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Obama's "grand" climate plan: reflections from a policy wonk

Posted Jun. 25, 2013 / Posted by: Michelle Chan

Today President Obama gave a much-anticipated climate change speech at Georgetown University. In true Obama fashion, the speech was pretty inspiring and sounded great; but dig a little deeper into the actual plan and you’ll start uncovering some warts.

As Friends of the Earth’s climate and energy director, Damon Moglen, stated earlier today, the plan has some welcome components, such as regulation of carbon dioxide from power plants. But it also is loaded with elements that sound a lot better than they really are, or are outright misguided. And it is not so much a plan backed by real strategy and ambition, than a selection of various actions that the White House seems to have collected from across the federal government. Many of these actions are specific economic and financial policy measures to encourage “climate friendly” investment, and as such, they are very familiar to those of us on Friends of the Earth’s Economic Policy team.

As I scanned the president’s plan, several proposals struck me:

Spurring Investment in Advanced Fossil Energy Projects: In the coming weeks, the Department of Energy will issue a Federal Register Notice announcing a draft of a solicitation that would make up to $8 billion in (self-pay) loan guarantee authority available for a wide array of advanced fossil energy projects under its Section 1703 loan guarantee program.          

Friends of the Earth’s Green Scissors campaign has long tracked environmentally harmful spending and subsidies embedded in our tax code and federal budget. We’ve had our eye on the  Department of Energy Loan Guarantee Program, which is one of those programs that on balance funds a lot more dangerous and dirty energy (such as nuclear power and fossil fuels) than renewables. Today, the President has specifically announced that the DOE will make billions of dollars in loan guarantees (you could call them pre-emptive taxpayer bailouts to energy companies and their bankers) to “advanced fossil energy projects.” This includes technologies such as converting coal to liquid gasoline, coal gasification, and illusory carbon capture and sequestration projects. Continued reliance on fossil fuels simply has no place in a climate policy -- simple as that.

Reducing Emissions from Deforestation and Forest Degradation: ...the Obama Administration is working with partner countries to put in place the systems and institutions necessary to significantly reduce global land-use-related emissions, creating new models for rural development that generate climate benefits, while conserving biodiversity, protecting watersheds, and improving livelihoods.

The White House rightly points out that “greenhouse gas emissions from deforestation, agriculture, and other land use constitute approximately one-third of global emissions.” However, here is where a little context makes me pause. US-supported REDD programs are not aimed at conserving forests (if they were, they would focus on curbing drivers of deforestation), but instead they are focused on developing an international system of tradeable carbon offset credits (such as the REDD plan California is contemplating). Not only does relying on REDD offsets allow the US to shirk its responsibilities in reducing it own GHG emissions, but REDD programs have been rife with problems, including a lack environmental integrity and high social risks such as landgrabbing. In sum: a better plan would say yes to forest protection, and no to the Administration’s vision for REDD.

Negotiating Global Free Trade in Environmental Goods and Services: The U.S. will work with trading partners to launch negotiations at the World Trade Organization towards global free trade in environmental goods, including clean energy technologies such as solar, wind, hydro and geothermal…

As critical as Friends of the Earth has been about the pathologies of U.S.-style free trade agreements, Friends of the Earth is not anti-trade. And again, Obama’s exhortation to promote more trade in clean energy technologies sounds pretty good. However, it would be easier to believe if we were not in the midst of solar energy trade war which the Obama administration helped start -- and is not backing away from. The Administration’s line about using trade policy to increase trade in green goods is old, yet utterly vague. What’s not vague, however, are the concrete proposals that the Obama is pushing in currently trade negotiations like the TransPacific Partnership. Leaked sections of the TPP reveal that the trade deal includes provisions that could stymie efforts to curb the export boom in fossil fuels. Similarly, we already see how the new TransAtlantic Trade and Investment Partnership with Europe is not about lowering tariffs to promote more trade in green goods (tariffs are pretty low already), but it is actually about lowering “non-tariff barriers to trade ” – in other words, weakening environmental and other regulations. Our takeaway from this trade proposal: buyer beware.

Phasing Out Subsidies that Encourage Wasteful Consumption of Fossil Fuels: … At the 2009 G-20 meeting in Pittsburgh, the United States successfully advocated for a commitment to phase out these subsidies, and we have since won similar commitments in other fora such as APEC. President Obama is calling for the elimination of U.S. fossil fuel tax subsidies in his Fiscal Year (FY) 2014 budget, and we will continue to collaborate with partners around the world toward this goal.

We welcome the commitment to phase out fossil fuel subsides, which is a longtime Friends of the Earth priority. There are some subtle but important political considerations though, when calling for the end to these subsidies internationally. As we explained in a position paper, we believe that all fossil fuel subsidies should ultimately be eliminated, but in the interest of social justice, they should be phased out in stages: “Many existing fossil fuel subsidies are production subsidies for Big Oil [particularly common in rich countries like the United States] or consumption subsidies for the wealthiest in society, and those should be eliminated immediately. Other subsidies [the majority of those in poor countries] provide energy access to those most in need, and for now should be preserved to safeguard the health, livelihoods and dignity of these populations.” Luckily, Obama is not asking poorer countries to dismantle parts of their social safety nets before trying to end to fossil fuel subsidies in the US. Obama’s last budget went farther that he had in the past in ending handouts for Big Oil, a longtime Friends of the Earth priority and a welcome step.

Leading Global Sector Public Financing Towards Cleaner Energy: Under this Administration, the United States has successfully mobilized billions of dollars for clean energy investments in developing countries, helping to accelerate their transition to a green, low-carbon economy. Building on these successes, the President calls for an end to U.S. government support for public financing of new coal plants overseas, except for (a) the most efficient coal technology available in the world’s poorest countries in cases where no other economically feasible alternative exists, or (b) facilities deploying carbon capture and sequestration technologies.

Again, banning U.S. government financing for new coal plants overseas is welcome; actually, since 2009, the U.S. Treasury has adopted a policy to not approve World Bank loans that fund coal projects when cleaner alternatives exist. This policy led the US Treasury in 2010 to abstain from voting upon the World Bank’s massive Eskom project in South Africa. However, Obama overstates his Administration’s track record in mobilizing clean energy financing for developing countries; for example, in 2012, the US Export-Import bank only provided $721 million in renewables financing, while extending a record-breaking $9.6 billion in financing for fossil fuels – that’s 13 times more money for dirty energy than clean.

And second, there are some risks hidden within very benign-sounding exceptions language to only finance “efficient coal” deals in “the world’s poorest countries.” In order to do this, the White House may gut what may be the only decent greenhouse gas cap and reduction commitment that exists anywhere within any US government agency: the Overseas Private Investment Corporation’s commitment to reduce GHG emissions from the projects it finances by at least 30 percent in 10 years and 50 percent in 15 years (over 2008 levels). OPIC, which is an international development agency, should not weaken its greenhouse gas cap by starting to finance coal power companies – something they have generally avoided in the last several years. Instead, OPIC should commit to financing projects that would increase access to renewable energy for all, especially the poorest.

Mobilizing Climate Finance: …We have fulfilled our joint developed country commitment from the Copenhagen Accord to provide approximately $30 billion of climate assistance to developing countries over FY 2010-FY 2012… Going forward, we will seek to build on this progress as well as focus our efforts on combining our public resources with smart policies to mobilize much larger flows of private investment in low-emissions and climate resilient infrastructure.

Here again is where a little misdirection goes a long way. The U.S. government touts the fact that it has “fulfilled its commitment” to provide climate finance, funds to help developing countries mitigate and adapt to the impacts of climate change. However, given the fact that the United States is the biggest historical contributor to the climate crisis, the US is far, far away from providing its fair share of climate finance. Also, FoE would question some of the activities that the U.S. government may count as climate finance. For example, OPIC provided $70 million in insurance and loans to a U.S. company called ContourGlobal to build combined heat and power plants at three factories that bottle Coca-Cola in Nigeria. Somehow financing U.S. corporations to help provide energy for Coca Cola doesn’t strike us as the best use of these scarce funds. And we are strongly skeptical of the approach the United States is promoting re: “mobilizing much larger flows of private investment;” the current obsession with mobilizing private finance will likely lead to a situation where scarce climate finance funds serve the interests of (and bail out) Wall Street investors, rather than deliver what is truly needed for poor populations to adapt to and mitigate climate change.

All in all, many environmentalists are cheering the mere fact that climate change has made it back onto rhetorical presidential agenda -- despite the fact that Obama's plan is a far cry from what what is really needed to address the global climate crisis. At its core, the plan still envisions a global climate regime which relies on countries' voluntary international pledges, instead of a binding international framework in line with what science and social justice demands. Domestically, the plan embraces the president’s misguided “all of the above” energy approach, with continued support for fossil fuels, dirty biofuels, and dangerous nuclear power. As Friends of the Earth President Erich Pica once put it, “Instead of teaching my son the differences between right and wrong, good and bad as well as actions and reactions, I could teach him the moral ambivalence of ‘all of the above.’ Why lead when all of the above is acceptable, why make tough decisions when we can have it all, why sacrifice or take the path less traveled when we can do it all?”

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