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With the US on the brink of change following Barack Obama’s historic triumph in the presidential election, those in the clean energy space were left considering what this would mean for the US’ burgeoning green economy. In a web video released last week for the Bi-Partisan Governors Global Climate Summit, the President-elect pledged new leadership to address global climate change.
In the speech, posted on YouTube, Obama reaffirmed his positive intentions, stating that there are few challenges facing the world today that are more pressing than tackling climate change.
Obama said, ‘Climate change and our dependence on foreign oil, if left unaddressed, will continue to weaken our economy and threaten our national security.
‘My presidency will mark a new chapter in America’s leadership in climate change that will strengthen our security and create millions of new jobs in the process,’ he added.
In the speech, he reiterated his pre-election plan to invest $150bn over the next ten years to catalyse private efforts to build a clean energy future, and the need to implement clear steps to propel the US to a leading position in terms of new energy resources.
His pledges included establishing annual targets to reduce emissions to their 1990 levels by 2020 and reduce them by an additional 80 per cent by 2050.
‘We will invest in solar power, wind power and next generation biofuels. We will tap nuclear power while making sure it is safe and we will develop clean coal technologies,’ he said in the speech.
For decades, the US has been the world’s largest petroleum consumer. However, a recent report from the Energy Information Administration (EIA) estimated that 58 per cent of all petroleum consumed by the US in 2007 was imported. The long-term implications of this situation were something that Obama appears keen to address. The proposed $150bn investment into homeland energy sources would seem to reflect this commitment.
Obama continued, ‘This investment will not only help us reduce our dependence on foreign oil, making the US more secure, and will not only help us bring about a clean energy future saving the planet, but it also will help us transform our industries and steer our country out of this economic crisis by generating five million new green jobs that pay well and cannot be outsourced.’
Obama also plans to introduce the Cap and Trade Program to Reduce Greenhouse Gas Emissions, which seeks to reduce carbon emissions by the recommended 80 per cent below 1990 levels, by 2050. Through this programme, all pollution credits will be auctioned with approximately $15bn of revenue per year going towards the development of clean energy. In a bid to limit dependency on foreign resources, this $15bn will be reinvested into domestic basic research, technology demonstration and aggressive commercial deployment and clean market creation.
Such a massive commitment would surely pave the way for new investment and future innovation as both industries and individuals clamour to meet this target.
The recent volatility in the price of oil and ensuing record highs have thrust the theme of alternative energy firmly to the fore, with investors paying increasing attention to the sector. In terms of venture capital alone, private investment in the renewable energy space topped $2.6bn in 2007.
The overriding theme in the industry is that the change of leadership will be a positive force.
Jim Pettit of clean energy-focused private equity firm Navitas Capital, believes that despite the financial crisis sweeping the globe, Obama will still play a pivotal role in the expansion of renewable energy. ‘While President-elect Barack Obama is poised to inherit a ton of problems across every dimension of his presidency, we look for the Obama administration to become a strong advocate for a wide array of clean technologies.
‘As a result of policy at the federal level, we believe that Obama sees an enormous opportunity to simultaneously stimulate the economy and improve the environment for future generations,’ he added.
Obama’s policies, however, do raise the question as to whether a critical change can really be implemented and whether the legacy of the past eight years of a Bush presidency can be significantly altered.
Amidst a flurry of economic woes, some have argued that it would be a mistake to place climate change at the top of the agenda in a time of financial difficulty and instability. However, many in the industry feel that the economic downturn will have little long-term effect on renewable energy and clean technologies, reinforcing the profile of this sector as a long-term prospect.
Another challenge facing Obama is that the US must acknowledge that it requires the support of emerging countries such as India and China if it is to make a significant dent in the global carbon footprint.
The Kyoto Protocol calls for developed countries to slash their emissions by five per cent by 2012, yet scientific research suggests that emissions requires an 80 per cent reduction by then if climate change is to be significantly tackled. With even Kyoto’s requirements looking a daunting prospect, Obama faces a stern challenge.
Indeed, Obama himself recognises that the US alone cannot solve this pressing concern. While he acknowledged that it was time for the US to set the precedent, he added that countries such as China and Brazil would have to follow suit with their own binding commitments. To that end, Obama, alongside Vice President-elect Joe Biden, has pledged to re-engage with the UN Framework Convention on Climate Change and bring all the major emitting nations together to develop effective emissions reductions efforts.
With the US known for its unashamedly consumer lifestyle, Obama understands only too well how crucial it is to tackle the issue of energy consumption if the new administration is to show a deep commitment to change. To this end, fuel economy standards are set to increase by four per cent each year while one million hybrid cars are expected on the road by 2015.
The next president expects ten per cent of all electricity to be derived from renewable sources by 2012. With Barack Obama yet to step into the White House, we can only speculate whether his goals will be realised. It remains to be seen whether the US can lead the way in the world’s efforts to tackle climate change.
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