What Obama Didn’t Say About Climate — But Could Have

Today, President Obama gave a much-anticipated speech on climate change and released his “President's Climate Action Plan.” I have five quick observations to offer plus a general comment on the president's political strategy with respect to climate change:

1. A Speech!! Given the state of climate politics, the big story here is that the President gave a speech on climate change. Finally! That the Big Green environmental organizations are cheering this as a victory (see NRDC and Sierra Club, for example) is a sad measure of how low expectations have fallen. Was it really just four years ago that the House passed a cap-and-trade bill, only to watch it die in the Senate? Still, it’s better that the president speaks about this than not, and good that he is recognizing that the risks are even greater for developing countries. Obama: “They don’t just have as much to lose, they probably have more to lose.”

2. Where’s the beef? The speech featured the expected soaring rhetoric but the associated “action plan” contains staggeringly few new policies. Much of it simply touts common sense actions already taken by the Administration, while noting a desire to do more of the same. Fuel economy standards, clean energy permitting, appliance efficiency standards, rural energy efficiency loans, and loan guarantees for “advanced fossil energy projects” do not add up to a shift in policy.

3. Let’s go after existing coal plants…someday. The domestic centerpiece of the plan is a Presidential Memorandum directing the EPA to create carbon pollution standards for existing power plants. (See CGD’s Carbon Monitoring for Action or CARMA for the location and ownership of all US power plants, including the 1,021 we classify as “Big Red” Alerts: the largest and dirtiest coal plants).

   The Presidential Memorandum is the first federal policy to explicitly commit to regulating carbon emissions from coal-fired power plants that that provides about 40% of America's electricity. In truth, however, the carbon standard is more legal inevitability than bold action. The EPA included carbon dioxide as a pollutant under the Clean Air Act in 2009, and the Supreme Court narrowly upheld that view last year. So while the president deserves some credit for instructing the EPA to proceed today's announcement is hardly unexpected: after all, it's the EPA's job to regulate pollutants.
   
   Nor did the president tell them to hurry. The EPA has a year to draw up the regulations, and another year to put them in place. At the earliest, the carbon standard will not become effective until 2015, and it's not at all clear how stringent it will be. Given the fierce political and legal opposition of coal-using states to conventional air pollution standards, it seems likely that the carbon standards will be far less timely and biting than the Administration would like us to believe.

4. Fool me once, fool me twice? Media coverage of the president's speech and laundry list of climate actions may create a sense of movement but it’s unlikely that even a year from now this will be remembered as a watershed moment for US climate policy. I can't decide if the speech is really an attempt to revitalize the climate issue or cynical maneuver to create political space for approval of the controversial Keystone XL pipeline that would transport Canadian tar sands oil to the Gulf of Mexico. Juliet Eilperin, a seasoned Washington Post environmental reporter, notes that Obama’s seemingly strong words on the pipeline leave plenty of wiggle room. Either way, it's hard to see the speech as signaling a shift in basic priorities.

5. Let’s all work together (or not). The President's speech seems unlikely to alter the climate impasse with major emerging economies. Without aggressive, economy-wide domestic action, it is impossible for a US president to make legitimate demands of China and India. For the time being, the president would do better to focus on points of mutual cooperation such technology transfer and climate adaptation, as argued for by my colleagues Aaditya Mattoo and Arvind Subramanian in their recent book Greenprint, and R&D for smart deployment of renewable energy, as my research demonstrates for South Africa. In this regard, the president’s promise to end US financial support for coal-fired power plants in developing countries, with limited exceptions, is unlikely to make much difference to global emissions but pretty certain to irritate leaders in the developing world, such as those he will be meeting in Africa starting tomorrow.

Obama supporters will argue he is doing all he can faced with Republican opposition to sensible climate legislation in a GOP-controlled House and a Senate subject to minority filibuster. Critics respond that the president could do much more if he were willing to make use of executive orders. Both are right, but both are overlooking the critical issue.

Climate change is a long-term challenge that requires decades of economic transformation. Ultimately, this requires clear and stable incentives that hold up across administrations and election cycles. Only an economy-wide price on carbon – approved by a bipartisan coalition in Congress – can provide the kind of long-term, secure policy that is needed to drive wholesale change domestically and cooperation abroad.

Faced with Congressional opposition, the president has opted for a piecemeal, regulation-heavy approach to climate change that will bring only modest environmental benefits while antagonizing political opponents. I understand the arguments for doing so, but there is then little to prevent a future Republican president from weakening or abandoning the efforts that Obama takes through executive action. As Nancy Birdsall has asked: Is a US Carbon Tax Hopeless – Forever?

Not necessarily. Instead of resigning himself to a deadlocked Congress, the president could put forward a bold legislative proposal that would spark a national debate and put opponents of climate action on the defensive, much as has happened since the 2012 with the US immigration debate. For example, what would happen if the president proposed collecting a per-ton carbon emissions pollution fee and distributing the proceeds to the American public in a way that benefits households across the political spectrum. Such a policy would shift taxes from things we want more of (jobs and income) to things we want less of (pollution).

Moreover, the president could make Republicans an offer that would be extremely difficult to refuse, by designing the proposed pollution rebates or tax cuts to disproportionally benefit households in states and districts likely to be impacted most significantly by higher fossil fuel prices. This is fair and defensible public policy. It would also be politically savvy, since these are often states and districts held by Republicans whose support is needed for bipartisan legislation.

Such an approach would provide cover for moderate Republicans to support climate legislation on the grounds of economic benefits and lower taxes for their constituents. And it would force conservative Republicans who vote against the proposal to explain why they chose the fossil fuel industry over tax relief for American families. Crafted properly, it's hard to see how such a proposal would constitute a political risk, especially for a second-term president.

My current research project attempts to provide the foundation for just such a policy proposal. By identifying the cost of a carbon tax to households in specific districts and simulating the financial effect of various rebate and tax reform policies, it may be possible to construct a “pollution fee and rebate” policy that offers something for everyone. Identifying the consequences of the policy across demographic groups and districts may change how some politicians view the issue.

The president said today that he was open to working with anyone to address climate change. That's good, because he'll have to move beyond the Oval Office and executive action if he wants his legacy to measure up to his rhetoric.