President Obama’s Climate Action Plan and BPC Energy’s Recent Work

Tuesday, in a speech at Georgetown University, President Obama announced his climate action plan — a comprehensive strategy to cut carbon pollution, prepare the United States for the impacts of climate change, and lead international climate efforts. The Bipartisan Policy Center’s (BPC) Strategic Energy Policy Initiative (SEPI) embraces restarting the conversation on climate policy in light of the nation’s new domestic energy landscape. Below is a brief analysis of the issues President Obama touched on today and what we’ve said about those issues here at BPC in our recent reports.

Environmental Protection Agency (EPA) Regulations

As a key feature of his plan, the president highlighted regulation of greenhouse gas emissions from new and existing power plants. Accounting for 33% of U.S. greenhouse gas emissions (GHG) in 2011, the electric power sector is the “next in line” for greenhouse gas regulation, following efforts to reduce emissions from vehicles through fuel economy and GHG tailpipe standards.

The new presidential memorandum directs EPA to work expeditiously to complete carbon pollution standards for both new and existing power plants under the authority of the 1990 Clean Air Act. The president called for EPA to work with states, industry, and other stakeholders in developing carbon pollution standards that build on state leadership, provide flexibility, and take advantage of a wide range of energy sources. A stakeholder process offers an opportunity to converge on some common ground and draw from existing efforts at the utility, state, and regional level to reduce GHG emissions from the power sector. There is also growing support for allowing compliance flexibility in the GHG power plant rules.

The recent SEPI report—America’s Energy Resurgence: Sustaining Success, Confronting Challenges—recommends that Congress and implementing agencies should, where possible, be encouraged to seek environmental program designs that promote energy productivity. Many economists suggest a broader approach has the potential for lower cost emission reductions, but there is no consensus among Clean Air Act experts on whether a broader interpretation is permissible under the Act.

Renewable Energy Production on Federal Lands

Interest in siting renewable energy facilities on federal lands has increased dramatically in recent years as technology costs have declined and as renewable energy potential has been more clearly understood. At the current pace of project approvals and construction, the Department of the Interior is on pace to meet and exceed the Energy Policy Act of 2005’s goal of hosting 10,000 megawatts of renewable energy projects on federal lands by 2015. Furthermore, Interior achieved the president’s goal of permitting 10 gigawatts of renewables on federal lands by 2012. The president’s plan directed Interior to permit an additional 10 gigawatts of renewable power on federal lands by 2020.

BPC applauds Interior for surpassing the goal and supports both recent efforts and this new goal to promote renewable energy development on federal lands, including in particular the issuance of a Programmatic Environmental Impact Statement for Solar Energy Development, the establishment of the National Renewable Energy Coordination Office, and the “Smart from the Start” offshore wind initiative. These efforts, along with many other reforms too numerous to mention here, are the latest results from the sea change that has occurred in renewable energy development on federal lands since 2005. Consistent with the president’s recommendations today to increase renewable energy production on federal lands, SEPI recommends that Interior and other federal agencies should continue to fully fund and implement these important reforms for approving renewable energy projects as expeditiously as possible.

Transportation Sector

President Obama’s Climate Action Plan commits to partnering with industry and stakeholders to develop fuel economy standards for heavy-duty vehicles. For decades, the most increases in vehicle fuel efficiency have come from the federal corporate average fuel economy (CAFE) standard. First enacted by Congress in 1975, CAFE standards were substantially increased in 2007; under current law, the average fuel economy requirement for new light-duty vehicles will increase gradually to a target level equivalent to 54.5 miles per gallon by 2025. To further reduce oil consumption and reduce the U.S. economy’s exposure to volatile world oil prices, however, these vehicle efficiency improvements will have to be paired with greater efforts to reduce vehicle miles traveled (VMT) and diversify transportation energy sources. SEPI calls for Congress, the Department of Transportation, states, and localities to encourage the adoption of cost-effective policies aimed at reducing energy demand for transportation services and making full use of existing authorities to ensure continuous improvement in fuel economy for new vehicles under the bipartisan Energy Independence and Security Act of 2007.

The Climate Action Plan also calls for further development and deployment advanced transportation technologies. A variety of policies and programs have been introduced since the 1970s to promote alternatives to petroleum-based fuels for the U.S. transportation sector. One of the most significant policies has been the renewable fuel standard (RFS), which—in combination with other federal incentives—has brought significant volumes of ethanol into the vehicle-fuel market. All alternative fuels generally face economic and logistical challenges associated with deploying fuel-dispensing infrastructure in a timely manner to facilitate the growth of alternative vehicle demand. President Obama’s Climate Action Plan reiterates support for the RFS and continued efforts to leverage partnerships between the private and public sectors to deploy cleaner fuels in every transportation mode. SEPI believes the nation should continue to develop advanced renewable fuels and supported the role that the renewable fuel standard can play in promoting those fuels. SEPI also recommends the federal government, by itself or in combination with industry, should pursue sustained investment in research and development for transportation fuels, vehicles, and infrastructure to advance more efficient and cleaner energy consumption in the transportation sector.

Energy Productivity

Many elements of President Obama’s Climate Action Plan mirror SEPI’s position that energy efficiency (or energy productivity) is “one of the clearest and most cost-effective opportunities to save families money, make our businesses more competitive, and reduce greenhouse gas emissions.” SEPI includes numerous recommendations to improve the energy productivity of the economy that would support the president’s goal of doubling energy productivity by 2030 relative to 2010 levels. While SEPI supports efficiency activities at the state and utility level beyond those in the president’s Climate Action Plan, many of the president’s Executive Branch recommendations are generally in line with those of SEPI.

Both the president and SEPI focus on efforts to reduce barriers to investment in energy efficiency across the sectors of the economy. Specifically, both SEPI and the president recommend the expansion of DOE’s efficiency standards for appliances and federal buildings. Additionally, SEPI recommends that the Executive Branch continually upgrade federal model building standards based on life-cycle cost-effectiveness. Along these lines, the president’s plan expands the Better Buildings Challenge to help commercial, industrial, and multi-family buildings cut waste and become at least 20 percent more energy efficient by 2020. Finally, SEPI recommends harmonizing and improving existing federal efficiency programs, a message reiterated by the president in his plan to harmonize federal building codes.

Methane Emissions from Oil and Gas Production

Efficient and environmentally responsible production of natural gas and oil resources has the potential to transform the nation’s economic and energy security. Though the rapid expansion of U.S. oil and gas development from shale formations has been central to America’s “good news” energy story, the industry faces a number of ongoing challenges—from concerns over the impacts of hydraulic fracturing to the need to meet growing infrastructure, water, and labor demands. These issues are explored in our January 2012, report, Shale Gas: New Opportunities, New Challenges, which identified the potential environmental and community impacts of natural gas development.

Consistent with the president’s initiatives to reduce methane emissions from the oil and gas sector, BPC’s Shale Gas and Energy Resurgence reports endorses the Natural Gas Subcommittee of the Secretary of Energy Advisory Board (SEAB) and the National Petroleum Council (NPC) recommendations to lower methane emissions associated with shale energy production while recognizing the progress made to date.

Transmission Expansion and Grid Modernization

The president’s plan noted the importance of upgrading the electric grid in order to maintain a clean, affordable, and reliable electricity system. Construction of long distance transmission lines capable of transporting remotely located renewable generation will be a key component of upgrading our nation’s electricity infrastructure. However, in practice, such lines – whether they cross federal lands or multiple state boundaries – are difficult to site. Earlier this month, the President signed a Presidential Memorandum designed to improve the siting of transmission along federal lands by improving coordination between relevant federal and state agencies. These process changes are similar to those called for BPC’s Electric Grid Initiative, which also called for Congress to enact a revised backstop siting authority at FERC that would allow FERC to approve interstate high voltage transmission projects under a very narrow set of circumstances, in order to ensure that interstate transmission projects with broad regional or national benefits can be sited in a timely fashion. The proposal is intended to leave states with authority to oversee route selection and protection of their environmental resources.

The president also touched on the need to help communities prepare for and respond to the impacts of climate change, which can include extreme weather. The electric grid—often the first energy system affected by hurricanes, storms, and tornados—needs to be both more resilient and flexible, while at the same time integrating cleaner energy technologies. To provide flexibility to the system, grid technologies such as advanced metering and two-way digital communication can go hand-in-hand to greatly enhance the potential of unconventional resources, including demand response, energy storage, or dispatchable distributed generation. Other technologies, such as phasor measurement units, have the potential to allow grid operators to more quickly diagnose and respond to reliability threats.

Our grid report recognized the progress made by the DOE in developing and deploying advanced grid technologies, and recommended that DOE focus on a number of issues: identifying best practices for state public utility commissions for integrating advanced distribution system technologies; continuing research and development (R&D) efforts toward cost-reducing technology breakthroughs in energy storage; and continuing to support the deployment of advanced grid technologies while compiling lessons learned from ongoing deployment efforts.

Innovation

President Obama also expressed his support for a robust federal role in energy innovation. Similarly, SEPI maintains that investment in energy R&D is critically important—not only for reducing greenhouse gas emissions, but for fostering economic growth, bolstering U.S. competitiveness, and strengthening our national security posture. In fact, the United States is currently benefitting enormously from past federal investments in energy innovation. America’s abundant natural gas supply (and its attendant environmental, economic, and national security benefits) is a result, in part, of federal efforts in basic science and resource mapping, coordination of industry efforts, applied R&D and tax credits for unconventional gas. SEPI believes that innovation can and must continue to be one of the strategies we use to tackle our toughest climate and energy challenges moving forward.

As the president indicated, addressing climate change will require new technologies, institutional configurations and partnerships, and business models. On a related note, SEPI believes a strategic federal role, from basic research through deployment, is necessary to cohesive, national energy policies. Specifically, SEPI recommends that federal energy science and R&D budgets should be significantly increased and that the federal energy innovation portfolio should be managed effectively and consistently reviewed and rebalanced through a Quadrennial Energy Review. The Administration’s decision to initiate such a review is a very positive step and essential to strategic policy moving forward. Additionally, SEPI acknowledges the need for reforming elements of DOE’s institutional architecture in order to prioritize energy innovation and for undertaking reforms to the loan guarantee program. While bipartisan support for energy innovation has persisted over time, energy R&D budgets have remained a small fraction of total federal R&D spending, and are threatened to be cut even further. Particularly now, when federal dollars are scarce, the president is right to call for investments in our energy and climate future.