Climate Change in Obama’s Second Term

President Obama surprised pretty much everyone when he spent a considerable part of his inaugural address talking about the need to confront climate change. It suggests a willingness to tackle the issue in ways that go beyond what was accomplished in his first term.

I’ll be watching three big areas on the domestic front. The first, and the most politically challenging test, will be how he uses existing Clean Air Act authority to go after carbon dioxide emissions from existing power plants. Some creative plans have been surfacing – you’d be well served to read Dan Lashof and his NRDC colleagues’ recent paper, which outlines one of those, here – that could allow the EPA to make substantial cuts to emissions in ways that are flexible enough to pass a serious cost-benefit test.

Figuring out how to advance such a plan amidst significant energy-sector uncertainty remains a real hurdle. Indeed facts on the ground have changed so quickly enough that the emissions that NRDC projects will occur in 2020 as a result of its proposed policies are now very close considerably closer to what the EIA projects will happen without any policy at all. (Update: The NRDC study uses a two year old baseline that projected power sector emissions of 2301 tons in 2020; the EIA 2013 AEO now projects 2081 tons; and the NRDC policy case projects 1796 tons.) This particular change, of course, argues in favor of more aggressive standards, and reinforces the fact that rigid regulation can result in lost opportunities. But the prospect of equally large changes in the other direction (i.e. changes that make cuts more difficult) will undoubtedly be on policymakers’ minds as they work through various options. The president will also need to be prepared to fend off congressional attacks on EPA authority if he decides to go down this road in a strong way.

The second area I’ll be watching is spending on energy innovation. This may be the most promising area for near-term bipartisan compromise, however limited, on Capitol Hill. But success in attracting support on this front is far from a given, particularly given continuing focus on the budget deficit. The fact that some new innovation spending seems possibly doable with enough political muscle, but unlikely to move forward without some sort of White House push, makes it a useful test for whether the administration has the ability to move anything climate-related forward in Congress.

The last area to watch is much broader. While pressing forward on near-term initiatives, President Obama will need to lay the groundwork for longer-term action. The reality is that none of the front-burner decisions – on EPA regulations, innovation spending, or the Keystone XL pipeline – will get the United States on the sort of long term path that it needs to be on. And some potential near-term decisions – particularly on oil and gas infrastructure, including Keystone and other issues – could make it more difficult to forge a broad enough coalition to curb U.S. emissions down the line.

What President Obama did yesterday, by weaving action on climate into a history of how Americans have tackled big problems in the past, and talking at some length about the problem, was an important start in trying to build the broad understanding of climate risks that could help support a future push for more substantial action. It will become easy in the next few years to focus only on tangible wins that have near-term payoffs. But to fully evaluate whether Obama succeeds in his second term agenda, it will be essential to keep an eye on the long haul.