Reading Between the Lines of Obama’s Climate Change Plan

Anyone who reads a newspaper has probably heard about President Obama’s climate change speech today and seen more than enough commentary on its highlights. Instead of piling on, I thought it would be enlightening to reflect on five things that are buried in the plan released alongside the speech but could have important consequences.

(One note: Nothing on the President’s Keystone comments in this post, since lots depends on the details that come out over the coming days, given that reporting in advance of the speech was in conflict with the President’s remarks.)

A New Approach to the Major Economies Forum

Many analysts have argued for years that the Major Economies Forum (MEF), which brings together the top twenty or so emitters, should expand its efforts to include not only preparing for the annual UN climate talks but also negotiating concrete actions on climate change. There has been strong resistance to that in many quarters because of fears that the MEF might usurp the role normally filled by the UN. The new climate plan, though, includes this:

“We are proposing that the Forum… [launch] a major initiative this year focused on further accelerating efficiency gains in the buildings sector, which accounts for approximately one-third of global carbon pollutions from the energy sector."

The plan takes pains to emphasize continuity here, noting that the MEF spun off the action-focused Clean Energy Ministerial several years ago. But make no mistake: the return to using the MEF to drive specific action is new and notable. It remains to be seen how ambitious the effort will be and whether other countries will buy in.

A Steer on Clean Air Act Rules

The biggest news from the climate plan is its timetable for regulating existing power plants under the Clean Air Act. But there has been essentially no detail offered on what the regulations will ultimately look like. The best clue seems to be this:

“In developing the standards, the President has asked the Environmental Protection Agency to build on state leadership, provide flexibility, and take advantage of a wide range of energy sources and technologies....”

It’s the last part of this that I find interesting. Loosely speaking, Clean Air Act regulation of existing power plants can do one of two things: it can require power plants to become more efficient or it can incentivize shifts in the types of energy sources we use. The first category would include things like improving existing coal-fired power plants; the second category would include things like switching from coal to natural gas. The fine details of the wording in Obama’s climate plan shouldn’t be over-interpreted -- but the language used suggests that policymakers are at least looking carefully at regulations that would encourage power producers to switch fuels and technologies, i.e. the second category.

Reinforcing the Renewable Fuel Standard

Debate has been raging over whether the Renewable Fuel Standard (RFS) will lead to skyrocketing gasoline prices in the next year or two – and thus whether it should be modified or repealed. The new climate plan goes out of its way to say that “the administration supports the Renewable Fuel Standard”. I wouldn’t over-read this – the White House could still be open to reform – but this does suggest that, absent an overwhelming push from Congress to gut it, the RFS isn’t going away any time soon.

A Warning on Forests

Climate experts often talk about conservation of tropical rainforests. But the administration’s new climate plan focuses attention on U.S. forests too:

“In the face of a changing climate and increased risk of wildfire, drought, and pests, the capacity of our forests to absorb carbon is diminishing. Pressures to develop forest lands for urban or agricultural uses also contribute to the decline of forest carbon sequestration.”

This is an acknowledgment that the U.S. forest stock is threatened by a variety of forces. The climate plan doesn’t say what the U.S. government will do about the problem, but by flagging it prominently, the plan increases the odds that new policies will be developed.

Changes in Support for Coal Power Plant Exports

U.S. support for coal technology exports has been controversial. In particular, an Ex-Im loan that helped support construction of a high-efficiency coal-fired power plant in India has come under fire. It’s notable, then, that the new climate plan includes this:

“The President calls for an end to U.S. government support for public financing of new coal plants overseas, except for (a) the most efficient coal technology available in the world’s poorest countries in cases where no other economically feasible alternative exists, or (b) facilities deploying carbon capture and sequestration technologies.”

The big question here will be the definition of the “poorest countries”. If the U.S. government uses the World Bank definition for “low-income”, very few countries would qualify; in particular, India would be out. If it includes countries that the World Bank classifies as “low-middle-income”, India would be in. It will be interesting to see how other countries react to this move.