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Les Echos, France

Obama and Energy: A
Failure In Optical Illusions

By Denis Florin

Translated By Michelle Boone

3 January 2013

Edited by Lau­ren Gerken

France - Les Echos - Original Article (French)

Barack Obama was elected in 2008 with a strong discourse on global warming. At first glance, he seemed to have failed to put an energetic and ambitious policy in place. His initiatives have either been blocked at the draft level (the creation of a carbon market) or crushed by congressional filibuster (regulation on acid rain). Despite the Macondo oil disaster in 2010, offshore exploration was extended in 2011. The alarmist film, “Gasland," did not stop the development of schist gas and the extension of fracturing techniques to other non-conventional oils. After the bankruptcy of Solyndra, which had been supported by federal funds in solar energy, who would dare to speak of an overseas energy policy again?

A closer analysis suggests that the Obama administration did not abandon its ambition, and took part in four initiatives that will remain unchanged after 2012. The first is in the desire for energy independence at a low cost. The pragmatic, post Macondo approach — a big fine for BP, a new regulatory agency, but no lasting moratorium — or the response to criticisms of schist gas — new standards — is in line with this logic: don’t destroy the dynamics of unconventional hydrocarbons, which are a source of employment, improve the commercial balance, and reduce vulnerability to Iran or Venezuela.

The second constant focuses on new energy. The fiscal incentives of the 2009 economic stimulus package will not all survive the tax deal that just concluded, but they do reflect a strategic desire. In biofuels, support of the agricultural lobby permitted the approval of a 15 percent rate of ethanol in gasoline by 2012. In solar energy, the United States, as opposed to Germany, has not given up the fight for leadership with China, as proven by the unilateral anti-dumping tax in 2012. In R&D, federal funds protect the ability to dispatch new technology.

The third constant is that the United States, will continue to improve their energy efficiency. American automakers accepted standards to reduce the use of trucks, something that Europe has not yet done. The International Energy Agency predicts a 19 percent decline in carbon emissions between now and 2035, thanks to better energy efficiency — the substitution of gas for coal and 23 percent renewable energy.

The final constant is that Obama will continue to encourage local initiatives to circumvent Congress. In 2012, California created a cap-and-trade system that was rejected by Washington twice. Twenty nine states have proposed a minimum renewable electricity production. The very Republican Oklahoma City has generalized the use of Smart Meters. Further developments will fuel federal initiatives, such as the Clean Energy Standards Act.

The Sisyphus of energy, Obama will thus continue to have a policy made up of less controversial “little things,” rather than a “big picture." This policy will have a triple consequence for the rest of the world. Industrially, the low sustainable cost is going to increase the competitiveness of a dragging American industry. Commercially, rebalanced foreign trade will allow the United States to selectively export liquefied natural gas to its Japanese ally or coal to Europeans. Geopolitically, the United States will have to re-evaluate its priorities in the Middle East. After two wars, in Iraq and Afghanistan, will American GIs fight for Ormuz or Suez tomorrow? It is a question worth contemplating in Riyadh, Beijing and… Paris.



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