Obama’s Parting Words on Climate and Energy
January 10, 2017
The last literate President?
In Science’s Policy Forum column, President Barack Obama has penned an article arguing that the world is quickly replacing fossil fuel-based energy with clean energy. That momentum, he asserts, will not be stopped by “near-term” policy changes from Donald Trump’s incoming administration.
The current president writes that, although climate change is undeniable, the incoming administration might do nothing about it. That would be a political mistake, but it might not effect on the economics of clean energy, Obama argues. “Mounting economic and scientific evidence leave me confident that trends toward a clean-energy economy that have emerged during my presidency will continue,” he wrote, adding that “the trend toward clean energy is irreversible.”
Barack Obama in Science (paywalled):
Perhaps the most compelling example is energy efficiency. Government has played a role in encouraging this kind of investment and innovation: My Administration has put in place (i) fuel economy standards that are net beneficial and are projected to cut more than 8 billion tons of carbon pol- lution over the lifetime of new vehicles sold between 2012 and 2029 (10) and (ii) 44 appliance standards and new building codes that are projected to cut 2.4 billion tons of carbon pollution and save $550 billion for consumers by 2030 (11).
But ultimately, these investments are being made by firms that decide to cut their energy waste in order to save money and invest in other areas of their businesses. For example, Alcoa has set a goal of reducing its GHG intensity 30% by 2020 from its 2005 baseline, and General Motors is working to reduce its energy intensity from facilities by 20% from its 2011 baseline over the same timeframe (12). In- vestments like these are contributing to what we are seeing take place across the economy: Total energy consumption in 2015 was 2.5% lower than it was in 2008, whereas the econ- omy was 10% larger (2).
Because the cost of new electricity generation using natural gas is projected to remain low relative to coal, it is unlikely that utilities will change course and choose to build coal-fired power plants, which would be more expensive than natural gas plants, regardless of any near-term changes in federal policy. Although methane emissions from natural gas production are a serious concern, firms have an economic incentive over the long term to put in place waste-reducing measures consistent with standards my Administration has put in place, and states will continue making important progress toward addressing this issue, irrespective of near-term federal policy.
Renewable electricity costs also fell dramatically between 2008 and 2015: the cost of electricity fell 41% for wind, 54% for rooftop solar photovoltaic (PV) installations, and 64% for utility-scale PV (16). According to Bloomberg New Energy Finance, 2015 was a record year for clean-energy invest- ment, with those energy sources attracting twice as much global capital as fossil fuels (17).
The levelized cost of electricity from new renewables like wind and solar in some parts of the United States is already lower than that for new coal generation, without counting subsidies for renewables (2).
That is why American businesses are making the move toward renewable energy sources. Google, for example, an- nounced last month that, in 2017, it plans to power 100% of its operations using renewable energy—in large part through large-scale, long-term contracts to buy renewable energy directly (18). Walmart, the nation’s largest retailer, has set a goal of getting 100% of its energy from renewables in the coming years (19). And economy-wide, solar and wind firms now employ more than 360,000 Americans, compared with around 160,000 Americans who work in coal electric generation and support (13).
Were the United States to step away from Paris, it would lose its seat at the table to hold other countries to their commitments, demand transparency, and encourage ambi- tion. This does not mean the next Administration needs to follow identical domestic policies to my Administration’s. There are multiple paths and mechanisms by which this country can achieve—efficiently and economically—the targets we embraced in the Paris Agreement. The Paris Agreement itself is based on a nationally determined structure whereby each country sets and updates its own commit- ments. Regardless of U.S. domestic policies, it would un- dermine our economic interests to walk away from the opportunity to hold countries representing two-thirds of global emissions—including China, India, Mexico, European Union members, and others—accountable.
This should not be a partisan issue. It is good business and good economics to lead a technological revolution and define market trends. And it is smart planning to set long- term emission-reduction targets and give American companies, entrepreneurs, and investors certainty so they can invest and manufacture the emission-reducing technologies that we can use domestically and export to the rest of the world. That is why hundreds of major companies—including energy-related companies from ExxonMobil and Shell, to DuPont and Rio Tinto, to Berkshire Hathaway Energy, Cal- pine, and Pacific Gas and Electric Company—have supported the Paris process, and leading investors have committed $1 billion in patient, private capital to support clean-energy breakthroughs that could make even greater climate ambi- tion possible.
Despite the policy uncertainty that we face, I remain convinced that no country is better suited to confront the climate challenge and reap the economic benefits of a low- carbon future than the United States and that continued participation in the Paris process will yield great benefit for the American people, as well as the international community.