President Obama’s inauguration speech highlighted the need to address climate change in a way that has been largely absent in both the campaign and the months following the election. The President spent more time on climate change than any other single topic and sounded a welcome call for America to lead the transition to sustainable energy sources.
While chances for legislative action on climate change are dim in the near future, given Republican control of the House, Obama's biggest contribution in the next two years could be to forcefully articulate a bold agenda in this area that legitimizes key ideas, shapes the national debate, and lays the groundwork for action when the political stars finally align.
Here are the three big yet simple steps that the President should push for to put us on the path to a clean energy future.
1. Implement a carbon tax
We’ve talked about how a carbon tax would be good for our economy and for our renewable energy development. A rate of $20 per metric ton would generate $88 billion in 2012 and up to $144 billion by 2020. Part of the revenue could be used for deficit reduction, a much more economically sound idea than slashing safety net programs. Another portion of the revenue could be used to offset any increase in energy costs to low-income and working families. Finally, the remaining portion could be used to directly invest in renewable energy development or electrical grid upgrades.
A dedicated revenue stream would help provide stability for the renewable energy sector that would attract private capital. And, a carbon tax shifts the costs of pollution onto the polluter to provide incentives to change negative behaviors.
2. Repeal fossil fuels subsidies and redirect the support to renewable energy
Every year, the fossil fuel industry receives between $10 billion and $32 billion in federal subsidies. Efforts to repeal any part of these subsidies continually fail. President Obama has suggested repealing around $4 billion in fossil fuel subsidies in each of his annual budgets but Congress has never even proposed voting on them. This money is a total corporate giveaway. The fossil fuel industry continues to post record profits and t is not a struggling industry that needs support to help it grow. Any support given to the fossil fuel industry just pads profits.
At the same time, renewable energy continues to struggle for support. The renewable energy production tax credits must be renewed annually and, as demonstrated by this last battle, are increasingly being held hostage for political gain. The uncertainty over the future of the tax credit hurt the wind industry. Yet, despite these challenges, renewable energy production continues to increase. Redirecting the support from fossil fuels to renewable energy will help the sector really flourish and do what subsidies are meant to do-- provide stability and support to help an emerging industry succeed.
3. Adopt a federal renewable portfolio standard
Currently, roughly 30 states have a renewable portfolio standard, RPS, a renewable energy production requirement that has helped states expand their renewable energy production capacity. A federal renewable production standard of 20 percent by 2030 could provide incentives and technical support for states that produce less than that level. States that produce more than the federal level could also receive energy infrastructure support to help further expand their production.
These ideas are not as far-fetched as they may seem. The carbon tax, for example, has strong public support. Fossil fuels do not need subsidies, as they continue to post record profit levels. And, as most states already have an RPS, a federal RPS would just help provide a floor for production levels.
President Obama’s emphasis on climate change is very encouraging and pushing these steps will help turn his words into reality. Eventually.