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Did Obama promise a ‘war on affordable energy’?

at 11:00 AM ET, 10/22/2012

“Under my plan of a cap-and-trade system, electricity rates would necessarily skyrocket.”

“So, if somebody wants to build a coal-powered plant, it’ll bankrupt them.”

-- Excerpts of Barack Obama interview featured in an American Energy Alliance ad

This ad uses cropped comments from a January 2008 interview between then-Sen. Barack Obama and the San Francisco Chronicle’s editorial board.

The president’s critics have cited these same comments as proof that the current administration is bent on destroying the fossil-fuel industry and the jobs that go along with it. The American Energy Alliance, a fossil-fuel advocacy group that produced the ad, said on its Web site that “President Obama is waging a war on affordable energy.”

Generally speaking, taped comments are factually accurate, barring any editing to manipulate language or splice together unrelated remarks. But we’re always suspicious when an ad strings together snippets of a discussion. After all, cutting at just the right place can leave a thought incomplete, giving viewers the wrong impression.

Let’s examine Obama’s 2008 interview and his coal-industry policies to determine whether this video provides adequate context. Is the president preventing energy prices from dropping? Has he failed to protect jobs in the coal industry?

The Facts

The comments in this ad appear in reverse chronological order. The remarks about coal-fired plants came first, as the candidate was responding to a question about how he squares his previous support for the coal industry -- including a bill he introduced in 2007 to promote coal-to-liquid fuels -- with his call to fight global climate change.

In his response, Obama insisted that he’d already squared his position, noting he’d voted against the Clear Skies Act of 2005, a failed piece of Republican legislation that would have implemented a cap-and-trade program while loosening air-pollution controls from the Clean Air Act.

But the former senator clarified his overall position by saying that the notion of doing away with coal “is an illusion, because the fact of the matter is that right now we are getting a lot of our energy from coal, and China is building a coal-powered plant once a week. What we have to do then is figure out how can we use coal without emitting greenhouse gases and carbon, and how can we sequester that carbon and capture it.”

Obama later suggested he did not support taking coal “off the table as an ideological matter,” adding that “if technology allows us to use coal in a clean way, we should pursue it. That, I think, is the right approach.”

This doesn’t sound like a candidate hoping to bankrupt coal. Here is his full response:

So Obama told the Chronicle that he was open to pursuing technology that uses coal in a clean way. That leaves us with the question of what his administration has done in that regard.

In 2009, the Obama administration dedicated $1 billion in economic-stimulus funding toward re-starting a long-stalled program called FutureGen, which aimed to create the first zero-emissions coal plant in the U.S. The George W. Bush administration had put the brakes on that program in early 2008, citing cost overruns.

The Obama administration also committed $1 billion in 2009 toward moving forward with the Clean Coal Power Initiative, a public-private partnership started during the Bush years aimed at developing coal-fired power plants that use carbon capture and storage -- catching the carbon from exhaust and pumping it underground. It also dumped about $3 million into research on clean-coal technology at the university level.

Projects supported by the Clean Coal Power Initiative have fared rather poorly, with three of six having been canceled, according to PolitiFact. But it’s worth noting that the chief executive of one plant said a lack of greenhouse-gas regulation made it impossible to recover the cost of deploying the necessary technology and thereby attract investors.

The coal-mining industry has shown a net increase of about 600 jobs since Obama took office, based on data from the Mine Safety and Health Administration. The industry reported 94,700 jobs (including contractors) in 2011, which was highest level since 1993. But the sector has lost 9,000 jobs since last year, which doesn’t look good in terms of the direction things are heading.

Part of the problem for the coal industry is that many power plants are switching to natural gas. Coal’s share of electricity generation dropped from 45 percent to 36 percent during the past year, according to the Energy Information Administration.

The U.S. Census Bureau does not track employment for coal-fired power plants in particular, so we haven’t been able to account for the coal industry beyond mining.

As for “cap-and-trade,” Obama promised during the 2008 election that he would set a “hard cap” on carbon emissions with a goal of reducing the levels by 80 percent by 2050. His first budget called for such a program, but the corresponding legislation stalled in Congress and finally died when Republicans gained control of the House in 2011.

Just to clarify, “cap-and-trade” places limits on carbon emissions and allows companies to purchase additional emissions permits from each other. The idea is that heavier polluters could pay lesser polluters, thus creating a financial incentive for lower emissions.

The president hasn’t implemented or even won the necessary congressional support to enact such a program, so it’s hard to test whether his 2008 campaign promise spells doom for the fossil-fuel industry.

However, the Obama administration has adopted tighter regulations on mountain-top mining and emissions of mercury and air toxics for new power plants. Those combined rules are expected make coal extraction and coal-energy production more expensive.

In addition, the Obama administration has proposed stricter limits on soot and greenhouse-gas emissions, which will likely deter many utilities from constructing new coal-fired plants..

In terms of Obama’s reference to skyrocketing electricity prices, he was warning that his proposals could face strong opposition because of the upfront costs. But he also pointed out a few ways to mitigate those increases, such as through energy conservation.

Here’s what the former senator said:

“If you can’t persuade the American people that, yes there is going to be some increase in electricity rates on the front end, but that over the long-term -- because of a combination of more efficient energy uses and changing lightbulbs and more-efficient appliances, but also technology improving how we can produce clean energy -- that the economy will benefit. If we can’t make that argument persuasively enough, you can be Lyndon Johnson -- you can be the master of Washington -- you’re not going to get that done.”

Indeed, Obama backed cap-and-trade legislation in 2009 that included a provision to mitigate the risk of rising rates. The bill, which died in the Senate due to bipartisan opposition, would have dedicated funds from the carbon-allowance auctions toward protecting consumers from rate hikes.

We should point out that no such cost-shielding provisions apply with the administration’s tighter standards for mountain-top mining, greenhouse-gas emissions and mercury emissions. Those executive policies don’t include the carbon-allowance auctions included in the 2009 cap-and-trade legislation — the auctions would have generated money to help shield consumers.

Even without cap-and-trade, residential electricity rates have risen since Obama took office. But they certainly haven’t skyrocketed. In fact, the rates have grown at a slower pace during the president’s first three years in office (+3 percent) than they did during the same period for his predecessor’s final term (+8 percent).

The falling price of natural gas, which is less than a quarter of what it was four years ago, has had something to do with this slower growth. However, it is questionable whether that trend is due to the current administration’s policies.

For one thing, the Department of the Interior works with five-year lease plans for extraction, and the last one from Bush administration ended just this year. Furthermore, drilling permits on federal land have dropped 37 percent under Obama -- although part of that decline is due to the moratorium that followed the Deepwater Horizon oil spill in the Gulf of Mexico.

The Pinocchio Test

The American Energy Alliance used cropped footage of Obama’s 2008 interview to suggest the president is bent on raising electricity rates and bankrupting coal-powered energy plants. But the extended version of his remarks show that he supported clean-coal technology and thought it was possible to mitigate the higher electricity rates that would result from cap-and-trade.

Obama’s policies align with those sentiments to some extent. His administration committed money to clean-coal technology, and he backed a cap-and-trade bill that would have provided federal funds to offset potential rate hikes on consumers.

Still, the administration has shown a willingness to unilaterally impose stricter regulations even when it can’t protect consumers from possible impacts — legislation would be needed to create cost-shielding mechanisms.

To review, the missing context in this ad was: 1) Obama said he supports clean coal and 2) he said consumers don’t necessarily have to feel the effects of tighter regulations.

The president has lived up to No. 1, but he has been less mindful of No. 2 when lawmakers — including members of his own party — don’t agree to enact his preferred cap-and-trade program.

We allowed some leeway on this ad because Obama has not always followed through with the sentiments he expressed in his 2008 Chronicle interview. But the American Energy Alliance still omitted imporant parts of what he said at the time about regulation. The group earns One Pinocchio.

One Pinocchio



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