Oil spill seen as energy opportunity for Obama

Some environmentalists and liberal lawmakers believe the BP oil spill has handed President Obama a significant political opportunity to renew his stalled energy and climate bill, and are urging him to push for sweeping legislation to move the country away from reliance on oil and other fossil fuels.

An oil boom stretches across an opening in Lake Eloie near Shell Beach, La.

“He needs a response which is as big as the spill is,” said Wesley Warren, program director for the Natural Resources Defense Council in Washington.

The climate bill that White House officials have been negotiating called for limited greenhouse gas emissions from power plants, transportation fuels and eventually factories. It included large incentives for drilling offshore, nuclear power plant construction and so-called “clean-coal” technology. It also would have required set levels of renewable electricity use nationwide. The bill included several sweeteners to minimize the cost for industry.

But that bill has bogged down in the Senate. And while White House officials continue to call for an energy bill this year, Obama has not publicly linked the call to the gulf spill.

Many environmentalists believe it will now be politically easier now to strengthen the clean-energy provisions of the bill and jettison industry breaks. But many longtime energy analysts say Obama’s options are limited for reducing the nation’s reliance on oil.

“In the near term — near term being 20 years — there is no meaningful alternative to using oil in the transportation sector” on a wide scale, said Charles Ebinger, director of the energy security initiative at the Brookings Institution.

Still, the nation’s reliance on gasoline means choosing between imported oil or increased domestic production — and there, the gulf spill may have an impact.

All signs from Capitol Hill suggest that Obama’s expanded drilling plans will find little support in light of the BP leak.

Environmental groups want the administration to push for enhanced oil recovery on land, especially if gasoline prices spike again and public pressure mounts for more domestic production.

Some drilling advocates are pushing the administration to keep its response to the spill narrowly focused.

“Getting to the bottom of this, considering adding safeguards, things that could prevent this spill from happening again and things getting out of hand” — those should be Obama’s focus, said Ben Lieberman, an energy expert at the free-market Heritage Foundation.

Many economists say Obama’s best chance to reframe the energy debate — and dramatically cut oil use — could also be the least popular—a large gasoline tax on gasoline, with the proceeds dedicated to alternative fuel research, reducing the federal budget deficit, or even refunded to consumers.

White House officials pushed back against a modest proposed fee on gasoline in negotiations over a Senate climate bill.

In an interview Tuesday, one of Obama’s top energy advisors, Carol Browner, said “There’s no doubt that portions of the debate are going to change” because of the gulf spill.

She added: “We want to evaluate, at the end of the day, are we doing what we can to break our dependence on foreign oil… are we putting a cap on dangerous greenhouse-gas pollution? There’s more than one way to get it done.”

If Obama can’t sell an energy transformation after this spill, Ebinger said, “He will miss a unique opportunity to point out to the people, ‘This is a situation we got ourselves into… let’s not be sitting here five to 10 years from now and be saying, we didn’t do anything to address it.'”

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White House finalizing rules to cut car emissions

The Environmental Protection Agency and the Transportation Department sent the final rules this week to the White House’s Office of Management and Budget, according to a notice posted on the OMB website.

The higher mileage requirements will reduce U.S. greenhouse gas emissions by 900 million metric tons and save 1.8 billion barrels of oil over the life of vehicles built during the 2012-2016 model years, according to the EPA.

The projected savings over the life of the plan amounts to about four months of current fuel consumption in the United States, the biggest petroleum consumer, with demand at close to 19 million barrels per day.

The rules would aid the Obama administration’s efforts to cut U.S. greenhouse gas emissions, especially if Congress fails to pass legislation to fight global warming.

The vehicle emissions standards will be phased in starting with the 2012 model year, raising fuel economy to an average 35.5 miles per gallon by the time the 2016 models are ready — up 42 percent from the current 25 miles per gallon.

Lower U.S. gasoline consumption could make more crude supplies available in the world market, which in turn could put downward pressure on oil prices.

Phil Flynn, an analyst with PFGBest Research in Chicago, said the new standards will definitely lower U.S. oil demand, but that could be offset with higher fuel use in other countries.

“We can save it here, but are these cars going to be marketable in China, where all the demand growth is going to come from?” he asked.

The rules follow an EPA finding that greenhouse gas emissions from new vehicles contribute to air pollution, a danger to public health.

The EPA has come under attack from many U.S. lawmakers and industries for working independently on regulations that would slash greenhouse gas emissions from power plants, oil refineries and factories. Legislation is pending in Congress to stop the EPA from issuing broader emissions-cutting regulations.

Many accuse the EPA to trying to get around Congress, where legislation that would cap and then slowly reduce U.S. emissions blamed for global warming has been bogged down. As lawmakers deal with a massive healthcare bill and financial reform, it becomes more unlikely Congress will be able to approve a final climate change bill this year.

But automakers support the separate vehicle regulations because it would create the first national standard for controlling car and truck emissions, instead of having state-by-state regulation.

Many new vehicles, especially hybrid cars, already meet or exceed the planned standards.

The government must notify automakers by March 31 of the higher fuel efficiency for the 2012 model years.

To meet the new standard, the sticker price on a car or truck would rise by an average $1,300 in 2016 compared to current vehicle costs, the EPA said. However, a driver would save about $2,800 over the life of a vehicle through fuel costs.

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Wal-Mart Unveils Plan to Make Supply Chain Greener

Wal-Mart, the nation’s largest retailer, announced on Thursday that it would cut some 20 million metric tons of greenhouse gas emissions from its supply chain by the end of 2015 — the equivalent of removing more than 3.8 million cars from the road for a year.

The company plans to achieve that goal by focusing on popular product categories with the highest embedded carbon — milk, bread, meat, clothing — and by pressing its suppliers to rethink how they source, manufacture, package and transport those goods. Essentially, suppliers are being asked to examine the carbon lifecycle of their products, from the raw materials used in manufacturing all the way through to the recycling phase.

Wal-Mart’s sustainability executives will work with suppliers to help them figure out what measures to take. Any costs related to making products more energy-efficient — redesigning packaging or using a different fertilizer — will be the responsibility of each supplier, not of Wal-Mart.

Jim Stanway, who oversees Wal-Mart’s supplier initiatives involving energy, said in an interview on Thursday that suppliers would be willing to spend money if “it’s an investment where everybody’s sure it makes the supplier more profitable.”

And while the initiative may be good for the environment, it may also be good for Wal-Mart. Driving costs out of the supply chain could result in savings for Wal-Mart that can be passed along to consumers — enabling the company to uphold its reputation as a destination for rock-bottom prices.

Also, as Michael T. Duke, Wal-Mart’s president and chief executive, said in a Web cast on Thursday, “We know we need to get ready for a world in which energy will only be more expensive.”

At the beginning of the decade, Wal-Mart began taking an industry-leading role in environmental sustainability, in part to burnish its image. Soon, Wal-Mart was wielding its heft to change industry practices.

Wal-Mart said supplier participation in its effort to reduce greenhouse gas emissions would not be mandatory. But the giant retailer — with sales of more than $400 billion last year — made it clear that it was interested in doing business only with suppliers that share its goals.

Critics argue, though, that rather than change its business model, Wal-Mart pressures suppliers to change theirs — which can lead them to cut corners and produce shoddier products.

“You can’t argue with asking companies to reduce packaging,” said Stacy Mitchell, a senior researcher at the Institute for Local Self-Reliance, an advocacy group. “But if durability is not part of what matters in retailing anymore — and Wal-Mart arguably has been the leader in making that the case — that’s something we have to grapple with.”

Ms. Mitchell added that large stores have been shown to encourage consumers to drive farther from home, increasing emissions. And as Wal-Mart accelerates its growth overseas, putting more stores around the world, its carbon footprint will expand.

Wal-Mart has started many environmental initiatives in recent years, from improving the efficiency of its truck fleet to creating a global index to measure the environmental impact of products. In the last couple of years, the chain worked with 20th Century Fox Home Entertainment, which produces DVDs, to cut greenhouse gas emissions by eliminating the plastic knob in the center of its CD cases.

For the latest initiative, Wal-Mart is collaborating with organizations including the Environmental Defense Fund, PricewaterhouseCoopers, ClearCarbon, the Carbon Disclosure Project and the Applied Sustainability Center at the University of Arkansas. The groups will help advise Wal-Mart and its suppliers, as well as evaluate and measure reductions.

Already, Wal-Mart is working to change the labels on clothing it sells to indicate the products can be washed in cold water (therefore lowering customers’ electricity bills), and to sell private label compact fluorescent light bulbs in Mexico. The company said the 20 million metric tons of greenhouse gas emissions it intends to cut from its supply chain by the end of 2015 is 150 percent of the estimated growth in carbon emissions from its own operations over the next five years.

Matt Kistler, Wal-Mart’s senior vice president for sustainability, said the initiative was also a way of getting ahead of pending energy legislation. For “suppliers who could be adversely affected,” he said, “this will just put them further ahead.”

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Saving the Amazon may be the most cost-effective way to cut greenhouse gas emissions

An hour outside Manaus, the Amazon’s biggest city, the blackened remains of a virgin forest smolder. Chain saws whine. And Jonas Mendes tosses logs, one after another, into his kiln.

“I know it’s wrong to cut down the trees,” said Mendes, 48, sweat streaming down his neck and torso. “But I have no other way to make a living.”

Under a lean-to, his teenage son hacks charcoal into pieces with a machete. His wife fills 110-pound plastic bags that sell for $4 each.

If the Obama administration succeeds in its pledge to curb climate change, billions could flow from the U.S. to help forest dwellers such as Mendes change their ways.

Governors of the Brazilian Amazon’s nine states are pushing the U.S. and other industrial nations to invest in projects under rules known as REDD — or Reducing Emissions from Deforestation and Degradation — that are being designed through the auspices of the United Nations.

Under pending legislation to cap greenhouse gases, the U.S. government would auction emission allowances, funneling as much as $3 billion from the annual proceeds into rain forest protection. U.S. companies facing carbon controls could meet part of their obligations by investing as much as $13 billion a year by 2020 to preserve forests.

And several Amazon governors have signed agreements with California Gov. Arnold Schwarzenegger to measure the carbon in their forests with the goal of selling carbon credits in California’s cap-and-trade market, set to begin in 2012. The program would allow California businesses to use the credits to meet their emission caps, and thus funnel several hundred million dollars a year into tropical forest protection.

The reason? Slash-and-burn deforestation accounts for about 15% of humanity’s carbon dioxide emissions. Despite activists’ efforts, forests have been disappearing at the rate of about 34 million acres a year for the last two decades. Globally, Indonesia and Brazil are the third- and fourth-largest emitters respectively of greenhouse gases, after China and the U.S., because of their breakneck pace of forest destruction.

Saving the Amazon, Earth’s largest tropical jungle, can be a cheaper and faster way to avoid greenhouse gas emissions than replacing coal-fired power plants with renewable energy or switching to electric cars — although all such measures are considered necessary by climate experts.

President Obama acknowledged as much last fall.

“It is probably the most cost-effective way for us to address the issue of climate change, having . . . mechanisms in place to avoid further deforestation,” he said.

Despite the failure to adopt a long-term climate treaty in Copenhagen last year, the U.S., along with Australia, Britain, France, Japan and Norway, promised $3.5 billion in fast-start funds to help preserve tropical forests.

Forest livelihood

But if nations across Latin America, Africa and Asia are to guard their trees, they must first alleviate the poverty of 1.2 billion people who depend on forests for their livelihoods. Many of these developing nations, struggling economically, bristle at preaching from wealthier countries.

“Let no gringo ask an Amazonian to die of hunger under a tree,” Brazilian President Luiz Inacio Lula da Silva warned recently.

“We want to preserve,” he added. “But they should pay.”

Beginning in the 1960s, politicians in Brazil pushed to populate the rain forest and to clear tracts for cattle, soybeans and timber. Across the Amazon, homesteaders were promised title to their plots if they cut down trees to make the land “productive.”

But the policy known as Land Without People for People Without Land has backfired. Rain forest soil is unsuited to small-scale agriculture. Malaria is rampant. Jaguars devour livestock. Many settlers never got title because of bureaucratic snafus and thus have little incentive to protect the forest. Many, like Mendes, survive mainly by felling their trees for charcoal.

Taruma Mirim, where he ekes out a living, is one of 2,500 Amazon settlements created by Brazil’s Institute for Colonization and Agrarian Reform. Behind the tin-roofed shack where Mendes lives with his wife and four children, he drags logs to his kilns with the help of a half-starved cow.

Mendes has an infected eye, aggravated by fumes.

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Obama set to outline biofuels strategy

The strategy will be laid out in a report by the Biofuels Interagency Working Group, a body the president established to help spur investment in biofuels and make the industry more environmentally friendly.

Obama and members of his Cabinet are scheduled to meet on Wednesday with a handful of state governors to discuss energy policy and the “opportunities and challenges presented by the transition to a clean energy economy,” the official said.

The president is pushing for the United States to overhaul its energy habits by switching to less-polluting fuels and reducing its dependence on foreign oil.

Coinciding with Obama’s announcement, the U.S. Environmental Protection Agency also could issue new rules on measuring carbon dioxide emissions from biofuels such as ethanol.

Under a 2007 energy law, ethanol made from corn must emit less of the main greenhouse gas, carbon dioxide, than gasoline over the life cycle of the fuel, from production to being burned. Cellulosic fuels, made from crop waste and the woody bits of nonfood crops, would have to be even cleaner.

The struggling biofuels industry is concerned that the Obama administration will move too quickly away from ethanol, which is mostly made from corn, to more difficult techniques using wood chips and other biomass.

ENERGY INDEPENDENCE

Boosting production of home-grown biofuels such as ethanol would help achieve more energy independence while also creating jobs in rural regions of the United States as the country battles double-digit unemployment, the administration argues.

Obama’s push for ethanol could also shore up his support in farm states where ethanol helps support demand for corn.

The president may touch on other energy policies such as technology for capturing and storing carbon emissions during the meeting with governors.

Since his State of the Union Address, the president has been embracing a range of fuel alternatives including nuclear and clean coal technology in a move likely to win support of some wavering Democrats in coal states and Republicans.

Some expect that Obama will seek to lump the energy initiatives in a climate change bill in order to win broad bipartisan support for a bill to reduce U.S. greenhouse gas emissions.

Obama charged the biofuels working group, which includes the leaders of the Department of Agriculture, Department of Energy and the Environmental Protection Agency, with retooling the nation’s policies toward biofuels in many areas.

The group was asked to develop a strategy to increase biofuels production, investment in the industry, and the use of “flex fuel” cars, which can run on either gasoline or fuel that is mostly ethanol.

Biofuels, which are made from biomass — organic matter such as wood, crops and animal waste — are used to power vehicles, but critics do not see them as the perfect replacement to high-polluting fossil fuels.

Environmentalists and some scientists say production of U.S. biofuels from corn and other grains can drive out production of other crops, forcing farmers in other countries to burn down forests and clear land to grow those crops — creating new sources of carbon dioxide, a greenhouse gas blamed for global warming.

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Cap-and-trade may be separate in Senate bill

A cap-and-trade system would set limits on greenhouse gas emissions and allow companies to trade permits to pollute. The system, a version of which was approved by the House of Representatives, is controversial, especially among lawmakers who represent states with big coal reserves.

“The most controversial aspects of the energy debate that we’ve been having: the House passed an energy bill and people complained that, ‘Well, there’s this cap-and-trade thing,'” Obama told the crowd.

“We may be able to separate these things out. And it’s conceivable that that’s where the Senate ends up,” he continued.

Other, more popular parts of the energy bill seek to boost renewable energy such as wind and solar power. Those parts may be easier to pass.

As Obama was delivering his remarks, leading senators on Capitol Hill said detailed work was continuing on a comprehensive bill — one that would promote alternative energy development but also impose nationwide controls on carbon emissions.

Democratic Senator John Kerry, the leader of the group, told reporters “a lot of progress” was being made.

But he added that there still is no deal on the mechanism for reducing carbon dioxide emissions.

“It is accurate that we are still working on precisely what carbon-pricing mechanism, what shape it will take,” Kerry said, adding, “We know we need to price carbon.”

A Senate aide close to the negotiations told Reuters that the goal was to get a bill ready for floor debate by April, after the Environmental Protection Agency conducts an economic analysis of whatever compromise is produced.

Meanwhile, independent Senator Joseph Lieberman told Reuters that he, Kerry and Republican Senator Lindsey Graham were “working to get to 60” votes of support — the number needed to bypass opponents’ procedural hurdles and approve major legislation.

Asked when the senators might be able to unveil a compromise bill, Lieberman said, “Probably not before March.”

A White House spokesman said the president still supported comprehensive climate and energy legislation as one package.

HYBRID CONSIDERED

Given the difficulty of passing a cap-and-trade program in the Senate, Kerry, Graham and other senators have talked of the possibility of a “hybrid” system to control carbon emissions.

One private-sector supporter of carbon control legislation, who asked not to be identified, said a “hybrid” could be a system that imposes cap and trade on coal-fired power plants, coupled with “some sort of cap and dividend or emissions fee for other industrial sources” of carbon pollution.

Cap and dividend refers to a system that would reduce industry’s carbon emissions and compensate consumers for potentially higher energy prices. But it would not create a market for trading pollution permits like cap and trade does.

Getting an energy and climate bill through Congress was originally one of Obama’s top policy goals, but the drawn-out healthcare debate delayed the package, and supporters fear it may die or be delayed further during an election year that could change the balance of power in the House and Senate.

Obama made it clear during a question and answer period with a crowd in New Hampshire that he wanted a market mechanism to put a price on carbon. He said that even with advanced technology, coal — a highly-polluting fossil fuel — would continue to be cheaper to buy than cleaner, renewable energy.

A market mechanism would address that by making companies pay for using fuels that emit more carbon dioxide, one of the most common greenhouse gases blamed for warming the earth.

“The concept of incentivizing clean energy so that it’s the cheaper, more effective kind of energy is one that is proven to work and is actually a market-based approach,” Obama said.

“Does it make sense for us to start pricing in the fact that this thing’s really bad for the environment and, if we do, then can we do it in a way that doesn’t involve some big bureaucracy and a control-and-command system, but just says…there’s going to be a price to pollution,” he said.

“Then everybody can adapt and decide which are…the best energies,” he said.

In June a Senate committee approved an energy package that would require utilities to generate 15 percent of electricity from renewable sources such as solar and wind power by 2021.

It also supported a measures that would allow drilling within 45 miles of Florida’s Gulf coast.

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Senators Want to Bar E.P.A. Greenhouse Gas Limits

In a direct challenge to the Environmental Protection Agency’s authority, Senator Lisa Murkowski, Republican of Alaska, introduced a resolution on Thursday to prevent the agency from taking any action to regulate carbon dioxide and other climate-altering gases.

Senator Lisa Murkowski is challenging the authority of the EPA

Ms. Murkowski, joined by 35 Republicans and three conservative Democrats, proposed to use the Congressional Review Act to strip the agency of the power to limit emissions of greenhouse gases under the Clean Air Act. The Supreme Court gave the agency legal authority to regulate such emissions in a landmark 2007 ruling.

The agency has declared carbon dioxide and other greenhouse gases to be a threat to human health and the environment and is moving to write regulations to restrict emissions from vehicles, power plants and other major sources. The action could impose significant costs on the economy but would also rein in production of the heat-trapping gases that most scientists link to worrisome changes in the global climate.

“Make no mistake,” Ms. Murkowski said in a floor statement, “if Congress allows this to happen there will be severe consequences.” She said businesses would be forced to close or move overseas, domestic energy production would be curtailed, housing would become more expensive and agricultural costs would rise.

Her resolution requires a majority vote in the Senate, a remote possibility because of the strong opposition of the Democratic leader, Senator Harry Reid of Nevada, and most other Democrats. It faces even longer odds in the House. And then it would require the signature of President Obama, who is all but certain to veto it because it would rob him of a critical regulatory tool.

Ms. Murkowski said that the Obama administration was using the threat of E.P.A. regulation to force Congress to move quickly on broad energy and climate-change legislation, including a complex cap-and-trade program to limit carbon-dioxide pollution.

Ms. Murkowski, the senior Republican on the Senate Committee on Energy and Natural Resources, has nearly unanimous Republican support in addition to the backing of the three Democrats: Senators Blanche Lincoln of Arkansas, Mary Landrieu of Louisiana and Ben Nelson of Nebraska.

Her effort was applauded by a broad swath of industry, agriculture and energy lobbies, which fear the prospect of what they consider capricious and heavy-handed regulation by the E.P.A.

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Obama heads to Copenhagen

President Barack Obama heads to Copenhagen on Thursday to help secure a U.N. climate pact, staking his credibility on an as yet elusive deal that has ramifications for him at home and on the world stage.

Obama is expected to arrive in the Danish capital on Friday morning, joining about 120 other world leaders to finish a complicated process of reaching a political agreement to reduce greenhouse gas emissions and fight global warming.

The time is short and the stakes are high. With his top domestic priority of healthcare reform legislation percolating in Washington, the president plans to stay in Copenhagen less than a day.

That may or may not be enough time to overcome persistent disagreements between developed and developing nations that have marred two weeks of talks, but Obama’s presence and contribution could be a potential deal-maker.

The United States has proposed to cut its greenhouse gas emissions in the range of 17 percent by 2020 compared with 2005 levels. That corresponds to a 3 percent reduction from 1990 levels, the baseline used by the European Union and others.

Obama is unlikely to propose a more aggressive emissions reduction target, which many countries have demanded. His goals are based on a bill that passed the House of Representatives but has yet to go through the Senate before it can become law.

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US Proposes Innovative Trade Concept to Fight Climate Change

The United States supports taking “early action” to liberalize trade in products that reduce greenhouse gas emissions and believes that could spur progress in broader world trade talks on environmental goods and services, a U.S. trade official said on Wednesday. “We would be interested in early action on climate-friendly technologies. We are discussing this possibility with other countries,” Carol Guthrie, a spokeswoman for the U.S. Trade Representative’s office, told Reuters.

Negotiators from around the world are in Copenhagen through Dec 18 for U.N. talks aimed at reducing carbon dioxide and other greenhouse gas emissions blamed for global warming. Washington believes reducing tariffs and other trade barriers on technologies that help countries reduce carbon dioxide emissions could be an important component of international action to address climate change.

At the same time, the House of Representatives has aroused international concern by including language in its climate bill that would allow the United States to impose a “carbon tariff” on imports from countries the president believes are not doing enough to reduce greenhouse gas emissions. That “would be a nuclear option in terms of trade consequence. For example, such an action by the U.S. and EU would be the equivalent of imposing a tariff of over 20 percent on China and India, resulting in lost exports of 20 percent,” a recent World Bank study said.

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What would emissions cuts mean to you? Obama, Republicans at odds on costs: MIT expert sees ‘gradual evolution’

The White House will commit the U.S. to a goal of cutting carbon dioxide emissions in 2010 to about 17 percent below 2005 levels at a U.N.-sponsored climate change summit in Copenhagen early next month. That’s about 12.5 percent below 2008 levels, according to the Department of Energy. He also set a goal of cutting emissions by 83 percent by 2050, which is what European nations want.

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