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Sunday, Nov. 16, 2008

Sticky details of Obama's clean-energy plan


Special to The Japan Times

SINGAPORE — U.S. President-elect Barack Obama is coming to power on a torrent of promises and high expectations. Yet as recession bites deeper into the world's biggest economy, investment slumps, jobs are lost, tax revenues fall, and the U.S. budget deficit grows ever larger. It is expected to more than double next year to around $1 trillion.

Will Obama be able to deliver on his expensive campaign promises, or will he have to phase them in?

The outline of his priorities that has emerged in recent days is important for Asia. His top priority, of course, will be an economic recovery program. But he has also said his administration "can't afford to wait on moving forward on the key priorities that I identified during the campaign, including clean energy, health care, education and tax relief for middle-class families."

Clean energy means reducing U.S. dependence on oil and boosting renewable power to cut greenhouse-gas emissions and combat global climate change. With less than 5 percent of the world's population, the United States has been consuming about 25 per cent of the world's oil. Recent high prices for oil followed by the economic slowdown have reduced oil use in America.

If the Obama program is successful, there may be less American demand for oil when global growth resumes, keeping the price lower for major Asian oil importers led by Japan, China, South Korea and India.

But that will accentuate the increasingly prominent role of big emerging economies in general, and those in Asia in particular, as sources of global warming gases. These come chiefly from burning coal, oil and natural gas to power their economic growth, and from clearing forests for farming.

Several recent studies have concluded that China has overtaken the U.S. as the largest emitter of carbon dioxide, the main greenhouse gas. If the U.S. re-engages constructively in international negotiations on climate change, as Obama has promised to do, the pressure will grow on all countries — not just developed economies — to control their emissions.

Alone among advanced economies, the Bush administration refused to ratify the Kyoto Protocol to limit greenhouse gases, arguing that it would hurt America's energy-intensive economy and that it unfairly excluded big developing country emitters like China and India. Now that a successor treaty is being negotiated to take over when Kyoto expires in 2012, U.S. participation is seen as the key to a comprehensive global deal.

But what will the U.S. undertake to do and what will it expect from its negotiating partners?

Obama says he wants to bring in an economy-wide, market-based cap-and- trade system to cut U.S. carbon emissions by the amount scientists say is necessary on a global basis to prevent potentially catastrophic climate change: 80 percent below 1990 levels by 2050. He says his administration will immediately establish strong annual reduction targets and implement a program to bring emissions back to 1990 levels by 2020.

To build a clean energy future, he says his administration will invest $150 billion to expand wind, solar, geothermal and other renewable power in the 10 years from 2009. The aim is to help create 5 million new "green" jobs and require 25 percent of U.S. electricity to come from renewable sources by 2025, while promoting energy efficiency and conservation.

To try to hasten an international consensus on how to combat climate change and share the costs, Obama says he will create a Global Energy Forum of the largest greenhouse-gas emitters, consisting of the Group of Eight leading powers plus Brazil, China, Mexico and South Africa.

Jason Grumet, an energy and climate change adviser to Obama, explained last month that the U.S. had to "move quickly domestically so we can get back in the game internationally. We cannot have a meaningful impact in the international discussion until we develop a meaningful domestic consensus."

However, putting a price on greenhouse-gas emissions and making polluting companies pay add hefty costs to the economy and is likely to be unpopular when consumers are struggling with rising unemployment and falling incomes. While renewable power may one day compete with coal, gas and nuclear power, it is currently more costly and less reliable.

Meanwhile, China and other developing countries expect substantial aid from the developed world if they are to curb emissions without sacrificing economic growth.

At a conference in Beijing last weekend, Chinese officials said wealthy nations should divert as much as 1 percent of their gross domestic product to pay for clean-technology transfers and to help the Third World cope with damage caused by climate change. This would amount to a total of $284 billion a year if the 30 member states of the Organization for Cooperation and Economic Development paid up based on the size of their economies in 2007.

As always, the devil is in the details.

Michael Richardson, a former Asia editor of the International Herald Tribune, is an energy and security specialist at the Institute of South East Asian Studies in Singapore.


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