STATE OF THE UNION:

Obama pushes clean energy as part of his new centrist agenda

The United States should produce 80 percent of its electricity from clean energy by 2035, which will require a serious investment in technology and innovation and a reduction in oil company subsidies, President Obama said last night in his State of the Union address.

Like last year, Obama highlighted clean energy near the top of his speech. He urged Congress and the nation to "reinvent our energy policy" and work together to create new jobs by establishing a market for clean energy sources. He called the challenge "our generation's Sputnik moment."

"Clean-energy breakthroughs will only translate into clean-energy jobs if businesses know there will be a market for what they're selling," Obama said, as Democrats clapped. "Some folks want wind and solar. Others want nuclear, clean coal and natural gas. To meet this goal, we will need them all. And I urge Democrats and Republicans to work together to make it happen."

But the scattered applause that met Obama's list of possible energy sources is a strong indication of the battle he and other supporters of a national "clean energy standard" will face on an issue that is more often decided on a regional rather than party basis.

His call to eliminate the "billions in taxpayer dollars" in subsidies to oil companies received a decidedly partisan response: Democrats for the most part cheered; Republicans sat on their hands. One member said loudly in response that the companies were "all international," indicating the repeal would not save any money to fund innovation.

Still, Obama insisted, "I don't know if you've noticed, but they're doing just fine on their own. So instead of subsidizing yesterday's energy, let's invest in tomorrow's."

Obama did not, however, mention last year's Gulf of Mexico oil spill in his call to cut the subsidies or as a reason to push for clean energy. He said the repealed benefits could help fund research and innovation to "break our dependence on oil with biofuels and become the first country to have 1 million electric vehicles on the road by 2015," a goal he has outlined before.

Obama did not mention global warming or greenhouse gas emissions -- which he did near the beginning of his speech last year -- reaffirming the White House's pivot away from a cap-and-trade bill and toward a focus on clean energy and regulations to cut emissions.

Obama also set high goals for rebuilding America's infrastructure, asking Congress to "redouble" efforts to repair roads and bridges, increase broadband access and provide 80 percent of American access to high-speed rail in 25 years (see related story).

In an effort to address interest in cutting government spending and the U.S. deficit, Obama called for a freeze to annual domestic spending for the next five years and eliminating inefficient, overlapping jurisdictions between federal agencies. That goal provided one of the lighter moments of the evening when Obama noted the Interior Department oversees salmon in freshwater, the Commerce Department has jurisdiction when the fish is in salt water and added, "I hear it gets even more complicated once they're smoked."

Joking aside, Obama warned, "We cannot win the future with a government of the past." He said the administration will develop a proposal in the coming months to reorganize the federal government and push for Congress to approve it.

Given the high profile that clean energy received in his speech, it appears that energy may be somewhat shielded from the aggressive spending cuts. In his fiscal 2012 budget request due out next month, Obama will call for a one-third increase in funding for clean energy technologies, according to the White House.

The spending boost will include an expansion of the Advanced Research Projects Agency-Energy and the Energy Department and a doubling in the number of energy innovation hubs. The White House will also call for a doubling in energy efficiency investments and an 85 percent increase in renewable energy investment. Obama's plan to end tax breaks for oil, gas and other fossil fuel companies will pay for the clean energy spending increases, the White House said.

GOP stalemate

While Obama's speech inspired smiles from both Republicans and Democrats when he emphasized that in America, "we do big things," his specific energy policies face a tough climb.

A cold splash came in the official GOP response from Rep. Paul Ryan (R-Wis.), chairman of the House Budget Committee, who said the government should not be in the business of innovation.

"Depending on bureaucracy to foster innovation, competitiveness and wise consumer choices has never worked and it won't work now. We need to chart a new course," Ryan said. "Whether sold as stimulus or repackaged as investment, their actions show they want a federal government that controls too much, taxes too much and spends too much in order to do too much."

Rep. Doc Hastings (R-Wash.), chairman of the House Natural Resources Committee, agreed.

"What I have concerns with and continue to have concerns with are policies that give all of the advantage to one sector over the other. I think it is better that we have a level playing field for all sectors of energy," Hastings said. "Thus far, unfortunately, the signals that have come from this administration are that they're trying to pick winners and losers, [with the winners] primarily in the renewable energy."

Rep. Fred Upton (R-Mich.), chairman of the Energy and Commerce Committee, also disagreed with the emphasis on renewable energy.

"Congress spent tens of billions of dollars on the federal government's favored energy sources in the stimulus, yet America remains dependent on hostile foreign nations to power our lives," he said in a statement. "We know the answer is not to hyper-subsidize preferred industries or force consumers and job creators to purchase energy they cannot afford. That is not how the free market works."

The repeal of oil subsidies was also very unpopular with Upton, Hastings and other Republicans -- who warned it would increase the price of gasoline for consumers -- and some Democrats. Obama last session proposed repealing the oil subsidies, which Democrats tried to do in several bills, all of which were stopped by Republicans and some Democrats from oil-producing states.

Sen. Mark Begich (D-Alaska) said he "didn't stand up applauding there" over the repeal plan and also said he was disappointed that Obama did not mention a broader approach to energy with greater emphasis on oil and natural gas.

Rep. Sandy Levin (D-Mich.), ranking member of the Ways and Means Committee -- where a measure to repeal oil subsidies would likely take shape -- said while he liked Obama's plan to repeal the subsidies he was not sure how it would get past Republicans in the House.

"We clearly need to look at that," Levin said. "There will be resistance. There will be resistance to everything. ... Look, we have tried to attack subsidies that are unnecessary and I think as we move towards a new energy policy we need to look at how we subsidize the production of oil. So we have to look at everything.

"No retreat but let's move ahead together. I think that is the mantra as I read his speech," Levin said.

Rep. Peter Welch (D-Vt.) said repealing the subsidies was a question of economic competition.

"Well, it's uphill they have rejected that in the past but bottom line if we do this we can get ahead of China. I think, Republicans or Democrats, if we want jobs we have to get real and there is an opportunity in clean energy. And China is moving ahead of us and why in the world do we want to fall behind?"

Clean energy

Obama's call for an 80 percent clean energy target was cautiously welcomed by both sides of the aisle.

Senate Majority Whip Dick Durbin (D-Ill.) said setting a target allows Congress to measure progress.

"I just think what the president said tonight just makes so much sense," Durbin said. "I hope it brings us together and get beyond some of the impossible conversations about global warming -- that I believe is a serious problem and others don't -- and really focus more on energy independence and how to reach that in a clean and efficient way. I think we can approach these same goals from a different angle and really serve our nation."

Sen. Charles Schumer (D-N.Y.), who is No. 3 in the Senate Democratic leadership team, heartily endorsed Obama's 80 percent goal saying it would be "great" if it was the final number in any CES bill.

"I'd be for that," he said, noting that an energy bill is "a very likely thing that will come up rather soon. There's good hope for bipartisan cooperation."

Sen. Joe Lieberman (I-Conn.) said bipartisan talks for a CES have already started with Sen. Lindsey Graham (R-S.C.) and that the endorsement by Obama gives the policy even more momentum and "promise."

Sen. John Kerry (D-Mass.), a third member of a group that included Lieberman and Graham that pushed to pass an energy and climate bill last session, said the issue of clean energy jobs is "screaming out" for bipartisanship and called Obama's 80 percent goal "superb."

Sen. Susan Collins (R-Maine) also called Obama's goal "a good one."

Even Sen. Barbara Boxer (D-Calif.), chairwoman of the Environment and Public Works Committee, said she could support a CES, despite stating grave misgivings about nuclear energy in the past.

A CES "brings in many more people," she said. "It's going to generate a lot of support. Clean coal, if it's done right, nuclear energy, if it's done right ... are part of it."

But not everyone was pleased that Obama added natural gas and nuclear to a standard that had previously concentrated just on renewable energy.

Sen. Tom Udall (D-N.M.) said he would need to see details and would like to continue to try for just a renewable energy standard. Sen. Ben Cardin (D-Md.) also said moving a renewable standard and a separate bill for a clean energy standard might work given the debates on clean coal and nuclear that may ensue.

Off-the-Hill reactions

Early reactions to the president's speech from outside interest groups was fairly predictable. Environmentalists and renewable energy advocates praised his call for a clean energy mandate while the oil and gas industry and its advocates blasted the president's lack of focus on traditional energy and his call for an end to oil and gas subsidies.

"We are pleased the see the possibility of the first predictable long-term federal policy toward renewable energy," said Denise Bode, CEO of the American Wind Energy Association, in a statement. "But of course we'll need to make sure the policy really deploys the renewable energy Americans want in the near term, as well as the long term."

Frances Beinecke, president of the Natural Resources Defense Council was also supportive of the president's call for a clean energy standard. "The president got it right," she said in a statement. "Nothing's more urgent than creating American jobs and protecting our health. The best way to do that is to invest in a clean energy future that makes our workers more competitive, our companies stronger, our country more secure and all of us healthier."

But Jack Gerard, president and CEO of the American Petroleum Institute, did not offer such high praise.

"Tonight was a missed opportunity. The president focused on job growth through federal spending, but was silent on one of the best ways to create jobs: allow more energy development," Gerard said in a statement. "Natural gas and renewables are important components of our energy mix, but we will need our nation's vast oil resources for decades to come."

And he blasted the president's call to repeal tax breaks for the industry.

"The U.S. oil and natural gas industry also pays taxes at effective rates far higher than most other industries, and does not receive payments from the government to support oil and gas development," Gerard said. "The tax deductions it does receive are similar to those enjoyed by other industries to encourage energy production and new jobs. We need policies that help the 9.2 million hardworking men and women in the industry, not hurt them."

Click here to watch E&ETV's post-speech coverage.

Reporters Katie Howell, Elana Schor, Jean Chemnick and Sarah Abruzzese contributed.

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