United States

United States

Analysis: Obama limited for action on wind power

UNITED STATES: President Barack Obama's failure to prioritise wind energy and the renewal of the industry's lapsed production subsidy in his 2014 State of the Union address could be more of a reflection of the difficulty of working with a gridlocked Congress than an indication that his support for the sector has waned.

Obama's State of the Union address in 2014
Obama's State of the Union address in 2014

The State of the Union address typically outlines major presidential policy objectives for the year ahead. In 2012, Obama called on Congress to pass tax credits to support the continued growth of renewables and mandate the production of 80% of electricity from clean sources by 2035. Last year, he talked about making the $0.023/kWh production tax credit (PTC) permanent. In 2014, none of those goals made it into the speech.

The challenge the president faces is that he needs the co-operation of Congress to bring those ideas to fruition, and it has been hopelessly deadlocked, last year passing the fewest number of laws in history.
In fact, much of Obama's 2014 speech focused on how he will use his executive powers to act if lawmakers don't.

"I think it just recognises reality," said Keith Martin, a Washington-based lawyer at legal firm Chadbourne and Parke. "There is a limit to what the administration can do on Capitol Hill on anything."

When it comes to advancing renewable energy, there are some things Obama can do. A background document released with the State of the Union speech noted that the Department of Interior is making progress on the president's goal of permitting 20GW of renewable energy projects on public lands by 2020, including holding the first-ever offshore wind lease sales in 2013.

The administration has also been encouraging the treasury department to look at ways it can interpret the tax laws to help push down the cost of capital for renewable energy, said Martin. The Environmental Protection Agency (EPA) is moving forward with plans to limit greenhouse gas emissions from existing power plants, after issuing proposed rules for new power plants last autumn.

"I think the administration is using what tools it has to operate independently of Congress," Martin said.
Given the market realities US wind producers face, action on greenhouse gases could prove particularly helpful. Power demand in the US has grown at an average of less than 1% a year for the past decade, notes Martin. "So where is the big market for lots more power plants? The big market is replacing older power plants that retire. So the action by EPA is significant to the extent it accelerates retirement of coal-fired power plants."

Steve Clemmer, director of energy research for the Union of Concerned Scientists, said the EPA carbon standards are the most important step Obama can take to support wind. "Part of what needs to happen there is encouraging states to use renewables for compliance," he said. EPA chief Gina McCarthy said in a February speech that the agency is looking at ways to use the rules to incentivise renewable energy development.

Even so, said Clemmer, executive action is not enough to get the US where it needs to go in boosting the role of wind and other renewables. "The really big things are going to have to come through Congress, so the president does need to use the opportunities he has to make the case to the American people that it is important," he said.

"I do think the State of the Union was a missed opportunity."

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