The inauguration of Barack Obama as the forty-fourth President of the United States will be a defining moment in American history. For most Americans and countless others around the world, this will be a truly inspiring political transition. The question we must face, however, is whether inspiration will lead to effective action. As I wrote in a Boston Globe op-ed this morning (November 12, 2008), environment and energy issues -- particularly climate change policy -- provide a microcosm of the forces that are shaping and will shape the actions of the new Administration and Congress.

To read my op-ed at the Boston Globe web site, please click this link.

In an interview that President-elect Obama recently gave to AGA’s flagship publication, American Gas magazine, he indicated that he would support increased production of natural gas in the Outer Continental Shelf provided steps are taken to enhance energy efficiency, conservation and renewable energy.

To that end, we believe his and Congress’ initial priorities with respect to energy and environmental policy will be the further development of renewable energies—solar, wind, biomass—and energy efficiency technologies.

AGA supports these initiatives. Because it is the cleanest burning fossil fuel, more and more natural gas is being used to generate electricity, which puts upward pressure on its price and makes it less affordable in the residential and commercial markets that our natural gas utility members serve. When renewables can take on more of that power generation burden, it will dampen demand for natural gas in that market, making it more affordable for our members’ customers.

Also, we not only support increased energy efficiency, we are the leaders in achieving it. Natural gas residents have steadily reduced their energy use which has resulted in a 29 percent decrease since the mid-1970s. That efficiency has also meant significant reductions in greenhouse gas emissions. Today homes using natural gas produce fewer CO2 emissions than they did in 1970, despite a dramatic increase in the number of homes heated by natural gas.

Our only note of caution to our new political leaders is one of timing. In our view, the timetables being talked about for substantially increasing the use of renewables for power generation are overly optimistic, meaning that for the foreseeable future, natural gas will still be the fuel of choice for generating electricity. That is one reason we urge our leaders to support policies that provide more access to new domestic supplies of natural gas to meet the ever growing demand of this fuel. Natural gas is abundant in North America, and we can produce it safely, reliably and in an environmentally responsible manner.

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The current economic and financial crisis presents the new administration an opportunity to unite the largest manufacturing sector in America, the environmental community, labor, governors and Congress behind a comprehensive approach to energy and climate change. Automakers want to be part of the solution and are committed to improving fuel economy and reducing CO2.

Sustained progress in producing the next generation of technology and vehicles to meet the challenges of fuel economy and CO2 reduction requires a healthy, competitive auto industry and clear national leadership. Our industry will be on the leading edge of the new energy economy. Our engineers and designers continue working toward the next technology breakthroughs that will even further reduce oil dependence and carbon dioxide emissions. Our work towards meeting a national solution could create the biggest wave of “green jobs” our nation has seen.

To get this industry back on track and begin meeting these challenges we need the certainty of a single national standard set by the federal government, fast-tracking of the loan guarantees to help automakers retool for the next generation of fuel-efficient autos, and an economic stimulus plan that includes steps to help consumers get back into auto showrooms, such as increased credit availability and efforts to spur consumer sales.”

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Opining on the specific changes expected from a new Congress and administration in U.S. energy and environmental policy requires too much of a focus on what is probable and too little focus on what is needed. So let me start with what is probable, and end with the opportunities that can seriously change the equation for energy and environmental policy.

What is “probable” is a resurrection of many of the failed energy policies of the 110th Congress that the Chamber successfully opposed. Policies like a federally-mandated renewable electricity standard, which would raise electricity prices for consumers and upset ongoing renewable energy programs in 27 states and the District of Columbia. And a windfall profits tax on crude oil imports, which has been effectively proven (from its 1980-88 incarnation) to reduce domestic oil production, increase dependence on imported oil, and fail to ease oil prices in any material way. We could also see new attempts to repeal the National Interest Transmission Corridor program created by the Energy Policy Act of 2005. These corridors are needed not only to ensure base load capacity in urban areas but also to make sure that renewable energy is truly developed and used. And since renewable energy is likely to be developed in rural areas, e.g. wind on the plains and solar in the southwest, these transmission corridors are essential to having the renewable projects completed and profitable.

It is probable that lawmakers will resurrect the “No Oil Producing and Exporting Cartels Act” (NOPEC), a bill that would waive sovereign immunity and subject OPEC nations to federal antitrust laws, a move that could strain international relations, spur retaliatory efforts and force those nations to stop selling oil to the United States. Finally, I expect that we will once again see legislation imposing price controls on oil and gas companies under the guise of “price gouging” protections, which could distort market price signals that act to efficiently allocate fuel. Such a move could exacerbate shortages, result in gasoline lines and generally make consumers worse off.

On the bright side, it is also probable that the new Congress and administration will seize upon the opportunity to focus the Department of Energy (DOE) on implementation of the energy efficiency and emerging technologies provisions contained in EPAct and the Energy Independence and Security Act of 2007 (EISA). These statutes contain over 100 authorizations to do research, development and implementation of new energy efficient and non-fossil fuel technologies. The authorizations are well over $50 billion but appropriations have been around $1.2 billion, which means that little work has been done to move from lab to market the very technologies needed to reduce greenhouse gases. If President-elect Obama follows through on his campaign promise to put $150 billion into energy technologies and DOE places management emphasis on evaluating, researching and developing these technologies, DOE will for its first time be a major cabinet department. If managed properly developing this group of technologies will in essence be the U.S. energy version of a “Manhattan Project” that many have called for over the years.

Another bright spot in the “probable” column is continued implementation of the $25 billion in loans to the auto industry for advanced technology vehicles. Section 136 of the EISA authorizes DOE to provide up to $25 billion in direct loans to help pay the
cost of reequipping, expanding, or establishing a manufacturing facility in the United States to produce qualifying advanced technology vehicles or components. The program was not funded until September’s continuing resolution. DOE issued an interim final rule this week, and has begun taking applications for the loans. The transition team and the new staff at DOE must continue to manage the regulatory process for Section 136 as efficiently as possible, because America’s auto industry needs these loans to remain competitive.

Now to what the new Congress and President are unlikely to do, but should do. Specifically:

1. Keep the Outer Continental Shelf open for oil and gas exploration as a serious step towards U.S. energy security and to reduce our balance of payments to foreign countries. The Minerals Management Service estimates that the OCS contains 85 billion barrels of oil. At an $18 per barrel royalty payment, the U.S. could receive $1.5 trillion in royalty payments and reduce our trade balance for oil by at least $4.25 trillion if oil stays above $50 a barrel. Oil is essential to our economy, and we will need more of it, so we at least should use U.S. oil.
2. Fully fund the development of Yucca Mountain, or in the alternative pursue spent fuel reprocessing, as a commitment to the future of our nuclear industry. Over the last few decades, the American people, as part of their utility bills, have already paid $40 billion for the development and operation of Yucca Mountain. It would be nice to see government fulfill its promise of permanent storage for spent fuels and nuclear waste. However, if the new government refuses to open Yucca Mountain, it should make a firm commitment to reprocess spent nuclear fuel. Either method would signal a firm commitment to expanding the use of the only existing major non-fossil fuel energy source that can legitimately be used to supply base load energy for the country.
3. Fast-track the permitting process for all clean energy sources, such as wind, solar, biomass, hydropower, geothermal, coal with carbon capture and sequestration, and, yes, even nuclear. If the U.S. is serious about developing alternative energy, we must ensure it can be quickly developed and put on the market. Otherwise, these new energy projects will be delayed like so many others, by those opposing new energy infrastructure at all costs.
4. EPA needs to give serious thought to any “endangerment finding” as it responds to the Supreme Court’s ruling in Massachusetts v. EPA concerning the regulation of greenhouse gases. The EPA staff is recommending finding that greenhouse gases from new motor vehicles or new motor vehicle engines harm public health and welfare. The U.S. has many options for regulating greenhouse gases from tailpipes without making a finding of endangerment. Such a finding would trigger literally all the permitting aspects of the Clean Air Act, which in turn would put in motion a construction moratorium on all new facilities or the modification of facilities that generate 250 tons annually of carbon dioxide, a very small amount of a pollutant which is everywhere. Moreover, an endangerment finding would run counter to all the emergency efforts to rescue our economy from further decline by placing impediments on our ability to build infrastructure and generate economic activity.

The U.S. voted for change and hopefully that change will bring about energy security through the development of new sources of energy as well as the mechanisms (transmission corridors and permit streamlining) to deliver these new energy sources. And the U.S. has the means to pay for these new technologies by allowing oil and gas exploration and production in the Outer Continental Shelf.

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The biggest challenge facing the new administration and congress is setting the economy straight. Voters are watching, and domestic and international markets remain skittish. No one knows when a credible and sustainable sense of economic optimism will return. Without that, policy options on a number of fronts are extremely limited and will remain so until we can generate economic growth.

President-elect Obama will need to bring the same steely discipline he evidenced throughout the campaign to his policy agenda—forging a coherent path forward. We think jobs have to be at the centerpiece of that agenda—keeping the jobs we have and creating news ones. They can be the new “green” jobs Obama described in clean coal technology, renewables and oil, gas and safe nuclear energy. There is also much that can be done in energy conservation through infrastructure projects that are being discussed.

In the end, however, new energy and environmental policies will have to make real economic sense—they just can’t be a hodge-podge of unrelated projects and initiatives.

First and foremost, there will be more attention given to defining a federal leadership role on energy and environmental issues. That will be a good thing. However, I do not believe that we in Washington yet appreciate how much the globe's economic woes will reduce the ability to invest in new technology and the competitiveness of new "greener, but more expensive products. Every day brings new announcements of reduced spending by utilities and non-utilties. The money simply isn't there.

Against that backdrop, I look for measures of the sort suggested last week by Commissioner Wellinghoff: a renewable or low carbon standard, combined with transmission policy reform to enable renewable resources to reach the consumers who want it. Note, however, that Rep. Waxman's challenge to Chairman Dingell for leadership of the Energy and Commerce Committee could delay action and make consensus more difficult to find.

I am hopeful that the new President and Congress will join forces to fashion an energy policy that places a higher priority on renewable energy and adopt policies that begin to meet the climate change challenge.

This won’t happen instantly. Much public attention in recent weeks has focused on the meltdown in financial markets and the slowdown in economic growth, and President-elect Obama and Congress will be under pressure early on to focus on that challenge.

But the President-elect has already signaled his intent to undertake a broad agenda, including energy. In addition, key members of Congress, including Republicans, have for the past several months been working on major energy and environmental legislation that did not reach final action. A new Administration with a stronger Congressional majority should make it easier to complete the process.

Major energy and environmental policy initiatives will, I expect, include the following:

• Meaningful climate change legislation
• Long-term renewable energy incentives, including an extension of the renewable energy production tax credit as well as establishment of Obama’s proposed 25% renewable energy standard by 2025
• Legislation to facilitate construction of new transmission infrastructure
• Increased renewable energy R&D

As Obama acknowledged on election night, these may not all get done at once. But new energy and environmental policies are too important to be left out of the agenda that he and Congress will pursue in 2009.

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The election of Barack Obama and a strengthened Democratic Congress is a pivotal opportunity for the nation to reset its course. We must accept the president-elect’s offer made last night to “join in the work of remaking the nation.” And we must hold our new leaders to their promise to assure a future that is livable, safe and just for everyone.

The new administration and Congress must shun the inevitable excuse that it is “too expensive” to curb global warming, or to end our allegiance to high-carbon fuels. It is too expensive not to act, and the cost of inaction in a future world of 9 billion people is what Barack Obama last night called “a planet in peril.” It is a world in a headlong rush toward climate instability, water scarcity, high food prices, deeper global poverty, and dangerous addiction to oil and coal.

We believe that investors, companies, and those who work for them, are just waiting for the signals from Washington to begin building a green and sustainable economy—one that creates new business opportunities, trains a legion of workers, and assures our future.

The signals should come quickly—in the first 12 months of the new administration—and they should include these concrete actions:

• Reform the capital markets to require honest accounting of financial risks that companies and investors face from climate change and other sustainability threats.
• Stimulate the economy through investments in clean energy technology, energy efficiency, green-collar jobs and training.
• Pass legislation to reduce greenhouse gas emissions by 25 percent below 1990 by 2020 and 80 percent by 2050.
• End tax incentives and subsidies for high carbon-emitting technologies and projects and enact mandates that 20 percent of the nation’s electricity come from renewable power by 2020 and at least 30 percent by 2030.
• Promote energy efficiency policies, including stronger building codes, appliance standards, tax incentives and energy efficiency resource standards, to achieve at least a doubling in efficiency.
• Instruct the Securities and Exchange Commission to address environmental, social and governance issues, including climate change, as part of corporate disclosure by all publicly-traded companies.

Though these reforms will not come easily, the election of America’s first African-American president shows that anything is possible in this great nation. And now, more than ever, Americans are hungry for change. They are ready to do what it takes to put this country on a path that will guarantee their children a brighter future.

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This election gives us all a new opportunity to think about energy and environmental policy in a new way. In essence, we have a rare chance to get it right, to shed preconceived notions, old ways and unworkable approaches. As President-elect Obama said Tuesday night, we cannot go back to the way things were.

While the economy is the No. 1 issue on our leaders' minds, it is our duty to remind them that without sound energy policies there can be no sound economic policies. An energy policy that will ensure our nation's energy security must be based on this one principle: we need all the energy we can get from all sources, and we need to do a better job of using energy wisely.

We are gratified that President-elect Obama and the leaders of the new Congress have listened to the will of the American people and have advocated expanding domestic production of oil and natural gas. Expanded production is essential to fuel our economy, create new jobs and give American consumers the energy they want and need. We hope that their willingness to expand production demonstrates a desire to put behind us the divisiveness and bitterness of the past, as well as a yearning for lasting solutions. The people of America's oil and natural gas industry--the backbone of our economy--are ready and willing to join in this constructive approach to energy. Our nation's economic survival and its standing in the world depend on it.

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President-elect Barack Obama has made it clear that he wants to usher in a new energy future built on clean power and highly efficient cars. We may be eight years late, but America is finally poised to enter the 21st century.

The time has come for us to repower America with clean energy. We can do this with comprehensive legislation that will create clean energy, break our dependence on oil, cut global warming pollution and create millions of new jobs.

NRDC and our partner groups will work with President-elect Obama and the new Congress to:
• Create 5 million new jobs
• Cut our dependence on oil by 50 percent
• Reduce global warming pollution by at least 80 percent by 2050
• Grant the California waiver for regulating global warming emissions from cars.
• Have federal agencies undo the damage done from Bush rollbacks on clean air regulations and protections against drilling in sensitive wilderness areas.

We already have better energy choices-- like solar, wind and geothermal-- that can accomplish all of this. Now we need the smart policies that will bring those benefits to more Americans, things like incentives to make homes and offices more energy efficient and investments to expand America’s public transit and retool our factories to build new fuel-efficient, plug-in cars.

Of course this work will be challenging. President-elect Obama is taking office in the midst of an economic cataclysm. He will be faced with monumental challenges and beset by powerful special interests. And while there are new faces in Congress, the old allies of the fossil fuel industry are not about to surrender without a fight.

But America is ready for bold leadership that capitalizes on our country’s resourcefulness and ingenuity. It really is time for change.

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The exit polls showed that energy was the fifth most important item on people’s minds as they voted, with the economy by far outstripping other concerns on voters’ minds. However, the economy and energy are intricately related, and to the extent that President-elect Obama understands that link, his election elevates energy to the top tier of issues going forward. There is a historical tendency for parties that win both chambers of Congress and the White House to overplay their hand and attempt something too extreme. But with a struggling economy President-elect Obama would be wise to work with Republicans to ensure that the economy is nurtured back to health while energy goals are pursued.

The Obama campaign has pushed for a national renewable portfolio standard (RPS), climate-change legislation, plug-in hybrid cars and natural gas vehicles (NGVs), and expanded DOE spending on energy efficiency, clean coal, and carbon sequestration technologies. If last year is any indication, climate-change legislation will prove difficult to move quickly. That means that energy issues themselves may receive quicker attention. But funding these new energy programs will challenge Congress, especially in the House with its “pay-as-you-go” rules. At FERC, Democrats will gain a commissioner slot and the chairmanship for a 3-2 margin. Because of the importance of renewables in Obama’s energy platform, FERC may well focus on electricity as the commission tries to figure out how to hook up renewable energy into the grid and transmit electricity long distances from the energy source to where people live. Natural gas will retain its importance as the fuel that allows renewables to be reliable, and as an industry is in a good position to take on that role immediately.

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Along with action on energy and environment, Democrats have promised re-engagement with the international community. This makes action before the UN Copenhagen conference next December a huge priority. What might be doable by that time? The most executable in that time frame would be cap and trade legislation covering large source electric power and industrial plants. This could connect the U.S. to the existing international carbon trading through the arbitrage of international offsets across the markets. This would be a huge step in the process of engaging China and other emerging economies in eventual emission reductions.

Can this be completed quickly? The challenge would be distributing the roughly 3.4 billion initial permits that would be entailed – for which the first year alone would be worth over $80 billion at prevailing international carbon prices. If the challenge of freely allocating or auctioning that large a sum becomes problematic, the U.S. could simply pro-rate abatement obligations among emitters rather than divvying up permits – while still allowing trading (see www.justcapit.org). The value of the first year abatement obligation would be about $1.6 billion if the required abatement were set at 2% per annum – much smaller than the permit value in cap and trade.

In any case, a cap for large sources should be doable by Copenhagen. Later, we can finalize standards, and other such policies, for the transportation sector - as well as for buildings.

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In his victory speech last night, President-elect Barack Obama called on America to defend a “planet in peril” as one of the three great challenges of our time. Obama is inheriting not just two wars, a broken economy, dangerous energy dependency and crushing debt, but he is inheriting a climate crisis that is far worse than most Americans know. Obama understands how difficult “remaking this nation” will be. He explicitly expressed this challenge in his acceptance speech: “For even as we celebrate tonight, we know the challenges that tomorrow will bring are the greatest of our lifetime: two wars, a planet in peril, the worst financial crisis in a century.” The good news is that we finally have a leader who gets the urgency of climate change and has the capacity to unite America around the solutions.

Election Day 2008 will be remembered not only for delivering a new president and a new Congress, but for sending the nation in a new direction to end our dependence on oil, reinvent our energy economy and find climate solutions. America must now embrace a new national economy built on a vision of carbon-free, domestically-produced energy.

This election was powered by younger voters, including many first-time and previous disaffected voters, who are deeply worried about their future. They want dramatic and meaningful change, especially for a new energy future that will protect the planet while creating domestic jobs. Obama’s bold stimulus package will be driven by new energy investments for clean power and investments in energy efficiency at the community level. In his words: “There's new energy to harness, new jobs to be created, new schools to build, and threats to meet, alliances to repair.”

The only way the President-elect solves all of the staggering problems facing us at one time is by bundling them into a single new energy package. A bold carbon-free energy stimulus program, a national grid and a comprehensive energy policy together will create a new pathway forward that caps carbon pollution and stimulates massive public and private investments in building a new energy infrastructure within ten years. Building a new clean energy infrastructure will not be easy or quick. As Obama said last night, “The road ahead will be long. Our climb will be steep. We may not get there in one year or even in one term… I will ask you to join in the work of the only way it's been done in America for 221 years -- block by block, brick by brick, calloused hand by calloused hand.”

It’s truly a new day in Washington. I hope it will be a new day for bipartisan cooperation to solve America’s problems. Senator John McCain’s willingness find bipartisan solutions will be needed more now than ever. Our leaders on both sides of the aisle, can’t afford to take this new opportunity for granted. Americans want a clean energy economy that moves away from dependence on oil and toward solutions to global warming. They will be looking for results, not more rhetoric. They expect legislation that caps and rapidly reduces U.S. global warming pollution, invests in made-in-America clean energy solutions, and provides funding to protect natural resources from the harmful impacts of global warming. I look forward to working with President-elect Barack Obama and lawmakers on both sides of the aisle in this new political climate to pass strong new energy/global warming legislation. After eight years of denial and delay, we simply can not afford to wait any longer.

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Now comes the REALLY hard part. Figuring out what to do about greenhouse gas emissions is by far the most important energy and environmental challenge facing the president-elect and the new congress-to-be. However, making significant progress in both the short- and long-term will require increasing the prices of both gasoline and also electricity generated from coal and natural gas (70 percent of the current mix). This is exceedingly difficult at a time when the economy is shrinking, not growing, and when people are reveling in much lower gasoline prices. Even ramping up R&D spending on renewables (which wouldn't affect energy prices) will be challenging because the budget is already $600 billion in deficit and we're not sure that all the financial shoes have yet dropped. It seems almost certain that significant progress on the climate front will take much longer than many of President-elect Obama's supporters will expect.

There was a binary question at stake -- past vs. future. Americans voted for the future. Exactly what happens next is unpredictable -- because it is new. If the Obama Admninistration decides to say to states and cities seeking financial aid in this grim winter, "OK, but you must invest in cutting your utility bills by 50%, and we will loan you the money" how many states will embrace that offer -- none of us can know.

That's what it means to make change, and be in the future.

So we are going to need to learn to ask new kinds of questions. More like, "What should we try next, and what did we learn from our last failure?"

But my guess is that this will not be as free form as 1932-33 -- if only because the crisis is not as fully developed, and the history of those years is available to the Administration -- and because Obama ran a stunningly disciplined campaign, more so than Roosevelt.

But we will all do better if we begin to recognize that we are in new and unexplored terrain -- and that kicking our carbon habit will be more like learning to ski than taking a college entrance exam.

A necessary change in Washington is establishing a stronger linkage between energy and climate change policy.

This election season clearly has been one defined by change. With sweeping change in the White House and the Democrats' stronghold on the Senate and House of Representatives, this election represents the most significant Washington power shift since 1980. One thing remains constant, however: voters want action on policy that provides America more energy security and sets in place a comprehensive plan to mitigate climate change.

Voters consistently have ranked energy as one of the most pressing issues for our nation. Despite our current economic woes, it is imperative that the White House and Congress work together on a comprehensive energy and environmental policy that recognizes there must be synergy between meeting a 25-percent increase in electric demand by 2030 and regional and national goals to reduce carbon and other greenhouse gases. To achieve energy and economic security-key components of our national security-the United States must deploy both proven and innovative forms of energy available domestically and from countries whose values are not at odds with our own.

The new administration and Congress must work together to establish a new approach for tackling the difficult challenges of transforming our energy production and delivery system while meeting our environmental goals. For example, Congress in 2005 approved federal loan guarantees for advanced technologies (renewables, nuclear and advanced coal) that avoid, reduce or sequester carbon dioxide. However, three years later, this program still is not a stable financing platform. The loan volume and time limitations imposed by Congress are insufficient to jump start clean energy technologies on the scale required.

The United States is increasingly dependent on older, less efficient, more costly electric generating capacity. Almost half of the 1 million megawatts of electric generating capacity today is more than 30 years old, and one-fifth is more than 40 years old. Continuing to operate that older, less efficient generating capacity and continuing to defer capital investment in newer, cleaner, more efficient electric generating technologies, is frustrating our ability to achieve cleaner air and reduce carbon emissions. Investment in new energy technology will feed our economy and create hundreds of thousands of high-paying, long-term jobs-reversing the loss of thousands of jobs in the chemical and manufacturing sectors to offshore production. This disturbing trend will not change unless we break the over-reliance on natural gas in the electricity sector.

The loan guarantee program authorized by the 2005 Energy Policy Act was a small step in the right direction, but it does not represent a sufficient response to the urgent need to rebuild our critical electric power infrastructure. It is especially insufficient for our country's requirements given the artificial constraints imposed by Congress. The United States will need something similar to the Clean Energy Development Bank concept now under consideration by some members of Congress. Modeled on the Export-Import Bank and the Overseas Private Investment Corporation, a Clean Energy Development Bank would provide loan guarantees and other forms of financing support to ensure that capital flows to clean technology deployment in the electric sector. This concept gives the new administration and Congress a vital program that would, at no or little cost to government, provide the financing solution to both our energy and climate challenges.

The development of U.S. energy policy must transcend partisan politics. Leadership in the White House and on Capitol Hill is essential. The new administration and congressional leaders should work with industry, environmentalists, organized labor and other stakeholders to craft an integrated energy and climate change policy that invests in cleaner energy technology, stimulates our economy, creates hundreds of thousands of jobs, drives innovation and makes the United States more energy secure.

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