning of 1997 until August 2012 there was no discernible rise in aggregate global temperatures

    This means that the ‘pause’in global warming has now lasted for about the same time as the previous period when temperatures rose, 1980 to 1996

    By David Rose

    Read more: http://www.dailymail.co.uk/sciencetech/article-2217286/Global-warming-stopped-16-years-ago-reveals-Met-Office-report-quietly-released–chart-prove-it.html#ixzz2BcxHTcon
    Follow us: @MailOnline on Twitter | DailyMail on Facebook

    1. The Daily Mail is trash. Posting their nonsense anywhere is not only irresponsibly, it’s possibly evil.

    2. The term “Global Warming” is misleading. The scientific term is climate change, this does not mean the world is getting “warmer”. It means that climates become more severe- extreme drought in arid climates, stronger storms in coastal areas and greater precipitation in tropical areas. The exact science is unknown, mother-nature can not be measured. Look at your local meteorologist how often are they correct?? This is real.

  2. Only a fool would want to introduce a carbon tax with the world economy already on the ropes. Hurricane Sandy was one of many natural weather events that have occurred since the beginning of time but some will try to put a spin on anything to further their agenda. Our government can barely do anything right to begin with and you want to trust them with cap and trade. What could possibly go wrong?
    Bloomberg has an agenda and he’s also a megalomaniac. He has all the attributes of a 1930’s German leader with self-serving causes.
    Obama did the right thing by requiring higher fuel standards for vehicles. That in itself was a big step forward and a decision where everyone wins. I’m not a big fan of the President but I give him credit where it is due.

    1. We can’t continue to use the red herring ‘it’ll destroy jobs’ as an excuse for continuing to destroy the entire planet. You must realize the economy requires the planet in order to run, right?

      Many industries have to pay for their externalities but energy does not. Not only don’t they pay taxes, they are given subsidies. Why should Exxon be given over a hundred million a year in subsidies? Seriously, the problem is way worse than ‘it’ll harm the economy a little bit’ – which isn’t even correct. It’ll create jobs.

  3. *
    +I get such a kick out of the whole Solyndra farce. From 1900 – 1930 there were over 1800 auto manufacturers. From 1930 on, more came and went. We now have 3. As GE and other multinational corporate entities play games with bankrupting and consolidating industries and patents with their Chinese partners, American pioneers vanish. It is an older story, that has little to do with the viability of an industry.

  4. Not Waiting for the Politicians – Going Carbon Negative

    If we’re serious about halting the rise of – and eventually lowering – CO2 concentration in the atmosphere, biochar could prove the best way. It also allows us to more sustainably manage organic waste from municipalities, croplands, wastewater treatment plants, and a certain amount of residues from forests. The problem, as with all other climate-mitigation approaches, comes with reaching scale. Can biochar be produced to a large enough scale to make a measurable impact? The answer lies in the triple-bottom-line perspective. In other words, the only way this will happen is if it can be produced in ways that meet the needs of people, planet and profit.

    Biochar and Sustainable Land Development

  5. Mankind’s greatest threat is the melting Arctic which is already adversely affecting our weather and will accelerate global warming. Our highest priority should be to design a geoengineering system capable of shielding and refreezing the Arctic. I am thinking that NASA should be in charge of this.

  6. I hope the idea of a feed-in tariff is explored by the new Obama administration. I’m no expert in economics so I don’t really know tons about them, but feed-in tariffs seem to have worked quite well for the environment AND the economy in Germany (as well as many other jurisdictions). http://en.wikipedia.org/wiki/Feed-in_tariff

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