7 Nov 2012

With Obama’s win, cleaner energy has another chance, but these questions loom

Written by Jim Pierobon

Just because President Obama won four more years, doesn’t mean the next four will be any easier. Sure, it’s now his legacy he is beginning to focus on. But there are tall hurdles even the election results will do to change.

Renewable energy developers and suppliers have a few rays of sunshine and a more wind at their backs. So does nuclear, if it can begin to solve its waste issue.

Meanwhile, the geology, technology and economics of natural gas will continue overtaking virtually all energy policy decisions the Obama administration could make, with one exception:  traditional coal.  That downward slope is getting steeper and more slipppery.

The economic momentum building behind and the jobs being created by the fracturing of natural gas and to a lesser extent, crude oil, have remade the U.S. energy outlook. Among the most pressing questions now are:

  • Will natural gas developers trip over themselves?
  • Can responsible stakeholders forge prudent rules to minimize the risks of a show-stopping fracturing accident?
  • Might renewable energy developers team with natural gas for a portfolio approach?
  • How might a bargain to increase federal tax revenue include scaling back tax breaks to fossil fuels?
  • What kind of a compromise on methane emissions from fracturing is possible given the natural gas boom?

President Obama’s energy team leaders, from left, include Heather Zichal and current Dept. of Energy Secretary, Stephen Chu. CREDIT: Chip Somodevilla/Getty Images North America.

Fortune magazine’s Brian Durmaine wrote perhaps the best ‘umbrella’ assessment here. He asserts Obama would keep the subsidies for renewables while eliminating the $4 billion in annual subsidies for the oil industry. But he’ll almost certainly need Congress to pull that off. The winning formula for now favors laws that automatically expire, unless there’s action on Capitol Hill.

So while that means the Production Tax Credit for wind energy will likely expire at year’s end, it will be easier to revive it with the Administration’s backing.

What no doubt has coal interests worried is how they stop the ‘bleeding’. Climate legislation, whether in the form of a cap and trade bill or not, shows no prospects. Obama did not even address it during the campaign. But EPA rules have a stronger foundation on which to sustain themselves.

In the courts, Obama’s EPA is still on its heals after the the U.S. Court of Appeals for the D.C. Circuit ruled 2-1 in August that the EPA exceeded its mandate with the so-called Cross-State Air Pollution Rule. That rule was was to limit sulfur dioxide and nitrogen oxide emissions from power plants in 28 mostly Eastern states and Texas. In the interim, the EPA has to continue administering the Rule, a Bush-era regulation that it now may be able to substantively update.

One playing field that could reach a tipping point during the next four years is what to do with high-level radioactive waste from commercial nuclear power plants. The federal government has broken its promise to utilities to build an underground waste storage facility. But that doesn’t seem to matter any more.

Obama has starved the partially-built Yucca Mountain waste depository in Nevada of funds to complete the job.  If there is no progress, how much longer will ratepayers of nuclear utilities agree to fund new “nukes” if there is no place to stash the waste? Georgia Power ratepayers not only are paying for a ‘next-generation’ nuclear power plant under construction, they will likely shoulder cost overruns that are inflating the tab — long before one megawatt hour of electricity is produced.

The alternative: the waste will remain on site in giant storage casks, at risk of an accident or perhaps an terrorist attack.

So who will drive energy policy going forward?

Heather Zichal has been put forth as Obama’s chief energy adviser and has made the rounds of numerous policy-oriented events in and outside of the nation’s capital. She strikes many as a a bit ‘lite’ for the type of forceful and articulate advocate of cleaner energy this movement certainly needs. But here consultative style could be just what Obama needs to forge compromises.

Zichal is a former senior energy aide to Sen. John Kerry of Massachusetts. She got her start in the policy arena as an intern for the Sierra Club while studying environmental policy at Rutgers University in New Jersey.

Since then she’s known for rarely claiming to have a complete command of an issue. Rather, she reaches out to attract experts and stops short of calling for creative solutions, at least publicly. It is this willingness to invite others to the table, whether they conform with her opinion or not, that helped the 36-year-old Iowa native in her mercurial rise to a top policy position, according to those who have worked with her.

“She is collaborative to a ‘T’,” Melinda Pierce, a lead lobbyist for the Sierra Club told Fortune.

Many informed observers see current Department of Energy Secretary Steven Chu heading back to academia. Who would replace him could affect policy on the margins.

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