An Obama second term could have fairly significant implications for energy and climate policy. Many of the bigger initiatives from his first term now won't likely be repealed, from strict fuel-economy standards on automobiles to regulations on coal-fired power plants. And those could all have a modest effect on the America's oil use, its energy mix — and ultimately its heat-trapping carbon emissions. Yet doing anything bigger on climate change will likely require working with a Republican Congress.
Stricter fuel-economy standards are here to stay. In his acceptance speech, Obama promised to work with Congress on "freeing ourselves from foreign oil." Yet his most ambitious move on this front won't require Congress at all. His administration has already set new rules requiring new passenger vehicles sold in the United States to average 54.5 miles per gallon by 2025, up from 29 miles per gallon today. The fact that these rules won't be repealed is itself significant — automakers will now keep working on ways to meet them. The EIA expects this second round of fuel-economy standards to save 1.5 million barrels of oil per day by 2035*.
The Environmental Protection Agency's existing rules on coal plants will survive. In Obama's first term, the EPA set strict limits on mercury pollution from coal-fired plants and put an upper limit on the amount of carbon dioxide that could be emitted from any new power plant built in the United States. Combine those EPA rules with cheap natural gas and rising mining costs, and coal is in trouble: The Brattle Group expects between one-fifth and one-fourth of the country's older coal plants to retire by 2016. Republicans have vowed to repeal or relax these rules, but Obama is now in a position to block them.
The EPA could also set new rules on polluters. There are plenty of unfinished EPA rules on the horizon, all technically mandated by the Clean Air Act. The agency has to figure out how to regulate carbon dioxide from existing power plants, refineries, cement plants, and so forth. There are standards for ground-level ozone pollution (smog) that still need to be revamped. And the EPA faces a choice on how to regulate toxic coal ash waste from power plants. Depending on how the Obama administration handles these rules — and assuming natural gas stays cheap — coal could decline even further.
Natural gas drilling could face tighter regulation. The natural gas boom in the United States, driven by new drilling techniques known as fracking, has upended the energy industry. But fracking also brings with it plenty of concerns — from air pollution to potential water contamination. So far, the states have been regulating the drilling boom. But federal officials have signaled that they may increase oversight in some areas, such as developing national standards for wastewater disposal. That's an area to watch.
Wind power could get more subsidies. At the end of 2012, a federal tax credit for wind power is set to expire, which is already leading to layoffs in the wind industry. Obama wants an extension of the credit, Romney was opposed. This one is really up to Congress, although if the credit does expire, it would slow down a remarkable seven-year boom for wind power, which currently makes up roughly one-third of all new generation in the United States. It's worth watching to see if this makes it into a fiscal cliff deal.
Carbon emissions could keep falling -- though that's not assured. A recent analysis by Resources for the Future found that the United States is on pace to cut carbon emissions 16.3 percent by 2020. That's roughly in line with what Obama has promised in international climate negotiations.
But meeting that target depends on a few things. States would have to continue to promote renewable power. California would have to get its cap-and-trade system working. Natural gas would have to stay cheap. And the EPA would have to strengthen its rules on carbon dioxide from power plants and keep the fuel-economy rules in place. Now that Obama has been reelected, those last two parts are looking more likely. But a lot of luck is involved in the rest.
Bigger action on climate will require Congress. Obama has signaled at many points that he would be open to more sweeping action to tackle global warming. He has proposed a clean energy standard that would require utilities to get a greater portion of their electricity from renewables. Joseph Aldy, a former White House official, has hinted that Obama would be open to a carbon tax if Republicans were willing to negotiate.
But Obama would have to get those proposals through Congress first. And, after that, he'd then have to revive international climate talks with countries like China and India, which have been flagging of late. We're still a long, long ways off from a world "that isn't threatened by the destructive power of a warming planet." By itself, Obama's re-election can't change that. There's a whole lot more he'd need to do.
*Correction: The EIA estimates that the 2017-2025 round of fuel-economy standards will save 1.5 million barrels per day of oil by 2035, not 2.2 million as noted.
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