IDEAS For Us | August 30, 2015

Obama’s Energy Plan: A Domestic Strategy with International Implications

Just recently the Obama administration announced its new energy plan which projects a 32% decrease in American emissions by 2030. In short, this is a big deal. First and foremost, this plan is a monumental step forward for the United States, which has been firmly cemented as one of the world’s largest polluters. For review, this new strategy begins by setting EPA authorized emission reductions goals for each of 47 (currently) states. These specially tailored goals make the setting and reaching of benchmarks much more adaptable, straightforward, and trackable, allowing the EPA to very easily report metrics of progress.  Specifically, the calculation of these state specific goals is founded on three mitigation building blocks, namely: running coal plants more efficiently, running gas plants more frequently in proportion to coal plants, and supplementing fossil fuels with renewable sources. These do not represent the channels through which states must reach their goals, but rather operate within the EPA’s system of how to set goals, and how to evaluate how much energy can realistically be cut in each state across a given period of time. From these calculations, states are given their respective and unique interim benchmarks and final goals, with a considerable amount of flexibility in how to achieve them. Each state will submit a reduction plan by 2016 for EPA approval, and as long as the methods for alleviating emissions concerns fit within EPA allowed practices, ranging from increasing renewable usage to even carbon taxing and cap-and-trade systems, the states are given the freedom to pursue their targets as they please. Thus, the energy plan has accommodated some of the concerns of EPA skeptics who worry that national oversight will restrict state’s rights and so forth. If, however, some states choose not to comply, it is at this point that the EPA will employ a federally mandated cap-and-trade system, which, while it could be effective in its own right, offers the incentive for participation to states that they utilize their right to tailor their own reduction plans. At the risk of sounding redundant, this is a big deal. However, this is not only a big deal within the United States. Last week, United Nations Secretary General Ban Ki-Moon applauded the USA’s efforts, calling the plan “visionary and bold.” Thus, the big question is, how will this spill over into the international climate processes?Obama-Solar-Panels-3-2012

It is safe to say that the Secretary General’s praise of the American energy plan is more than pride in a job well done, but additionally inspiration that progress may be nearer than previously anticipated. The most significant impact that this plan will have in the international sphere is undoubtedly the symbolic leadership of the United States in (finally) committing a concrete strategy to emission reductions. Alongside China and several other major polluters, action being taken within our world’s largest climate offenders is an overwhelming motivational tool for other countries and international energy partners to join in. Countries, especially in the developing world, who feel the impact of climate change more severely than the developed world, but have sat idly by while the United States delays hard commitments, can at last see steps being taken in the right direction.

The next most significant international response to this energy plan will be the potential for replication in other country’s strategic mitigation plans. Obviously not many countries share a similar energy use profile to the United States – hence our long reign at the top-end of polluters – but this plan is still immensely useful. To other countries with regional federalist structures (smaller administrative states like ours), this plan offers a strong suggestion as to a balance between regional administrative autonomy and national guidance. To countries without administrative regions the plan still delivers both a mechanism for evaluating their emissions and potential goals for mitigation, as well as 47 somewhat replicable plans for cutting emissions.

Finally, this plan can help amplify the already opportunistic position of developing countries on the road to global emissions reduction. By opportunistic, I refer to the fact that while many developing countries have a severe lack of energy access available to their populations, they are in a position where much of their energy infrastructure is yet undeveloped, which allows them the unique opportunity of starting on the right foot with renewable sources. While other countries must focus on reducing emissions from energy systems in which they have already invested time, money, and other resources – effectively working backwards in order to move forwards – developing countries, with some international guidance, can begin utilizing renewable energy sources right out of the gate. But how does this springboard of potential energy in developing countries relate back to Obama’s energy plan? The answer is simply, international guidance. The simple strategy is for developing countries to model their implementation after the methods utilized across the U.S. But to be more inventive, if the United States begins to seriously invest in the renewable energy industry, American enterprises can be on the leading edge of renewables, and act as the helping hand that lights the fuse for the developing world’s clean energy future. Admittedly, that connection is a bit idealistic; but the concept of an American industry driving the growth of new markets and industries internationally is not only believable, but an agreeable goal across the aisle. Let states develop public-private partnerships to drive emissions reduction action, effectively fueling the growth of a much stronger domestic renewable energy industry (not to mention business and job growth). Prices for these renewables are already reaching historic lows and competing with fossil fuels in affordability, meaning that the markets are ready to expand, competition can take place, and prices can drop further. The investment in, and growth of the American renewable industry will open the window for these businesses to form international partnerships with developing countries hoping to invest in the same low-cost renewables. Many Americans on the skeptical side of the climate and energy conversation worry about energy independence, and yet are dependent themselves on fossil fuels. Rather than attempting independence in a deleterious system of fossil fuel consumption that is only going to decline, opportunity awaits in renewables.

Of course I am simplifying what would be an incredibly complex road to spearheading growth in the international renewables industry, but the important theme is opportunity. That, in essence, is what the Obama administration’s energy plan means to the international community. It represents the opportunity for the United States to shift its role as a wrench in the gears of climate progress, to the cog driving the machine. As mentioned, there are many shapes this could take, and a wide array of avenues that can be pursued, but ultimately it’s cause for cautious celebration. The leviathan has budged, just imagine the force it could have at full speed.