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Obama's First-Term Eco-Legacy and the Road Ahead

By: John Tepper Marlin

November 26, 2012

President Obama achieved a great deal in his first term to advance energy efficiency and renewable energy. But his objective of making significant progress to slow climate change was not achieved. It was beaten by the fossil-fuel lobby acting through the know-nothing opposition of Tea Party Republicans or their brow-beaten colleagues.

With his reelection, in the teeth of huge spending by his opponents, the President is in a good position to get through some of his original program that was left on the table. The lessons of Hurricane Sandy may help his case.

Obama's Eco-Achievements

Obama started by making solid appointments, with Steven Chu as Secretary of Energy and Lisa Jackson as Environmental Protection Agency Administrator. He supported climate-change proposals at Copenhagen, and admitted that what was achieved there "was not enough". Here's what he did achieve in his first term, mostly through his budgeting and regulatory authority:

  1. Obama put energy efficiency and renewable energy on state agendas. The $90 billion investment in green jobs in the stimulus bill may not immediately have created 5 million new jobs — many states were not ready to take advantage of the programs in a timely way. But it encouraged states and localities to focus on needed environmental initiatives and the longer-term impact of their efforts is real and accounts for about half of the 23 percent lower projections in just a few years of 2020 emissions.
  2. His EPA has twice raised auto fuel-efficiency standards under the Clean Air Act. Nixon's Clean Air Act was the basis for the Obama EPA's higher Corporate Average Fuel Economy ("CAFE") standards, first requiring 35.5 mpg fuel efficiency by 2016 and now 54 mpg by 2025. By using existing legislation, Obama moved America forward despite the Congressional stalemate.
  3. He regulated carbon emissions under the Clean Air Act. Obama's EPA won a major victory in June 2012 when the U.S. Court of Appeals, DC Circuit, unanimously affirmed EPA's ruling in 2009 that (1) greenhouse-gas emissions pose dangers to public health and welfare and (2) four measures would be instituted to regulate carbon emissions.
  4. He saved the U.S. auto industry and its technology-generating capacity. The auto industry bailout was not just a job-creation success. By keeping this major component of U.S. industry alive, the President kept the United States as a strong player in electric-car technology and in the campaign to generate more efficient batteries.
  5. He has used federal purchasing power to reduce carbon emissions. He has made energy efficiency part of the mandate and procurement criteria of the General Services Administration and has supported the Energy Star rating program of the EPA and Department of Energy.
  6. He has supported four rounds of the ARPA-E program for energy technology research. The Advanced Research Projects Agency, once part of the Department of Defense, has an energy component administered by the Department of Energy. It has so far made awards for 107 project awards, with amounts ranging from $400,000 to $6 million each, for research on such topics as "electrofuels", carbon capture, batteries, electric grid, thermal energy storage, and rare earth substitutes. It would be hard to overestimate the long-term importance of this effort for the United States and for the planet.
Why Obama Failed to Address Climate Change Directly

That Obama didn't succeed in doing more on climate change reflects unpredictable developments. The BP oil spill early in his first term discouraged offshore oil drilling, and the Fukushima nuclear meltdown discouraged further nuclear power development, constraining his options. But most important, the Republican House of Representatives adopted a totally negative stance toward the President's climate-change goals. The entire minority membership of a committee headed by Senator Barbara Boxer's committee boycotted hearings on the House-passed Waxman-Markey cap-and-trade bill. I had a ringside seat to observe the crackup of the legislation in the 111th Congress, as senior economist for Congress's Joint Economic Committee. The bill was debated to death in the Senate. After the election of more Tea Party adherents in 2010, it was all over.

In 1970, it would have been hard to believe that 42 years later the nation still would not have such a carbon tax or a carbon-price-setting mechanism like a cap-and-trade system. Green issues then had bipartisan support. President Nixon's strong Clean Air Act amendments to the original 1963 Act created the EPA, William Ruckelshaus became its first head, and new water-pollution laws were passed after two years.

What stopped progress? OPEC's decision to create an oil shortage. Inflation cascaded through private and public prices and economic concerns overtook environmental ones. The GOP took on the mantle of environmental deregulation in the name of promoting economic growth, although significant instances of environmental progress have occurred under Republican leaders since Nixon.

The GOP's Opposition to Environmental Rules Is Negotiable

President Reagan, for example, may have cut social and environmental budgets, including one-third of EPA spending, but in his second term he did something important. He noted the high cost of ozone-depleting chlorofluorocarbon (CFC) gases and he promoted a worldwide reduction via the 1987 Montreal Protocol. This Protocol has been described as the most successful international convention ever, signed by 197 countries and the European Union, and it has stopped the growth of the ozone hole although some aerosol substitutes, such as hydrofluorocarbons, continue to contribute to global warming even though they don't damage the ozone layer.

President George W. Bush during most of his administration was, like Reagan, antagonistic to environmental regulation, but in the latter years of his presidency he championed significant initiatives to conserve natural resources that became law, and he moved the country along on the path toward greater energy efficiency.

Given that Reagan and Bush 43 added valuable environmental achievements late in their second terms, President Obama has some encouraging precedents. The fact that his re-election results are strong may have something to do with Republican leaders entering the 113th Congress with a more serious inclination to cooperate with President Obama than two or four years ago. He now has a real opportunity to achieve more of the change he promised in 2008.

Proposals for the President's Second Term

Climate-change legislation deserves to be near the top of the President's second-term agenda. Even if the United States magically reduced its emissions to zero, the planet will be threatened by the continuing rapid industrialization of China, India and other emerging economies. For the United States to exercise global leadership on this important topic, it must do more at home.

Some things will happen on their own. The Energy Star rating has been shown in several articles by Professor John Quigley and others to raise the value of a property significantly for both sale and rental, so this certification has legs. Venture capitalists are supporting renewable energy projects. Vehicle manufacturers are hard at work on fuel and battery efficiency. HSBC Bank projects the low-carbon economy will triple to $2.2 trillion a year by 2020.

The President in his second term has a Groundhog Day chance to push forward programs and laws that directly address climate change. Through the last two Congresses, Carol Werner at the EESI has faithfully been pushing out information on a large number of Congressional initiatives in the arena of clean energy and climate strategies. Here are five ways ahead that seem to me to be most promising:

  1. A carbon tax. The lack of progress of the Waxman-Markey bill in the Senate despite support of the President's Climate Action Partnership has reopened bipartisan consideration of a direct tax on carbon of perhaps $20 a ton. This might add 10 percent to the cost of gasoline, but it would lead to correct signals being provided throughout the economy. Pigou-type taxes on pollution ("tax bads, not goods") are viewed with a friendly eye by many analysts on both the left and the right.
  2. Trading permits — the Cantwell bill. As a backup for a carbon tax or a parallel strategy, the limited cap-and-trade bill proposed by Senator Maria Cantwell (D-WA) is a good plan that could be a focus for bipartisan negotiation. It creates an "upstream" (at the power-generation source) market for carbon among large energy producers and users. It seems to me easier to understand and execute than the broadly based Waxman-Markey bill.
  3. Championing state and local initiatives. With Hurricane Sandy as the backdrop, support local environmental investments and rethinking of zoning and building codes or planning for surge protectors. Green incentives in the stimulus bill have encouraged states and localities to act to improve energy efficiency and reduce emissions. Without a carbon tax or a national market for carbon permits, these efforts need encouragement. The President can help revitalize them with national support of subnational and private investments.
  4. Using the Presidency to make the case for change. Michael Northrop, program director for sustainability at the Rockefeller Brothers Fund, urges the President to use his second-term status to tell the truth about the U.S. coal industry, its grave impact on climate change, its declining share of electric-power fuel, its declining employment. Coal employs 40 percent fewer Americans than a few years ago as U.S. solar jobs grow 13 percent annually. He recommends the President convene a national bipartisan climate action planning council composed of sitting and former state and local officials, company CEOs and civic leaders, with leadership by a senior advisor in the White House appointed for this task. A good idea.
  5. Continued agency actions. Since the Congress is unpredictable, the most reliable way forward is to continue exercising executive authority through the EPA, Department of Energy and other agencies to lower emissions and to build clean-energy markets. The President has already done much by using federal buying power to support clean-energy markets, but he can do more. Catalogs of options include those of the Center for Climate Strategies and the Presidential Climate Action Project.

The timing of Hurricane Sandy could not have been better for purposes of bringing more business leaders on the side of action to address climate change. Stay tuned and make your voice heard.

Dr. Marlin is Chief Economist for the New Jersey Institute for Social Justice. His views expressed here are personal and not necessarily those of the Institute.

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