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US POLITICS

Laurie Wiegler looks at why America’s 2012 energy ‘policy’ is pure politics – until after the election
Rena Schild/ Shutterstock.com

Energetic posturing
S
INCE his inauguration in 2009, many Americans have criticised President Barack Obama for not meeting expectations, even posturing on issues he once espoused. This phenomenon is perhaps no more prevalent than when it comes to energy, with many expecting the Democrat to have heralded a greener era. That said, Obama appears far greener than his Republican opponent for the presidency Mitt Romney, who concluded his acceptance speech at his party’s convention on 30 August, saying: “President Obama promised to begin to slow the rise of the oceans. And to heal the planet. My promise is to help you and your family.”

hope without change
Obama was voted in on a mandate of change, with a promise of a greener future. On some isssues, he has delivered; notably automobile emission standards and making the words ‘clean coal’ and ‘natural gas’ part of the American lexicon. As recently as 29 August, Obama finalised a fuel standard requiring cars to achieve 54.5 miles (87.7 km) to the gallon by 2025. “After 30 years of inaction, we raised fuel standards so that by the middle of the next decade, cars and trucks will go twice as far on a gallon of gas. We have doubled our use of renewable energy, and thousands of Americans have jobs today building wind turbines and long-lasting batteries. In the last year alone, we cut oil imports by 1m barrels a day, more than any administration in recent history. And today the United States of America is less dependent on foreign oil than at any time in the last two decades,” Obama said, at the Democratic National Convention on 6 September. However, the build up to the election in November has restricted his progress. For example, the fracking movement in the US has helped lower carbon emissions
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considerably – a talking point for the president on the campaign trail – but the anti-fracking activists’ voices are growing louder as worries about water pollution and other potential environmental risks come to light. So to obtain maximum votes, of course the president hardly mentioned the ‘f’ word during the Democratic National Convention, complicating the debate. Further, Obama’s decision to delay the final vote on the US$7bn development of the TransCanada Keystone XL Pipeline until after the elections angered environmentalists, who wanted an immediate outright ban. That Obama was considering the extension of a pipeline that would have imported synthetic crude derived from ‘dirty’ Canadian tar sands and carried it over the delicate Ogallala Aquifier in Nebraska ignited a political firestorm in November last year. Environmental activists encircled the White House in protest, forcing Obama to delay his decision until 2013 as he sought to retain his political base for the coming election. Obama chose votes over efforts to strengthen national energy security. The politicking came as a wakeup call in Canada, with its prime minister Stephen Harper in February describing Obama’s delay as “deeply disappointing” as he took to Beijing to negotiate crude exports to China. and contaminate local drinking water. Environmentalists and other concerned citizens argue about the indeterminate risks from chemicals which are not disclosed by federal mandate. “A dozen federal agencies are looking at proposing natural gas drilling regulations. If made into reality, this would significantly slow down natural gas production – the development of which the president continues to tout in speeches,” says Julia Bell of the DC-based Independent Petroleum Association. “In theory, the threat of such proposals creates uncertainty for the industry and could limit the willingness of some companies to take on new projects today.” Stymied or not, natural gas proponents insist it’s the best way forward to grow America’s energy independence, and even some of the unconvinced believe it could provide a suitable transition from coal to renewable energy. “Right now eight [federal] agencies are looking at fracturing [...] but the federal studies [...] are actually duplicating what is being done at the state level. There are a lot of great state programmes, including STRONGER (State Review of Oil and Natural Gas Environmental Regulations) and FracFocus, launched in April of 2011, [which is] a voluntary chemical disclosure web site. A lot of states have made it mandatory [to disclose the chemicals used in fracking],” says Bell. On the natural gas issue, Romney is a clear supporter. Speaking at the Republican National Convention, he said if elected: “First, I will pursue dramatic regulatory reform to accelerate the exploration and development of oil and gas, to facilitate construction of vital infrastructure and to preserve and expand crucial electricity capacity. I will streamline permitting processes and create fixed timelines. Businesses can live with ‘yes’ or ‘no’ , but government must stop saying ‘maybe’ or ‘wait’” . Earlier this year Obama’s administration approved the US’ first LNG export terminal, heralding an opening for hungry world markets of the country’s abundant gas supplies. This has concerned chemicals manufacturers including Dow and Shell which plan to spend billions building new chemical plants to feed off the cheap domestic supplies. “I would definitely say there is a disconnect between the president’s rhetoric on natural gas and the implications of his policy,” Bell says. This is evident when it comes to tax and the oil and gas industry. “Time and again, the president has called for increasing taxes on the industry, and has claimed that the industry is subsidised. America’s oil and natural gas producers receive zero subsidies from the federal
David R Tribble/ Wikipedia

Above: Gas drillers are receiving mixed messages as Obama seeks to balance energy security and environmentalism. Far left and overleaf: protesters against the Keystone XL Pipeline encircle the White House in November 2011 in Washington.

on the green front
Green-minded activists would prefer to see Transcanada fade away altogether and for Obama to solidify his position on renewable sources. Fuel cell proponents criticise Obama for lacking the will to pursue the hydrogen economy in favour of cars powered by electricity. A ‘hydrogen highway’ was proposed for the US east coast with great fanfare in 2010, yet had all but faded from the rhetoric by 2011. Obama, in his State of the Union Address on 25 January, once again spotlighted natural gas, only tangentially discussing traditional alternative energy options. On offer, he said, is a better path with “a future where we keep investing in wind and solar and clean coal, where farmers and scientists harness new biofuels to power our cars and trucks, where construction workers build homes and factories that waste less energy, where we develop a hundred-year supply of natural gas that’s right beneath our feet. If you choose this path, we can cut our oil imports in half by 2020 and support more than 600,000 new jobs in natural gas alone.” And all of this comes as environmentalists worry that in the process of fracturing shale rocks to force out natural gas by injecting massive amounts of water mixed with chemicals deep into the ground, a toxic cocktail will seep into aquifers

I would definitely say there is a disconnect between the president’s rhetoric on natural gas and implications of his policy. Julia Bell, Independent Petroleum Association of America
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government. In 2010 alone, America’s independent producers paid more than US$69bn in taxes to state and federal taxes,” Bell adds. “The tax provisions of the oil and natural gas industry are not handouts; rather, they are provisions, which manufacturing companies receive across the board, aimed at encouraging further reinvestment in American energy development,” she concludes. Steven Agee, dean of Oklahoma City University’s Meinders School of Business says: “President Obama has embraced natural gas, which is good; he should. We have an abundant supply of it domestically and we need to take advantage of it. It can be used in so many ways that it hasn’t been before.” However, Agee is dismissive of Obama’s energy ‘policy’ or the president’s energy policies overall. “In my view, over the last 30 years we’ve never had a national energy policy. Every person running for the president’s position has said ‘we’re going to have a national energy policy’ and then they get in and nothing happens.” Agee says for the past 40 years, the US plan has been to simply import oil to supplement existing nuclear, hydro and solar resources that are already installed, without developing a plan for further development. Obama promised to reverse this trend, says Agee: “[the president] talked about using more renewable resources and having a positive impact on the environment, [but] we’ve never had a national, legitimate oil and gas policy.” “Every president talks about reducing our dependence on foreign oil, particularly from hostile foreign governments, yet they never develop a domestic energy policy that does,” he adds. And now, the president is talking up natural gas expansion as if it will eventually eclipse oil exploration, which is disingenuous considering the plethora of deepwater rigs punctuating the Gulf of Mexico. True, as a sceptical Bell points out, increased permitting requirements have made it tougher to get drills pumping on federal lands, and the offshore moratoria (post-BP oil spill) was only recently lifted. Walter Nasdeo, research director at Ardour Capital Investments in New York says that he’s seen the effects of politicising energy. “Yes, natural gas is in the news right now – and a lot of people are speaking about the benefits and the amount of natural gas out there. There’s a lot.” But Nasdeo insists that this readilyplentiful and cheap energy source remains economically volatile because one cannot count on low prices in the future. “An energy paradigm needs to encompass
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Rena Schild/ Shutterstock.com

all the ways we can make power and fuel,” he says. Obama’s natural gas mantra, rather than appealing to one constituency, is “more of a broader attempt to appeal to folks straddling [the fence], who are saying we need to be completely oil or …completely alternative energy.” Is Obama’s current rhetoric trustworthy? “Everything he’s saying is calculated to win votes right now,” says Nasdeo.

nuclear, wind, water – why?
Sources interviewed for this feature frequently remarked that the US really doesn’t have an energy policy. Ask anyone about whether the US is posturing on positions such as wind and water, and the response is a quick ‘of course.’ But what about nuclear energy? Ian Hore-Lacy, public information director with the World Nuclear Association (WNA), explains that politics is only part of the complexity that currently colours the nuclear discussion. He tells tce that Fukushima definitely affected not just the US but the

whole world’s views on nuclear energy, and this is not really a political issue, per se. The US Nuclear Regulatory Commission (NRC) earlier this year approved two new reactors to be built, the first since the late ‘70s. The reactors will go up in Georgia at Southern’s Vogtle plant. Did the timing have anything to do with politics? Perhaps the Obama administration’s desire to court the traditionally pro-nuclear Republican vote? Although the president’s position on nuclear energy is a supportive one – as early as the 2008 campaign he said nuclear power was fine as one component of an energy mix, and even prior to the Fukushima disaster he aimed to boost federal loan guarantees above US$50bn – public support is unclear. And during an election year, this means Obama’s position is not as vocal.

elephant in the room
Because it’s an election year and so much of what Obama and Romney say is just hype, it’s impossible to predict just how US energy policy will change in January 2013.

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Everything Obama’s saying is calculated to win votes right now. Walter Nasdeo, research director, Ardour Capital Investments

As Hore-Lacy points out: “In the US the Democrats lean more towards populism, and the Republicans a bit more towards the practicality; all the hype about renewable energy… wind and solar is, at its extreme, ‘total nonsense’ There is a role but it’s at the . margins, not at the centre.” What is also at the centre in the US is European-like petrol and oil prices. For such an automobile-loving culture, the very real fear of US$4/gallon in the near future provides fodder for the Republican party, even though prices dropped considerably this year. While, arguably, the president has little to do with fluctuating fuel prices, the fact is that the cost of petrol has spiked considerably since he took office. In January 2009 the average cost of a gallon of petrol was US$1.68, according to Consumer Reports. As of February this year, in Connecticut (one of the most expensive states) it was around US$3.60, and by 11 September, the Automobile Association of America (AAA) said the national average was US$3.83/ gallon.

Certainly, the oil and gas camp is in a stronger position to argue for the continuation of a fossil fuel economy when Americans are rightfully disgruntled to be sometimes spending more to fuel their tanks than feed their families. Shell is being allowed to drill oil from the hallowed Arctic, even as The New York Times reported on 10 September that the oil giant suspended work due to difficulties working with sea ice. “I do believe the facts support the case of a pro-oil and gas economy,” says Bell. “The industry supports 9.7m jobs in the US as a whole and…in an election year, the jobs are very important to the American people.”

winding down alternatives
Speaking of jobs, the once-bright wind power prospects in the US could create a serious quagmire if Congress does not vote to renew the production tax credit (PTC) in this sector. Nasdeo says, “PTCs in the wind space could be one area with fits and starts if there is not a strong signal out of Congress that the PTC will be renewed. Because of the lag time

[between now and the vote at the end of the year], you will start to see wind projects start to fall by the wayside because they won’t be able to raise the extended amount of capital by the end of the year.” If investors are not confident of the renewal of the PTCs, Nasdeo says there could be a “major near-term effect as far as the election goes.” Yet even so, and with a degree of friction during the process “there are too many people working in the wind industry to not renew it.” He claims that if the PTC is not renewed “you will see individual states that rely on wind to meet a renewable portfolio standard roll back [their wind programmes].” A better bet may or may not be solar. Nasdeo points out that the tax equity credit for solar is in place till 2016, yet obviously one memory still fresh in the minds of many is the recent debacle involving Solyndra – an Obama and US Department of Energybacked manufacturer of cylindrical solar panels. When the company went bankrupt in September 2011, it ended up costing US taxpayers around US$527m. It’s a sting not easily salved. “The problem is when people say ‘solar’ I think it’s a very narrow definition and it goes back to the modular manufacturers where you can see the significant effect on stock price. I think one area people aren’t as close to understanding is project development, which is on a big upswing right now. There’s a lot of work being done, such as with the tax equity programmes [for solar],” Nasdeo adds. It will be interesting to see how many more times the president fluctuates on energy policy before 6 November, especially if the natural gas detractors gain momentum, or another crisis – be it seismic, nuclear, oil and gas or otherwise – helps boost the Republicans’ position. tce

Laurie Wiegler (lauriewiegler@gmail.com) is a US-based freelance journalist
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