Obama’s “Green New Deal” Vanishes at a Critical Moment for Carbon Reduction

In anticipation of the U.S. presidential election this November, policy debates between President Barack Obama and Republican candidate Mitt Romney have been intensifying. Looking back at his inauguration four years ago, there is one area where Obama’s views have drastically changed: energy and environmental policy. It is quite apparent when you give it some thought. Following his inauguration, the centerpiece of Obama’s proposed legislation was the so-called “Green New Deal.” Yet, we rarely hear about it in his speeches these days. So where did it go?

At the time, the Green New Deal was intended to kill three birds with one stone: It was going to repair the poor image of the U.S. in regards to environmental protection while simultaneously strengthening the fragile U.S. energy reserves and creating new jobs. Specifically, the plan called for investments in renewable energy resources such as wind and solar power, expanding and improving nuclear energy, repairing the aging U.S. energy distribution network and installing new energy-saving “smart meters.” It appeared to be very skillfully designed legislation that incorporated the demands of the day, and was praised by Japan and many other nations around the world. However, the plan has not come to fruition; the Obama administration is instead steering the country toward a “No More Green” policy.

The largest reason for this shift is the “Shale Gas Revolution.” Shale gas, unlike ordinary natural gas, is extracted from subterranean shale formations. As a result of price increases for crude oil as well as technological innovation, the extraction and production of shale gas has exploded during the four years of Obama’s first term as president. Presently, shale gas makes up 20 percent of the natural gas supply in the U.S., and the expanding production shows no signs of slowing down. The price for natural gas in the U.S. has dropped below $2 per 1,000,000 BTU (British Thermal Units). When you consider that the price of natural gas in 2007 was between $7 and $8, the magnitude of the Shale Gas Revolution in the U.S. becomes clear. Furthermore, the production of “shale oil” has been stimulated by the success of shale gas. Imports of liquefied natural gas have been decreasing in the U.S.; crude oil imports have also begun to fall. Shale gas certainly seems to have had a revolutionary effect on the U.S. and the world.

The biggest changes have taken place in the realm of electric power. The need for new gas-burning power plants increased due to the abundant supply of natural gas, and plans for new wind and solar power facilities faded away. Additionally, the planned boom of new nuclear power facilities that were intended to bring about a “Nuclear Renaissance” has also stalled. While the U.S. Nuclear Regulatory Commission gave power companies permission to build new facilities, the companies themselves seem uninterested in the prospect. Certainly, the Fukushima Daiichi nuclear disaster had an effect, but even more, the low price of natural gas as well as the projection that the price will stay low into the future has made the high cost of new nuclear facilities seem like a poor investment. Furthermore, many thought that government assistance would speed the spread of renewable energy resources such as solar and wind power. However, even with grants and subsidies, power companies worry that solar and wind power are no match for cheap and abundant shale gas. Many companies have had second thoughts about the “Mega Solar Plants” (large scale solar panel arrays) they were planning to construct.

The main goals of the Green New Deal have been blown away by shale gas. If you think about it, “Green” and “New Deal” are somewhat incompatible concepts. “Green” means something designed to conserve resources, whereas the “New Deal” places importance on creating new consumer demand. In the pursuit of consumer demand, wasteful use of resources is desirable. The Shale Gas Revolution created jobs at every level, from probing and developing extraction sites, to production of the gas itself. Additionally, there was an increased demand for pipelines and construction equipment, as well as a boom in new petrochemical plants to turn the cheap natural gas into electric power. It should be called the “Shale New Deal.”

Needless to say, dependence on fossil fuels in the U.S. is now deeper than ever and reducing CO2 emissions seems to have slipped off of the government’s policy radar. Shale gas is being discovered in countries around the world, and moves to commercialize it have already begun. The world’s largest shale gas reserves are in the hands of the world’s largest CO2 producer, China. Prospecting in the Sichuan region has already produced favorable results. It’s clear that if the U.S. and China are both relying on shale gas, then a genuine reduction of CO2 gas worldwide will be nothing more than a dream.

Given these circumstances, the only way toward a low-carbon society is through advancements in renewable energy technology and new business models, as well as a renewed trust in nuclear energy. The world doesn’t need a “Green New Deal”; what it needs is “Green Innovation.”