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Emilie Mazzacurati headshot

Will Obama’s Climate Action Plan Save the World?

It’s hard not to get excited about Obama’s climate plan. Finally, after five years in office, Barak Obama came out with a full-fledged, comprehensive plan to address on climate change. Measures to curb greenhouse gas (GHG) emissions from power plants, measures to fund and support energy efficiency and renewable energy, measures to prepare and adapt to the worst impacts, measures to focus on sustainable investments, and a strong rhetoric all along about the importance of tackling climate change – it was time Obama came through on this all important topic. Granted, he’s a little late to the game. States and cities across the country have developed innovative, aggressive plans to reduce their emissions and are starting to work on adaptation.

The international community, on the other hand, has conveniently used U.S. inaction as an excuse to do as little as possible and allow commitment to carbon reductions under the Kyoto Protocol to expire. Meanwhile, climate change has not waited for us to act, causing over a $100 billion in damages in the U.S. last year.

So is this plan really a game changer? How much will it do to reduce U.S. GHG emissions and prevent global warming? Let’s unpack Obama’s climate action plan a little bit.

EPA regulations: tackling emissions from the power sector

The centerpiece of Obama’s proposal, and the most important measure if done right, is the Environmental Protection Agency (EPA) power plant regulation. These regulations have been years in the making. EPA’s authority to regulate GHG under the Clean Air Act was affirmed by the Supreme Court in 2007, when it found that GHGs were, indeed, a harmful pollutant that fell under the authority of the Clean Air Act. The environmental agency has since been laying out all the pieces of the puzzle to prepare for comprehensive GHG regulations.

EPA started with regulating “mobile sources” (also known as “cars” and “trucks” by the rest of us), inspired by California’s GHG emission standard. It has since been thinking long and hard on how to regulate “stationary sources” – power plants in particular. In a nutshell, EPA will set an emission standard for each type of power plant – coal and gas-burning plants, which will impose a limit on how much carbon dioxide those plants can spew for each MWh they produce. This is a tall order, as 1,596 power plants reported 2.2 billion tons of GHG emissions to the EPA in 2011 and will likely fall under the new regulations. As always, the devil will be in the details. How aggressive will the standards be? What technology will be allowed for compliance? Will plants be given any flexibility in complying? The EPA estimated that the measure would yield a conservative 2-5 percent reduction below 2005 levels by 2020 in a preliminary assessment. The Natural Resources Defense Council (NRDC), however, advocated for a more ambitious approach and predicted the EPA could get a 26 percent reduction by 2020.

Will the U.S. meet its 2020 reduction target – and does it matter?

The 2020 date is important because the U.S. has taken on a target of reducing its emissions by 17 percent below 2005 by 2020 as part of the global climate negotiations. Until yesterday it was thought that if the U.S. met its target, it would be mostly accidental, and the recent economic recession together with the shale gas boom would be to thank rather than proactive climate policy. Obama’s announcement is a game changer from that standpoint. With the EPA regulations in place by June 2015, and a slew of other policies targeting other more rare but also more potent greenhouse gases, the U.S. will likely comfortably meet its target.

Does it matter? Well, it’s nowhere near enough to prevent a 3-4°C degree increase in global temperature, and that’s just plain bad news. To avoid the worst of climate change, scientists on the Intergovernmental Panel on Climate Change (IPCC) recommended in 2007 an 80 percent reduction below 1990 level in emissions by 2050. Their upcoming assessment in 2013-2014 will likely call for more urgent, faster and deeper reductions, and in the big scheme of things, the U.S. is still not up to the game. But Obama’s plan puts the U.S. in a position to be much more of a constructive player in international climate negotiations, to pressure other nations (read: China) to take more commitment themselves, and possible to nudge the world as a whole towards less carbon.

EPA regulations meets state cap-and-trade programs

Since the federal government has been dragging its feet on climate change, a number of states have taken the matter in their own hands and developed their own comprehensive programs to reduce emissions. The Regional Greenhouse Gas Initiative (RGGI), in the Northeast U.S., started a cap-and-trade program across nine New England and Mid-Atlantic states covering the power sector in 2009. California just recently started its own cap-and-trade program, covering most sectors – power, industry, transportation – with an aggressive reduction target.

The good news is that those programs will get bolstered by Obama’s plan, not undermined. The President directed EPA to “build on state leadership” and “provide flexibility,” which indicates that those regional markets will likely be granted some form of equivalency to the new EPA regulations, and get to continue their good work rather than have to start from scratch.

So, we’re good, right?...

Well, not really. The sad truth is that we need to do a lot more, and even if we do more, we will still experience plenty of disruptive climate change impacts. So while we should rejoice that the U.S. is finally moving forward on climate, we also need to prepare. Obama saw to this as well, and his speech contained an extensive plea to support climate adaptation effort and strengthen the nation’s resilience to a changing climate. This is an important public recognition that we’re not in a position to ‘choose’ between mitigation (emission reduction) and adaptation, but that we need to move forward on both fronts in parallel.

And someday, our children, and our children’s children, will look at us in the eye and they'll ask us, did we do
all that we could when we had the chance to deal with this problem and leave them a cleaner, safer, more stable world? And I want to be able to say, yes, we did. Don’t you want that?”

President Obama, June 25, 20123


Emilie Mazzacurati is Managing Director of Four Twenty Seven, an advisory firm specialized on climate risks and carbon markets. Four Twenty Seven specializes in helping businesses and local governments turn climate risks into opportunities. Follow her California cap-and-trade blog at www.427mt.com/blog and on Twitter @emazzacurati


Image Credit: Washington Post

Emilie Mazzacurati headshotEmilie 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.

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