On June 25, 2013, President Obama released a comprehensive Climate Action Plan (CAP) that sets out bold new domestic and international actions for the US to mitigate “carbon pollution,” adapt to climate change impacts and enhance its international leadership on climate and clean energy. The President's announcement of the CAP was live-streamed from Georgetown University and replete with rhetoric signifying that the CAP is a significant legacy initiative for the President, who still awaits confirmation of Gina McCarthy, his intended leader of the US Environmental Protection Agency (EPA) that will be charged with implementing many of the CAP directions. If implemented, the most significant effects of the CAP are predominantly in three segments of the energy sector: renewables, natural gas, and energy efficiency products and finance.
Pushing a very strong renewables and natural gas agenda, and touting natural gas as a transition fuel, the President indicated that the US could not “drill its way out of energy and climate change” and, in direct reference to the Keystone Pipeline, stated that the US climate change strategy “must be about more than building one pipeline.” He explained that the US State Department was in the final stages of its study of Keystone, and that the US would not approve the pipeline unless: (i) it was found to be in the national interest of the US and (ii) it will not significantly exacerbate carbon pollution. A seasoned politician may see these statements as well-timed foreshadowing of the potential approval of Keystone, if the associated GHG emissions can be fully offset and US jobs and/or revenue may be guaranteed – delivery of an alternate and comprehensive climate change policy “win” to stakeholders who would otherwise be very opposed to the approval.
All politics aside, the CAP is very comprehensive, and if successfully implemented may, in fact, be a world-leading, balanced approach for innovation and transition to a cleaner energy, lower carbon economy. If so, it is very possible that the CAP and CAPP may successfully co-exist on ground well prepared by President Obama. That said, the CAP likely faces a long and difficult road to implementation, especially since many expect that the emissions standards on new and existing power plants that the President called for will essentially render new coal power plants an impossibility. Even before the President’s speech, members of Congress painted the plan as an attack on coal states that will raise energy prices and negatively impact the US economy. This may portend legislative efforts to curtail the EPA’s efforts to implement the President’s vision. With or without such efforts by lawmakers, legal challenges are almost certainly guaranteed.
Key elements of the CAP include:
1. Cut carbon pollution in America
- Emission standards: Carbon emission standards to be imposed by EPA on new and existing power plants (which may include gas-fired as well as coal-fired power plants)
- State flexibility: EPA to work with States to build on their existing efforts to provide a flexible approach to meeting the EPA carbon emission standards
- Renewables: Double renewable power (a further 10 GW) by 2020, increase hydropower at existing dams, deploy 3 GW of renewable generation at military bases by 2025, 100 MW at federally subsidized housing by 2020
- Transmission: Accelerated siting, approvals and investments to facilitate modernization of the electricity transmission grid
- Clean Energy innovation investments: $8B in loan guarantees for advanced fossil fuel projects (final solicitation anticipated in Fall 2013), Quadrennial Energy Review (4-year energy planning)
- Transportation: Tougher fuel economy standards for post 2018 heavy duty vehicles, greater investment in advanced bio-fuels and battery technology, particularly for the military and commercial sectors, increase alternative fuel use in the US government vehicle fleet
- Energy efficiency: double energy productivity by 2030 relative to 2010 levels, appliance standards, $250M rural utility energy efficiency and conservation loan program, grant and loan program for agricultural producers, $23M multifamily energy innovation fund with lenders round table in July to facilitate energy efficiency into home financing, expand Better Building program to encourage energy efficiency and decrease energy waste in multifamily housing
- Other GHGs: new HFC reductions with China, reduced methane emissions through agriculture and transportation initiatives and interagency strategies
- Forests: conservation and forest management
- Leading by example: 20% of federal government energy consumed to come from renewables, increased energy efficiency, private sector partnership to form a standardized contract to finance federal investments in energy efficiency, synchronized building codes, leverage "Green Button" Program to facilitate enhanced energy efficiency.
2. Prepare the United Stated for the impacts of Climate Change
- Direction to federal agencies to remove barriers to climate-resilient investments, remove subsidies to oil sector, grants and other programs for transportation, water and disaster relief, integrate into planning, establish a task force of state, local and tribal leaders on Climate Preparedness, increase resilience of federal facilities and infrastructure, competitive grant programs
- Protect economy and natural resources: identify vulnerabilities in key sectors, promote resilience in health sector, promote insurance best practices, conserve land and water resources, maintain agricultural sustainability, drought and flood management setting flood risk reduction standards for rebuilding
- Enhanced climate science for the management of climate impacts, research and data exchange
3. Lead international efforts to address Global Climate Change
- Clean Energy Ministerial; and Major Economies Forum on Energy and Climate to focus on building efficiency, bilateral work with China, India and Brazil, bilateral agreement with China on HFCs, leadership on REDD (reduced emissions from deforestation and forest degradation), expanded clean energy/renewables use and energy efficiency
- Low emission development strategies, partnerships with emerging economies, commercialization of renewables mini-grids, promotion of natural gas, nuclear power, clean coal and related technologies through bilateral efforts with China and India, and enhanced energy efficiency
- Negotiation of a global free trade agreement in environmental goods and services with key trade partners through the World Trade Organization
- Elimination of fossil fuel tax subsidies in Fiscal 2014 Budget
- Stop US government support for public financing of coal plants overseas other than (a) where the most efficiency technology is used in the poorest countries where no other economically feasible alternatives exist and (b) where facilities deploy carbon capture and sequestration technology
- Enhance international resilience and adaptation focused on agriculture
- Mobilize committed climate finance to encourage larger flows of private investment in low emissions and climate resilient infrastructure
- Lead international (UNFCCC) negotiations toward a new international climate agreement in 2015 that is ambitious, inclusive (of major emerging economies) and flexible.
For further information on the US Climate Action Plan and its impacts and opportunities for energy stakeholders, please do not hesitate to contact Elisabeth (Lisa) DeMarco or Jeffrey Margulies.
 Canadian Association of Petroleum Producers