President Obama gave a grandiose speech earlier this week at Georgetown University on protecting the environment and stopping climate change. The Wall Street Journal was not impressed:
President Obama’s climate speech on Tuesday was grandiose even for him, but its surreal nature was its particular hallmark. Some 12 million Americans still can’t find work, real wages have fallen for five years, three-fourths of Americans now live paycheck to check, and the economy continues to plod along four years into a quasi-recovery. But there was the President in tony Georgetown, threatening more energy taxes and mandates that will ensure fewer jobs, still lower incomes and slower growth.
Mr. Obama’s “climate action plan” adds up to one of the most extensive reorganizations of the U.S. economy since the 1930s, imposed through administrative fiat and raw executive power. He wants to reduce greenhouse gas emissions by 17% by 2020, but over his 6,500-word address he articulated no such goal for the unemployment rate or GDP.
The plan covers everything from new efficiency standards for home appliances to new fuel mileage rules for heavy-duty trucks to new subsidies for wind farms, but the most consequential changes would slam the U.S. electric industry. These plants, coal-fired power in particular, account for about a third of domestic greenhouse gases.
New fees or regulatory requirements that are targeted towards coal fired power plants will certainly raise electricity prices.
One interesting part of the speech was when President Obama mentioned the Keystone Pipeline:
Now, I know there’s been, for example, a lot of controversy surrounding the proposal to build a pipeline, the Keystone pipeline, that would carry oil from Canadian tar sands down to refineries in the Gulf. And the State Department is going through the final stages of evaluating the proposal. That’s how it’s always been done. But I do want to be clear: Allowing the Keystone pipeline to be built requires a finding that doing so would be in our nation’s interest. And our national interest will be served only if this project does not significantly exacerbate the problem of carbon pollution. The net effects of the pipeline’s impact on our climate will be absolutely critical to determining whether this project is allowed to go forward. It’s relevant.
His grassroots environmental activists certainly want limits on carbon dioxide emissions, but they also want the Keystone Pipeline to be blocked. This puts President Obama in an awkward position, because polling has shown that the pipeline (and getting oil from Canada) is popular.
Walter Russell Mead of The American Interest reads Obama’s speech and believes he will ultimately approve the pipeline:
Obama only devoted a minute to the topic, but he tipped his hand a bit, saying his administration would permit the pipeline “only if this project does not significantly exacerbate the problem of carbon pollution. The net effects of the pipeline’s impact on our climate will be absolutely critical to determining whether this project is allowed to go forward.”
Greens and browns are both reading what they want to readfrom that statement, but it could actually be setting up an approval of the pipeline. Here’s how: Obama won’t approve Keystone if the State Department decides that the pipeline increases net greenhouse gas emissions. The pipeline will be transporting crude oil from the Alberta oil sands, and this particular variety burns fairly dirty, even by oil’s standards. But a draft version of the State Department’s analysis of the pipeline, released in March, found that the tar sands oil will be coming out of the ground regardless of whether or not we build Keystone. The oil will be brought to market somehow, whether by rail or by the construction of a different pipeline through Canada. So while the oil will surely increase global emissions, the pipeline itself will have little net effect.
I think his reading is correct. Obama’s language specifically mentions exacerbating “the problem of carbon pollution.” And as Mead points out, the State Department has effectively already ruled on this point by noting that its quite likely that most of this oil will be pumped out of the ground regardless of whether or not the pipeline gets built, though its worth pointing out that shipping oil via pipeline is much less expensive than shipping it by rail.
If Obama had decided to nix the pipeline, I cannot imagine he would have discussed this careful approval/denial process. If anything, he would have announced at the speech that he intended to veto the pipeline.
Good news for the supporters of the Keystone Pipeline. Not so much good news for those who rely on inexpensive coal fired power plants for their electricity.