With climate change playing a central role in President Obama's first State of the Union address before a Republican-controlled Congress, how will the president's framing of the issue impact the future of legislative and legal action on the Clean Power Plan? During today's OnPoint, Kevin Book, managing director at ClearView Energy Partners, discusses the future of the "all of the above" energy strategy as the Obama administration pushes forward with its proposed action on climate change.
Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. With me today is Kevin Book, managing director at ClearView Energy Partners. Kevin, it's always good to have you here.
Kevin Book: Thanks for having me back, Monica.
Monica Trauzzi: Kevin, climate change was a spotlight issue for the president in this week's State of the Union address. He aggressively made the case for the science behind climate change, and he squarely pointed his finger at climate change deniers. Was he gearing up for the pending legislative and legal action on the Clean Power Plan?
Kevin Book: Unmistakably, Monica. It looked like the president's ready to fight, and he isn't just making it a small fight. He's making it the symbolic, most important issue of the future, ahead of other important issues that also came up in the speech. We never expected that he would quietly into a congressional check on his authority on climate change, but last night he made it very clear he's not just going to fight, he's going to fight all the way.
Monica Trauzzi: Brief mentions of wind, solar, and oil and gas production. What is the future of "all of the above" as an energy strategy?
Kevin Book: It looks like "all of the above" is now 6 feet under, and what remains walking around in the presidential rhetoric is this energy policy that's really about manufacturing and the end-use sectors that are benefiting from all of the gains in supply. Also in that mention of green energy, sandwiched between two oil and gas references, sort of got the sense that maybe the White House feels like green energy's all grown up now. That might spell trouble up ahead for future support for subsidy extensions.
Monica Trauzzi: Everyone always looks at the speech and counts the words, and just getting a mention is a good thing. So was last night a win for wind and solar? They got the mentions but not a whole lot more.
Kevin Book: Compared to past invocations of green energy as a source of jobs, as a manufacturing, strategic sector -- a lot of past references, clean energy standards, none of that last night, in fact quite a different stance on it. It seemed like it was a passing mention at best. And even in the associated fact sheet, or the press release that came out with the speech, nothing like the sort of collateral support for ongoing, significant gains in wind and solar.
Monica Trauzzi: Notably natural gas was not a highlight as it was in previous years. Has this administration's outlook on natural gas shifted?
Kevin Book: We're getting the impression that there might be a greening up of what we've referred to as the give a little, take a little energy policy that emerged in 2011. Yes, the White House is pleased to have oil and gas fueling the economy, fueling end use sectors, but not necessarily eager to overlook the environmental strictures that they believe need to be there for safe and responsible production. We've seen a lot of greener turns lately, not just the new NEPA reform proposal that came out in December, the methane strategy -- there's a number of pending regulations for oil and gas production that suggests that they're probably greening up, and maybe tightening up a little bit, too.
Monica Trauzzi: The president spoke about the debate over a pipeline. What do you think the significant of that was, the indirect Keystone mention?
Kevin Book: Well, in this comment, just as in other previous comments that are somewhat negative, the president isn't really taking issue with the pipeline itself. From our perspective it looks like the president is taking issue with the pipeline's proponents and the arguments that they're making, whether it's how many jobs the pipeline might create or the energy security that might be associated with it. Meanwhile behind the scenes the Obama administration isn't necessarily anti-Canadian oil or even anti-pipelines. If you look at what they did to flow line three volumes through Alberta Clipper while line three is down for maintenance, that says Canadian oil is OK. So maybe what's really going on is here is an argument against being pushed.
Monica Trauzzi: So you think he'll pass it but on his own terms.
Kevin Book: Our contention is that he's more likely to say yes on his own terms, yes.
Monica Trauzzi: One of the members of Congress I spoke to after the speech pointed out that the president was contradictory by talking about the U.S. being a No. 1 oil and gas producer, and then saying that climate change was the biggest threat. Can he bridge that divide between hydrocarbon production and climate mitigation?
Kevin Book: I think any sort of realistic view of the world has to do that. We're going to be fueled by fossil fuels as a world predominantly for the next 50 years. The question is whether or not we're going to have a lower carbon footprint as an economy. And the president made reference to some of the end-use sector efficiency gains: light-duty vehicle standards among other things. He referred to them mostly in terms of their economic benefits. But what's really going on is a policy where you're using energy more efficiently, so producing it is not a contradiction, no.
Monica Trauzzi: Were you surprised by anything in the speech?
Kevin Book: I think it was a little surprising to see the significant lack of mention of energy relative to past speeches. On the other hand it was also pretty notable that when he called out the issues that he might veto, Iran sanctions was one of the ones that made the list. Very clearly this, too, along with climate change, looks like one of the marquee legacy issues that he wants to try to establish in his final two years.
Monica Trauzzi: So the next step will be the president's budget requests due to be released at the beginning of next month. How do you expect he'll include these policy priorities in that budget?
Kevin Book: Well, Monica, every budget request up until now has included a series of tax treatment modifications for oil and gas, rescinding existing tax treatment. It's also included a lot of support for clean and renewable energy. It's expected, based on the comments we heard last night in his tax reform commentary regarding loopholes and corporations, that we'll probably see the oil and gas provisions again. It's not as clear whether or not we'll see something like a permanent extension for wind and solar credits.
Monica Trauzzi: All right, we'll end it right there. Thank you for coming on the show again.
Kevin Book: Thanks for having me.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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