Obama’s mandate to launch millions of green collar jobs now looks like it could become a reality, thanks to the economic stimulus package. Michael Allegretti and Evan Juska comment

On Tuesday, two million people gathered in Washington DC to watch Barack Obama become President of the United States, and share in his moment of historic change. During his campaign, Obama made energy and climate change issues a top priority, promising a break with the country’s past energy policies and its dependence on foreign oil. When the celebration of this week’s inauguration comes to an end, he will have a chance to follow through on these promises. But what should we realistically expect?

In 2009, climate change and energy will likely be addressed through three main policies: an economic stimulus package, a comprehensive energy policy and a national cap and trade programme.

Obama’s first priority is economic stimulus. Thursday last week the House introduced a $825 billion package, with about $550 billion in new government spending and $275 billion in new tax cuts. To get started towards Obama’s goal of creating five million new “green-collar” jobs over the next 10 years, $54 billion of this new spending will go to promote the production of renewable energy, modernise the electricity grid and increase energy efficiency in government buildings and homes. These kinds of projects fall into what Mark Fulton of Deutsche Bank calls the “green sweet spot,” because they address climate change, increase energy security and create jobs.

There was hope that this package would be ready for Obama to sign on his first day in office, but the new goal is to have it enacted by mid-February. As President-elect, Obama spent a good deal of time and political capital working to ensure that it succeeds. And given that many, even fiscally conservative, Members of Congress recognize the need for it, it is likely that it will.

Energy and climate change policies will face more challenges. A new energy policy is expected to be introduced in the Senate early in the year and begin moving through Committee in the spring. It will likely build on the “sweet spot” investments made in the stimulus package, while further addressing Obama’s energy-specific goals, including a national renewable electricity standard of 25% by 2025, a national low-carbon fuel standard and increased fuel-economy standards. But in the House, the Energy & Commerce Committee has yet to reveal its plans for energy policy and may focus first on other major issues that fall under its jurisdiction, like healthcare reform.

Similarly, new climate change policies are expected to be introduced early on in the year in both the Senate and the House. Obama’s plan to establish a national cap and trade programme that would reduce US emissions to 1990 levels by 2020 and 80% below that by 2050, with near full auctioning of emission allowances, has support from key Congressional leaders including Senator Barbara Boxer, Congressman Henry Waxman and Congressman Edward Markey. However, there are still significant concerns about the impact that Obama’s proposed cap and trade scheme would have on the economy among conservative Democrats and moderate Republicans, whose votes will be needed to pass legislation. Furthermore, while cap and trade proposals introduced in the last Congress provide a good starting point, the lack of serious debate on specific provisions has left much of this work undone, making it likely that the legislative process will extend past this year.

This does not mean that progress towards an international agreement on climate change is not possible for 2009. Obama is committed to reengaging the international community through more proactive participation in the UN negotiations and will likely use whatever progress is made in Congress to help establish a comprehensive framework for an international agreement, which would have a real chance to be ratified once US legislation is enacted.

Evan Juska is the Public Policy Manager for The Climate Group, email ejuska@theclimategroup.org

Michael Allegretti is head of US government relations at the Climate Group
Email MAllegretti@theclimategroup.org

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