President Obama Announces Administration’s Climate Vision

by Manatt, Phelps & Phillips, LLP
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In a much anticipated speech, President Obama addressed the issue of climate change and what the United States will be doing about it the future. His vision could be described as a collection of ideas new and old, both national and international, and addressing both greenhouse gas mitigation as well as climate change adaptation. He will invoke his executive authority nationally, but also address this issue with changes to foreign policy. If business was waiting for a clear signal from the Obama Administration about greenhouse gas, this speech confirmed the direction it is headed.

For the “sake of our children and the health and safety of all Americans,” the President said as he outlined his new initiatives built around clean-energy industry and policies. “We have a vital role to play,” he said. “The world still looks for the United States to lead,” he continued while noting that the United States is the world’s largest economy and the second-largest carbon emitter.

It was obvious that the President stopped looking for congressional approval, but instead will have his Administration enact regulations and issue directives that will change both the way the federal government operates and the signals it provides to the marketplace before he leaves office. But many of the actual details won’t be sketched out for some time.

One big question that was answered is what the U.S. Environmental Protection Agency (EPA) will do to regulate existing power plants. The President stated that he is instructing the EPA to issue a proposed rule to regulate carbon dioxide from existing coal- and gas-fired utilities by June 2014, and finalize it a year later. Additionally, it is thought that the EPA will now repropose its greenhouse gas rule for new power plants later this year.

Here are some additional highlights of the President’s plan:

National Policies

  • Establish greenhouse gas standards for both new and existing power plants
  • By 2020, double renewable electricity generation
  • Continue to improve fuel economy standards for heavy-duty vehicles and trucks in model year 2018 and forward
  • Install 3 GigaWatts (GW) of renewable power on Department of Defense installations
  • Permit an additional 10 GW of renewables on public lands by 2020
  • Reduce greenhouse gas emissions by 3 billion metric tons of CO2e by 2030 through enhanced energy efficiency standards for appliances and federal buildings
  • Tackle the issue of high global warming potential gases from air conditioners and refrigerators

International Policies

  • Have the United States lead by example
  • Enhance agreements with developing nations such as China, India and Brazil
  • End public financing of new coal-fired power plants abroad that don’t use carbon capture and sequestration technology, when appropriate

California Governor Jerry Brown issued a statement stating his pleasure that the federal government is rowing in the same direction as California. “The President’s action plan to reduce greenhouse gases is absolutely essential,” said Governor Brown. “California stands ready to do its part to ensure that America successfully asserts its leadership on climate change.” The President’s speech occurred concurrently with a California Air Resources Board workshop discussing the implementation details of its active Cap and Trade Program. The discrepancy between where California as a state is and where the federal government wishes to go was striking.

In 2009 Obama pledged that the United States would cut greenhouse gas emissions by 17% of 2005 levels by 2020. Environmentalists have been demanding decisive action to move forward and make that goal possible. Andrew Steer, President of the World Resources Institute, said the speech was “of extraordinary importance” because the President would be “resetting the climate agenda” by articulating a national strategy for the United States. “Now it matters because until it is clear where a nation is going on this, private investors and citizens don't really know what long-term signals to follow,” Steer said.

The President was silent on two critical climate decisions the White House has been facing for a while but will eventually have to make decisions on—whether or not to approve the controversial Keystone XL pipeline, and whether to compel federal agencies to take climate change into account when conducting environmental reviews. In a surprise reference, the President said that building the pipeline will only serve the interests of the United States if it doesn’t significantly exacerbate climate change. This seems to be a lower bar for approval than environmentalists had hoped.

As with most major policy speeches, the implementation of the policies outlined will take years to be fully vetted and implemented. In the short term, the main result is to provide a direction and market signal on climate policies, but it will be some time before the day-to-day business of energy use and generation in America will be impacted.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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