What Does the State of the Union Mean for the Energy Agenda?

This post originally appeared in the National Journal Energy & Environment Expert Blog. The question was, “Obama’s State of the Union: What Does It Mean for the Energy Agenda?”

In his State of the Union address, President Obama laid out his vision for American’s energy future. As WRI’s interim president Manish Bapna noted:

In looking at what the speech portends from a climate and energy policy perspective, three key elements come into focus:

• The federal government should play a leading role with policies and programs that support efficiency and renewables, and the advancement of clean energy technologies;
• Support for industrial energy efficiency can pay dividends for a recovering economy and for developing a strong, low-carbon economy; and
• The role of shale gas and fossil fuel resources merit careful evaluation to ensure that environmental and public health concerns are addressed, including putting the U.S. on a path to lower greenhouse gas emissions.

Government research and support has long been important for emerging energy technologies and resources, and that remains the case today as we move toward less polluting energy sources. If the U.S. wants to be competitive in the emerging clean energy sector, investments in innovation and supporting policies like feed-in-tariffs can help show the way.

President Obama also emphasized the importance of the manufacturing sector in helping the economy recover. Improving energy efficiency in the sector can provide important investment that pays off in reduced energy bills, less pollution, and increased competitiveness. A recent summit in Chicago highlighted the potential for efficiency in the Midwest industrial sector, along with the drivers and opportunities for further investment. With U.S. manufacturing helping to lead the nation’s economic recovery, now is the time to do more than rebuild our industries in the interest of near-term economic development; we should be putting forward policies that will drive a cleaner, more productive and more resilient 21st century manufacturing base.

The president also called for an ‘all-of-the-above’ energy strategy for developing American energy resources. This approach carries significant risks, as America’s ongoing dependence on fossil fuels and expanded drilling can threaten sensitive ecosystems and drive up greenhouse gas emissions. Therefore, we need a strategy that does not just emphasize near-term energy security, but also looks at how different resources fit into a longer-term shift to a low-carbon economy.

A solid national Clean Energy Standard could provide a framework in that direction, and we look forward to expected legislation from Sen. Bingaman. While the likelihood for momentum on such a bill remains low due to current political dynamics, important progress can be made this year in understanding how such a standard could work, and which elements are most important for pushing clean energy development in the U.S. (WRI has provided some initial thoughts on the design of such legislation, here.)

In addition, the rapid expansion of domestic natural gas resources through hydraulic fracturing has significantly changed the U.S. energy outlook. However, new projections from the Energy Information Agency (EIA) provide a useful reminder that early estimates of the potential size and cost of new energy resources are often highly optimistic. That said, even with revised estimates of technically recoverable reserves, the EIA is projecting the U.S. to be a net exporter of natural gas by 2021.

While natural gas can play an important role in America’s energy mix, as WRI’s Bapna said last week, “It must be pursued carefully to ensure that proper environmental and social safeguards are in place.” And, “We need to ensure that natural gas complements rather than displaces cleaner alternatives, such as wind and solar.” (Read more about WRI’s work on shale gas, here.)

Similarly, President Obama asserted that further natural gas production needs to be developed “without putting the health and safety of our citizens at risk.”

Finally, the president noted that political differences in Congress are too deep to see movement on comprehensive climate legislation presently. However, it’s important to keep in mind that even if political dynamics have shifted, the facts haven’t. The disruption of our climate from increasing greenhouse gas emissions remains clear. For instance, according to NOAA, there were 14 billion dollar weather and climate-related disasters last year. The Administration, therefore, should continue to use the tools at its disposal to reduce dangerous pollution and greenhouse gases.