The U.S. President Barack Obama’s the State of the Union speech on Jan. 25 avoided any toxic references to climate change and greenhouse gas emissions, says Robert W. Baird.
The president's call for 80 percent of electricity in 2035 to be sourced from 'clean energy' -- including coal and nuclear -- is an obvious move toward the center. However, a Clean Energy Standard needs funding, as do Obama's plan for biofuels and electric vehicles. Predictably, Obama fingered elimination of tax preferences for conventional energy to pay for it.
Clean Energy Standard instead of cap-and-trade. While not offering any details in terms of how to get there or any precise definitions, the president formally set a goal that by 2035, 80 percent of America’s electricity will come from clean energy sources, said Christine Tezak, an analyst at Robert W. Baird.
Tezak said this would require a significant shift in a portfolio that is currently 50 percent 'dirty' coal and an opportunity for renewables, nuclear, clean coal and natural gas
Biofuels and electric vehicles get a nod, natural gas vehicles in the cold? As Tezak expected, Obama called for biofuels and electric vehicles as a mechanism to 'get off foreign oil', but interestingly, left out natural gas vehicles, in spite of the nation’s prolific domestic natural gas resources.
Tezak said natural gas vehicles have had solid support on Capitol Hill, and may return if energy legislation gets moving.
As Tezak has written before, financial support for cleaner and greener energy resources needs to come from somewhere. In this case, Obama identified a source -- “oil companies.”
Instead of referring to the oil and natural gas industries, Tezak expects this reference to “oil companies” implies a focus on the major oils as the target of a change in tax policy instead of all conventional energy producers, including those focused on domestic natural gas production.
Obama made no mention of the Environmental Protection Agency’s agenda, depriving critics of a target on this occasion.
Will energy legislation succeed in 2011? Obama certainly opened the door to this debate, but energy legislation was not the central focus of the speech. Whether Congress can muster the needed focus to forge agreement is not clear. The 80 percent by 2035 target is now an Obama goal, not a Republican goal, said Tezak.
Will the Obama administration accept a delay or full halt on the Environmental Protection Agency's greenhouse gas regulations to facilitate a legislative deal and give the Republicans a victory in exchange for support of a clean electricity standard? Tezak still expects that this is possible, but not guaranteed.