Obama has made much of his renewed determination to tackle sustainability in his second term, and opponents and supporters alike are looking to test that resolve

Barack Obama’s first term was a disappointment to many environmentalists, and to many sustainability-focused businesses. The failure to pass cap-and-trade emissions trading legislation through the Senate, under-achievement on his target of five million new green jobs over 10 years, and a lack of support for clean business when confronted by fossil fuel interests all annoyed those who campaigned hopefully for a fresh start in 2008.

Since re-election, Obama has shown he intends to act on the environment during his second term. Having hardly mentioned the issue during the 2012 presidential campaign, he told a victory rally in November 2012 that he didn’t want the US “threatened by the destructive power of a warming planet”. Then, at his inauguration, he said: “We will respond to the threat of climate change, knowing that failure to do so would betray our children and future generations.”

Do such statements portend a shift to sustainability in the next three-plus years, and not just on the climate issue? Will we see more support for sustainable business in general? Can Obama get consequential things done?

The pessimistic answer is “no” – because, structurally, Obama’s position is not much changed. Congress is set up more or less the same as it was previously, with a Republican House of Representatives, and an immovable Senate. And, if anything, Republicans have shown even less willingness to meet Obama’s green priorities in this second term.

To give one recent example: in mid May, the Republicans would not even allow a vote on Obama’s nominee to the Environmental Protection Agency, Gina McCarthy. In other words, not only is Obama struggling to get his policies enacted in laws, he is barely managing to fill the ranks of his government. 

The more optimistic case is that Obama need not be so Congress-centric in a second term. There is a lot he can do – and, in fact, a lot he already has done – through executive power, and existing laws. And many analysts believe that he will be increasingly bold in a second term.

Emission cuts mandate

For example, Jonathan Chait, an influential commentator for New York magazine, recently wrote of a semi-secret plan to cut carbon emissions by fiat. Rather than going back to Congress and trying to get another cap-and-trade deal, this time Obama will simply mandate that the states set limits on carbon emissions. He would use powers under the 1970 Clean Air Act that gives the government wide authority to curtail pollution in the public interest.

The emerging strategy – from climate change and energy efficiency, to renewables and clean transport – is to “go over the heads” of Congress, and work with states and willing allies in the private sector. By 2016, Obama may yet have achieved a lot on sustainability, albeit not by the standard means.

“The heavy lifting will be, by conventional political terms, invisible,” Chait writes. “There is no need for Johnsonian arm-twisting or Sorkin-esque [as in the West Wing television series] rhetorical uplift. The fight of Obama’s second presidential term – the much-mocked fight to slow the rise of the oceans and heal the planet – requires only the simple exercise of power.”

In one area Obama’s record is already excellent, and we can expect him to add to it now: energy efficiency. He has proposed doubling the fuel efficiency of vehicles, to 54.5 miles a gallon on average by 2025. He has imposed sweeping standards for appliances such as refrigerators, microwaves and dishwashers. And he’s mandated strict greenhouse gas limits on new power plants.

Energy efficiency

In his State of the Union speech in February, Obama set an even more ambitious goal: to double the energy efficiency of the entire US economy by 2030. “Let’s cut in half the energy wasted by our homes and businesses over the next 20 years,” he said. One new idea is to tie grants that states receive from the federal government to improvements in their energy use.

Another area of focus is commercial and industrial buildings, which account for up to half of energy use. Obama has set a target of reducing buildings’ energy consumption by 20% by 2020. And there’s some evidence the plan is already bearing fruit. For example, 110 organisations have signed up to the US Department of Energy’s Better Buildings Challenge. The participants, including 3M, retailer Kohl’s, and the Intercontinental hotel chain, have reduced energy use by 2.5% on average so far, and are sharing data and case studies with the aim of spurring wider improvements.

The director of the programme, Maria Vargas, says the Obama administration is confident of meeting its 20% target, if it can get some early winners, and disseminate better information to help financing decisions. “I think we’re on track to achieve it,” says Vargas. “With the tools the Department of Energy is providing, and the examples the organisations are providing, we will help a lot to drive change. We want this to be a key part of business discussions and strategies.”

Obama’s focus on efficiency makes sense for at least two reasons. First, the US economy is incredibly wasteful compared with other major economies. Denmark, for example, has almost double the economic productivity per unit of energy used. There is a lot of room for improvement, and the investments involved are relatively low risk.

Second, efficiency is much less controversial than energy generation policy. While the debate around government support for renewables, say, is highly charged, everyone can see the wisdom of doing more with less, including the companies signed up to the Department of Energy’s initiatives. In other areas of policy, the business sector has not been so supportive. 

Efficiency drives are also an effective way to cut carbon emissions: every unit of energy you save is another you don’t have to dig from the ground, or generate from renewables. Increased efficiency was a major reason why the US managed to cut its CO2 emissions by 205m tonnes in 2012, and why its emissions fell 12% between 2005 and 2012 (a switch to gas for electricity production being another).

Budget priorities

Obama’s 2014 budget gives a good idea of other priorities. The administration wants to increase spending on cleantech research by 40% compared with 2012, and cut the roughly $4bn in tax breaks that currently go to the fossil fuel industries. There is money for solar, geothermal and biofuels, and funding for smart grid technologies and advanced manufacturing, which includes things like 3D or additive printing.

In addition, the budget includes a big push ($686m) on reducing harmful chemicals that reach the environment that many people think are big contributors to cancers and other problems. And Obama would like to revitalise the US railway system – something that received about $8bn in his 2009 stimulus package. The current budget calls for $40bn more, mostly for high-speed projects that have greatest potential to cut carbon emissions.

The question is whether Obama can get any of this passed through Congress, which holds the purse strings for most government spending. Probably, his Republican opponents will only allow additional spending in return for cuts elsewhere, or compromises on their own priorities, such as cutting corporate taxes, or trimming social security and public healthcare budgets. At the moment, such a quid pro quo is not likely, at least according to conventional wisdom in Washington.

Patrick Doherty, a director at the New America Foundation, argues that many lawmakers have yet to grasp the economic opportunities of sustainability. Instead, the focus has been on recovering the old economy. “Liberals generally see addressing sustainability and climate change as a net economic positive and conservatives see it as a net drag,” he says.

“Right now, substantial wings of both sides have a non-economic perspective on sustainability, with many progressives calling it a massive threat and conservatives calling it a massive hoax.”

Business allies and detractors

Doherty and other commentators say Washington is behind where business is in building a greener economy. “When we talk with corporations, investors and industry groups, we are hearing great interest in shifting the economic engine,” he says. “Washington is just not there yet.” While companies such as GE see huge opportunities in smarter machines and manufacturing, lawmakers are stuck with ancient arguments about the size of government and the level of taxation.

There is a tendency to lump all American enterprise together as one monolithic body of opinion. But these days, US companies are increasingly divergent in their interests and views. And sustainability is the growing faultline.

In one corner, the US Chamber of Commerce, which claims to represent three million businesses, has been staunchly against Obama’s sustainability agenda, or really his entire agenda. During the fight to enact cap-and-trade in 2009 and 2010, it attacked the proposal as an affront to the free market system. And, at times, it has also questioned the scientific basis for man-made climate change.

That, in turn, has led to disagreements in the ranks. Apple and Nike have resigned from their board positions, while some utilities and local chambers, such as Aspen’s, have left completely.

Clean air?

The chamber has gone to court to try to limit the Environmental Protection Agency’s authority to regulate carbon emissions under the Clean Air Act. And it is currently working with allies in the House of Representatives to bring legislation to achieve the same thing. Neither strategy has worked so far, but more efforts are likely. It’s possible the US Supreme Court will eventually agree to hear a petition on the issue.

Other groups have taken a very different line, though. General Motors, Starbucks, Intel and eBay have all joined the Climate Declaration, an initiative from the Ceres environmental network. The aim is to capitalise on Obama’s re-election and renewed public alarm following Hurricane Sandy, and push for a new climate law.

Meanwhile, companies including sportswear brands Patagonia and Eileen Fisher have joined the American Sustainable Business Council, a four-year-old group that strongly disagrees with the Chamber of Commerce’s line. Public policy director Richard Eidlin says the ASBC’s 165,000 small and mid-sized companies want to see stronger action from Obama on sustainability issues, including climate change, safer chemicals, decentralised agriculture, and fracking.

“We’re a voice in the policy process for businesses that don’t feel themselves represented by traditional and often conservative groups,” he says. “When they say ‘we talk for business’, we say ‘whose business?’.”

Eidlin sees sustainability as more than the environment. It’s about a whole gamut of business-in-society topics, from wages and fairness, to the profits companies reinvest in communities and contribute in taxes (as opposed to offshoring, or avoiding taxes). And he wants to see legislative action on all these things.

“There is a trend towards triple bottom line across the country that needs to be reflected in policy,” Eidlin says. “We don’t want to be driving to the lowest common dominator in the economy. We want a high road strategy [in Washington] that encourages companies to be more responsible.”

Case study: Keystone XL

The proposed Keystone XL pipeline – which would bring heavy crude from Canada to the Texas coast – has become a touchstone issue for both environmentalists and groups like the US Chamber of Commerce.

To NGOs such as the Sierra Foundation, it is a test of Obama’s willingness to draw a line in the sand about climate change and the future of energy policy. For some business groups, it is a test of his capacity to put pleading aside and do what is right for jobs and cheap energy. Keystone is more than just another energy project.

The issue brought 50,000 climate campaigners to a rally in Washington in February 2013 – the largest ever such gathering. The protesters argue that the pipeline will cause immediate damage from leaks, as well as contribute to CO2 emissions. They see it as one project that needs to stop, if the US is going to remain within safe global warming limits.

But it seems increasingly likely Obama will give some kind of go-ahead for the pipeline. Before the election in 2012, he called for a temporary halt to construction for a further environmental assessment. But a recent state department report did not find any major environmental problems with the project, annoying its detractors.

Meanwhile, the Senate recently voted across party lines (62-37) to encourage the president to finally approve the project, after two years of deliberation.

Whether he does so will go a long way to cementing his reputation among campaigners on both sides – probably, it should be said, out of all proportion to the actual impact of the pipeline itself.   

Obama environmental initiatives so far

  • Raising fuel efficiency for US cars and light trucks to an average of 54.5 miles per gallon by 2025.
  • Billions of dollars in support for renewable energy research and development, including $35bn in his 2009 stimulus package.
  • Limits on the amount of CO2 new power stations can produce per megawatt-hour.
  • Imposing stricter pollution limits on new vehicles by 2017.
  • Requiring coal and oil power stations without controls for mercury and other harmful elements to install them.

 What Obama might do in a second term

  • Place greenhouse gas emission limits on current power plants.
  • Impose greater reporting requirements on natural gas fracking companies.
  • More spending on renewables: 2014 budget calls for a 50% increase to $2.7bn.
CR Strategy  Oliver Balch  USA CSR strategy  USA government 

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