Rhein on Energy and Climate

The 2013 “State of the Union Address” devotes12 lines to climate change.

These express a firm determination to “do more to combat climate change”. Visibly, Obama has learned the lessons from his first mandate when he got lost in frustrating battles with the Republican majority in the Congress that failed to understand the reality and long- term threats of climate change for the American children and future, to which the President specifically refers.

“If Congress won’t act soon to protect future generations, I will, before it is too late. I will direct my Cabinet to come up with solutions we can take, now and in the future”.

By implicitly referring to the powerful role of the Environment Protection Agency he has thrown the gauntlet to conservatives in Congress: either you cooperate or the Administration will do without you.

Instead of trying once again to introduce a cap and trade emission system comparable to that of the EU, the Administration is more likely to follow its successful practice of fixing energy efficiency standards for the main polluting sectors, above all electrical power. Coal-fired power plants continue to be the main source of C02 emissions. It may direct the power industry to reduce its green house gas emissions by, say 50 per cent until 2030 (over 2010),which would be a substantial achievement. By doing so the power industry would be free to choose the cheapest means of achieving such targets, e.g. replacing coal by gas, wind or solar.

It could also decide launch a comprehensive energy efficiency programme for federal buildings, in the line of the cautious 2012 EU programme.

During the Obama Administration the USA has for the first time seen its green house gas emissions decline, due to the revolutionary transition from coal to gas. By 2020 total emissions should have declined by 17 per cent over 2005, thanks to gas fired power plants and the doubling of fuel efficiency of cars. Few people would have expected this performance.

But to set global standards the US climate policy must address the excessively high per capita energy consumption and emissions. No major country on earth can afford to emit more than 14 tons of C02 annually, as each US citizen does. Tackling waste in heating and cooling by much better insulation of buildings should be the major objective of the next 20 years, both for new and existing buildings. A huge thermal refitting programme would help the climate, energy independence and the labour market.

By finally addressing climate change at home, the USA will be able to assume global leadership, which has desperately lacked during the past 20 years. This is timely when China begins to wake up to its huge environment and climate challenges and when the international community prepares for a global climate compact by 2015.

The EU should respond to these positive developments in Washington.

The most urgent for both parties is to agree on how most effectively take forward the talks at the international level which should be be concluded in the next 20 months. Combined USA and EU account for only about one third of global green house gas emissions with their shares going down as emerging countries become more important emitters. It will therefore be crucial to get other parties on board, first of all, of course, China, by far the single biggest polluter.

The other joint priority should be to achieve more harmonisation of energy standards and technologies in areas like transport, power generation and transmission or insulation in view of achieving economies of scale in the perspective of the comprehensive free trade agreement to be negotiated in the next few years.

In conclusion, President Obama has opened a window of opportunities for a more effective climate policy that the EU and other major partners should seize without hesitation.

Rendezvous in two years from now to see what will have happened.

Brussels 14.02.2013 Eberhard Rhein

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