The lowdown on Obama’s climate change policy

If you were to believe the ABC or Fairfax, Obama is introducing the world’s best climate change policy which somehow puts Australia to shame.  Sure.

The truth is very different.  Having been thwarted in his attempt at introducing an ETS, including by plenty of Democrats in Congress, Obama has opted for the extremely inefficient approach of regulation – in other words, direct action.

And if you listen too much to the head of the EPA, you would believe you were in church listening to a sermon being delivered by a Baptist preacher rather than a serious regulator.

While the target sounds impressive (although note that 30% of 40% is 12%), there has been a deliberate choosing of the starting point – after the massive shift to gas as a means of electricity generation, in turn the result of a massive fracking program which has driven down the domestic price of gas.

(Please note: I am no fan of Abbott’s ridiculous direct action policy – pretty much a waste of money, but less damaging than the carbon tax, RET and assorted other interventions that are being unwound (hopefully).)

Here is Robert Samuelson’s informative article published in The Fin yesterday:

President Barack Obama and his harshest critics – business groups and Republicans – have a shared interest in exaggerating the impact of Obama’s plan for climate change.

By 2030, he wants to cut the electricity sector’s greenhouse-gas emissions by 30 per cent from a 2005 base.

For Obama, it’s all about legacy. He wants to be the president who took bold action on the great environmental challenge of the century. For critics, it’s about showing costly mandates would hurt family incomes and job growth.

There’s much hype here. The truth is that, love it or hate it, Obama’s plan will only modestly cut greenhouse gas emissions, mostly carbon dioxide from current levels. Assuming no major glitches – a big assumption – the economic effect will be muted. It won’t be a huge net job creator or destroyer. It won’t catapult “renewables” (solar, wind) into major electricity sources. The real significance is, if blessed by the courts, it will create a complex and costly regulatory apparatus that might govern much of the US economy.

True, the headline claiming a 30 per cent cut in CO2 emissions sounds impressive. The electricity sector is undeniably crucial to cutting emissions. In 2013, power plants caused nearly 40 per cent of energy-related US CO2 emissions. Coal-fired plants represented about 75 per cent of this; natural gas accounted for most of the rest. Unless many coal-fired plants are shut or retrofitted to capture CO2, meaningful cuts are impossible.

Still, Obama’s 30 per cent target by 2030 is misleading. It overstates the size of the cut, because the reduction is compared with 2005 and since 2005, there has already been a big shift away from coal; shrinking the need for added cuts by about half.

Let’s do the math. In 2005, power plants produced 2402 million metric tons of CO2. A 30 per cent reduction is 721 million metric tons. This is the target. But by 2012, CO2 emissions had already dropped to 2023 million metric tons, a 379 million metric ton decline. That’s 53 per cent of the 2030 target. All this has occurred without federal regulation of greenhouse gases.

The average coal-fired plant is 43 years old, says the Edison Electric Institute, the trade group for utilities. Many older plants have been retired, it says, for reasons “including plant age, fuel prices (ie: low natural gas prices), decreased demand, and the projected cost of complying with pending EPA [non-greenhouse gas] regulations”. By the institute’s count, utilities have plan the closure of coal units equal to 20 per cent of the coal total. Some have already shut; others will shut between now and 2022.

Obama would continue these trends. Coal’s share of electricity generated (including nuclear, hydro power and renewables) has dropped from 50 per cent in 2005 to 39 per cent in 2013; in the same period, natural gas’s share rose from 19 per cent to 27 per cent. By 2030, the Environmental Protection Agency projects coal will fall to 31 per cent and natural gas will increase to 32 per cent. Renewables’ share, led by wind and solar, goes from 5 per cent to 9 per cent.

This is not aggressive. Some environmentalists hoped for deeper emission cuts. The Natural Resources Defence Council did a study assuming a 39 per cent cut by 2025. But the modest goals weaken business objections that the costs will be steep. (Of course, unexpected surges in electricity demand or losses of generating supply could change that. Both risk power shortages.)

None of this will matter much without technological breakthroughs. Emission increases from China and other developing countries will swamp US cuts. Poor countries will not stop using more fossil fuels needed for electricity and to reduce poverty. Unless technologies can reconcile more energy with fewer (or no) greenhouse emissions, the crusade against climate change will continue to fail.

The best approach is to tax carbon emissions. If you want less of something, tax it. Stimulate competition to conserve energy or produce it without greenhouse gases. An energy tax would also help close US budget deficits. But there’s little public taste for it. In fact, support for any anti-global warming legislation is weak. In 2009 Democrats controlled the House and Senate, and could not pass a bill.

So Obama resorted to regulatory fiat money: The EPA sets emission limits under the Clean Air Act. The proposal is hugely complex. Each state receives a target that can be met in many ways, subject to agency approval. This would be challenged in court and, if upheld, would strain the EPA’s administrative capacity. Winners and losers would be determined as much by political pressures as by market forces. It would be a bonanza for lawyers, lobbyists, economic consultants and public relations advisers. Whether it would affect the world’s climate is more questionable.

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21 Responses to The lowdown on Obama’s climate change policy

  1. mizaris

    WOW!!!! Lies…damned lies and…………statistics!!!! FMD – enough O’Bummer!!!

  2. Remembering the 1970s and looking at present strife in the world, it seems very odd that anybody would step away from any domestic source of energy.

    Here’s hoping Australia takes a giant step back toward its greatest resource, its coal. And let’s hope the next “carbon” reduction is the modernistation of our coal power generation (on which, all green cant aside, we will continue to rely).

    I wouldn’t drive a sputtering 1970s Leyland and I wouldn’t burn precious coal in aging facilities. Especially after taxing the stuff.

    Do like Merkel. Talk green while you dig brown.

  3. Ros

    Wednesday USA signed a package of agreements with China on energy efficiency. Five initiatives, emission reduction from heavy duty and other vehicles-in Obamas’s plan. Smart grids – in Obama’s plan. Collecting and managing gas emissions data – in Obama’s plan. Energy efficiency in building and industry -in Obama’s plan. Carbon cpature utilisation and storage,-in Obama’s plan.

    Described to the USA as climate change, in deal with China descibed as energy efficiency. Haven’t checked but seems like the sort of stuff we are doing.

    And fairfax and ABC are falling over themselves to shout Obama saving the world with his climate change policies while Abbott is both a bad man and completely out of step with the rest of the world. Priceless.

    All Obama is doing is preening and pretending while our geniuses of journos prove once again how ignorant and incompetent they are.

  4. Spider

    No wonder Abbott was embarrassed to discuss Climate Change with Obama. He was worried that he might laugh out loud.

  5. Robert Blair

    In the wider world I think Climate Change scare stories are getting to be pretty much negative click-bait.

  6. cohenite

    I don’t know why concessions are continually given to the green filth and lunatic, ego-driven alarmists and spivs. AGW is a failed theory. Renewables are an obscene waste of money.

  7. Andrew

    Has anyone in the meeja challenged the Senior Labor Figures when they have pointed to discord between “denier” Abbott666 and St Barack of Nairobi about carbons? Seems a pretty easy set of questions:

    - What difference? Both have rejected carbon pricing in favour of Direct Action – specifically, what are the differences SLF?
    - If St Barack is “leading the world” on CO2s, doesn’t that mean so too is Abbott666?
    - Why would St Barack publicly ridicule his own policy?

    I can’t imagine that the SLFs have thought through these issues beyond 1 word slogans (“Denier!!!!!!!!”). Should be popcorn-worthy TV if any bothered.

  8. Andrew

    Obama has opted for the extremely inefficient approach of regulation – in other words, direct action.

    BTW you’re totally wrong about DA, Judith. It is by far the most cheap and efficient way to produce CO2 abatement – far more so than any “market-based” solution which have costs of abatement ranging from “heaps” to “infinite” – and that’s a proven fact.

  9. Baldrick

    Obambi knows he can’t get anything through the US House or Senate, regarding gerbil wormening, so he’s gone for the safe option of regulations, which don’t need Senate or House approval.

    It’s a complete farce that pretends to do something, without actually doing anything meaningful.

  10. Robert Blair

    I think the really interesting bit is how the interests of both sides coincide.

  11. Des Deskperson

    Speaking of Obama, isn’t this delineation of Obama by green left Canberra Times cartoonist David Pope, well, racist? Check out the lips and the cheeks, he’s made the guy look like an ape!

    http://www.canberratimes.com.au/photogallery/federal-politics/cartoons/david-pope-20120214-1t3j0.html

  12. Alfonso

    Judith…. CAGWarming is a lie.
    The necessity and efficacy and possibility of its “abatement” is therefore a political ideology based on a lie.

    So what’s with the “extremely inefficient approach of regulation” BS…..
    It’s not real Judith, stop treating it as if it is.

  13. AP

    Based on recent track record, that should be a Uniting Church preacher. The new Church of Gaia.

  14. mmxx

    This issue is not about actual global climate, now or in future.

    It is about ideologies that are loose now within Australia’s comfortable, self-assured western culture.

    Increasingly, self-indulgent and soft western ideology and convention are being stalked by committed jihadist and other revolutionary activism.

  15. johanna

    Obama in fact has a three-pronged strategy to appease the greenies that support him on CAGW.

    1. Opposition to new fossil fuel developments, like the Canadian tar-sands pipeline and any exploitation on Federal land.

    2. Subsidies – billions of dollars worth – to moneypits like Solyandra and numerous other “clean energy” ventures.

    3. Regulatory measures, principally via the EPA, to strangle fossil fuel based industries.

    Notably, the only one of these which involves the legislature is (2), because they have to allocate money in the budget. Which the gutless wonders there have signally failed to stop. But, he has taken the concept of Executive Action to new extremes, such as when he unilaterally announced changes to the health care legislation because it wasn’t working. Nobody did anything about it.

    The US legislative branch is now a toothless, declawed tiger, albeit a very noisy one.

  16. Michaelc58

    Sigh, we are slow learners.
    Once the regulatory machinery is in place, the greens can ratchet it up to real damaging levels.

  17. Rob MW

    Sigh, we are slow learners.
    Once the regulatory machinery is in place, the greens can ratchet it up to real damaging levels.

    Well said. It seems that the cost of regulatory burden is not seen by many as a hidden tax. How many environmental impact statements will it take to build a granny-flat out the back or to knock a tree over in order to grow a whole lot of little trees (crops).

  18. Andrew

    1. Opposition to new fossil fuel developments, like the Canadian tar-sands pipeline and any exploitation on Federal land.

    Who benefits when they block a pipeline, and force them to bring oil from Canadia by train? I wonder, is there a massive donor to the Kenyan’s campaign who also owns lots of trains?

  19. Tel

    Who benefits when they block a pipeline, and force them to bring oil from Canadia by train?

    Various fire departments.

  20. Andrew

    I’m not sure they get paid by the fire Tel, otherwise there would be a slight moral hazard

  21. johanna

    Yep, two birds with one stone there, Andrew.

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