Obama’s Last Shot
EDITOR’S NOTE: On Friday April 18th, after the print version of this story had closed, the State Department announced that the decision on the Keystone XL Pipeline would be delayed due to legal challenges to the pipeline’s route, effectively putting off resolution of this controversial issue until after the election. The text has been updated to reflect these latest developments.
President Obama is not even halfway through his second term yet, but you can almost feel the cement hardening around his feet. The glory days of hope and change have faded, his approval rating has flat-lined below 50 percent, and jockeying for 2016 has begun in earnest. But for Obama, the game ain’t over yet. In the next few months, he will take one of the biggest gambles of his presidency by testing the radical proposition that even SUV-loving Americans believe that global warming is real and are ready to do something about it.
It’s a gamble that could have a profound impact on energy politics, our economy and our ability to stabilize the climate. But if the president is wrong, it could not only cost his party control of the Senate this fall but also blow the last opportunity we have to save ourselves from life on a superheated planet. “It’s a transformative moment,” says Democratic Sen. Sheldon Whitehouse of Rhode Island in what may be the understatement of the century.
The springboard of Obama’s big leap is to use his presidential powers to effectively hasten the phase-out of dirty coal from America’s energy system. Right now, coal-fired power plants generate about 40 percent of the electricity in the U.S. and are by far the largest single source of heat-trapping gases. Last year, he directed the Environmental Protection Agency to develop new rules to limit carbon pollution from power plants. These rules, which the EPA will make public in early June, are fraught with political peril, not least because they will stoke up talk of a War on Coal, which Republicans will argue is code for a War on the American Way of Life.
At the same time, the president is likely to announce his decision on the northern leg of theKeystone XL, the hugely controversial 1,179-mile-long pipeline that would bring tar-sands oil down from Alberta to Gulf Coast refineries. Although no final decision has been made, two high-level sources in the Obama administration told me recently that the president has all but decided to deny the permit for the pipeline – a dramatic move that would light up Democratic voters and donors while further provoking the wrath of Big Oil. Finally,Obama is positioning the U.S. to play a key role in negotiations on a new global-climate treaty that will begin next year, establishing American leadership on climate issues and giving him one last chance to lead the world to a cooler future before he leaves the Oval Office.
Obama’s big leap is driven by two factors. The first is that the politics of climate and energy are changing fast. “Nature has a vote now,” says Chris Lehane, a political consultant who works with Tom Steyer, a hedge-fund-billionaire-turned-
Obama’s other motivation is the judgment of history. When he took office in 2009, he had four major tasks on his to-do list: pump up the economy, get out of Iraq, fix health care and take action on climate change. He put a lot of political muscle into the first three, but on climate change, it was mostly poetic speeches, under-the-radar regulatory reform and billions of dollars in loan guarantees for clean-energy projects. The president’s supporters boast that he’s already done more to tackle climate change than any president before him, but that’s not saying much. He avoided risky political battles and too often treated the greatest challenge human civilization has ever faced as if it were no more urgent than reforming teachers’ unions.
Now Obama has one last shot. “Taking action on climate is one of the most important goals in the president’s second term,” John Podesta, counselor to the president and his point man on climate policy, told me a few weeks ago. “He feels a profound and urgent obligation to get as much done as he can before he leaves office.”
In his first term, Obama tried and failed to pass cap-and-trade legislation to limit carbon pollution from gas and coal-fired power plants. It was one of his biggest defeats and effectively killed any action on climate change for the rest of his term. This time around, he’s cutting Congress out of the process altogether, vowing to use the regulatory powers of the Clean Air Act to crack down on carbon-spewing power plants. He signaled his seriousness by appointing a first-rate Cabinet to advise him during his second term, one that is, in some ways, even more impressive than the team he had assembled for the first term: Moniz, a nuclear physicist and former MIT professor; Massachusetts Sen. John Kerry as secretary of state; and EPA veteran Gina McCarthy as the agency’s administrator.
The choice of McCarthy to head the EPA was particularly important because it’s her job to guide the new rules on carbon pollution from power plants through the agency’s bureaucracy and to defend them in public. McCarthy, who grew up in a working-class mill town near Boston, has a kind of gruff charm that suggests she’s anything but a tree-hugging elitist. Within the environmental world, she was best known for her tireless and effective work as assistant administrator at the EPA to limit mercury pollution from coal plants. Now Obama is calling on her to do the same thing with carbon pollution. “The president made it clear to me when we talked about the job that passing carbon rules for power plants was his top priority in the second term,” McCarthy told me. Not surprisingly, her confirmation hearing in Congress was one of the most contentious in history, stretching out for 136 days.
The 600 or so coal plants in the U.S. are responsible for nearly a third of all carbon pollution in this country. But they are the hardest to go after, in part because the plants that pollute the most are often the plants that are most profitable for the utilities that run them. Big Coal was a major factor in derailing cap-and-trade legislation; under the new regulatory approach, this becomes less of a problem because the rules aren’t voted on by congressmen who play golf with coal lobbyists on weekends. But setting these new rules will nonetheless require all the political finesse McCarthy can muster. One dilemma: How do you make sure coal states like Kentucky and West Virginia are not hit harder than clean-energy states like Arizona and California? One solution is to set overall carbon standards for each state, then let states decide for themselves how to meet those standards, either through efficiency or trading with other states or switching from coal to natural gas. In this way, you can get big reductions while still allowing states flexibility. How big the reductions turn out to be depends on how the rules are written. A plan proposed by the Natural Resources Defense Council, which uses a framework that’s similar to the proposed new EPA rules, estimates that 470 million to 700 million tons of carbon pollution can be eliminated per year by 2020, equivalent to the emissions from 95 million to 130 million autos. NRDC calculates the plan would result in up to $63 billion in health and environmental benefits and up to $120 billion in investments in energy efficiency and renewables.
Still, these new EPA regulations are a heavy lift. For one thing, the agency expects a flood of legal challenges from fossil-fuel-friendly states over what kind of technology standards can be applied under the Clean Air Act to existing (as opposed to new) power plants. For another, if there’s anything Big Coal hates more than solar panels, it’s government regulation. In order to get power-plant regulations in place before he leaves office, Obama had to get an aggressive timetable, with the proposed rules due by June: That means the rules will be rolled out just before the midterm elections, the moment of maximum peril for Democrats.
The proposal won’t be made public until June, but Big Coal is blasting it as yet another attempt by liberal elites to shut down the industry. The playbook is simple and familiar: The EPA is trying to put the coal industry out of business; electricity rates will soar, forcing more American manufacturing to move to China; there will be more blackouts, causing economic chaos. It’s the same argument they made against regulations to cut smog 40 years ago, the same argument they made against regulations to cut acid-rain pollution 25 years ago, and the same argument they made against regulations to cut mercury pollution 10 years ago.
Big Coal is indeed in a death spiral, but what’s killing them isn’t the EPA – it’s cheap wind, cheap solar and cheap natural gas. Of course, that hasn’t stopped coal-friendly politicians from throwing themselves on the tracks. Last fall, the attorney generals from 17 states wrote a letter to McCarthy, suggesting that the EPA was overstepping its authority in setting these rules. The House has already passed a bill to strip the EPA of authority to make these rules. And you can be sure that groups backed by the Koch brothers will get in on the action, too. Koch-related groups like Americans for Prosperity, American Future Fund and the American Energy Alliance, headed by former Koch Industries lobbyist Tom Pyle, spent some $400 million to influence the 2012 election, bombarding swing states like Ohio and Virginia with TV ads calling on voters to “stand with coal” and to “vote no on Obama’s failing energy policy.” These groups have already spent $30 million targeting vulnerable Democrats in 2014 midterms and will spend millions more in the coming months.
But the old rhetoric is losing its power. In Kansas, Koch-backed groups recently funded an attack on the state’s renewable-energy laws, which require 10 percent of the state’s power to come from renewable energy, and 20 percent by 2020, claiming that renewable energy was expensive and would destroy local economies. In reality, Kansas added the second-most wind generation in the country in 2012, with 13,000 direct and indirect jobs, and $7 billion in economic activity for the state. Although a Koch-backed bill to kill the renewable-energy laws passed in the Kansas state Senate, it was defeated by the House. “This is nothing more than folks who want to exercise political power,” said Rep. Russell Jennings, a Republican and an advocate of clean energy, after the bill’s defeat.
In fact, it’s Republicans, as much as Democrats, who feel the pressure from Koch money. “There used to be a whole range of Republicans who were willing to talk frankly about renewable energy and climate change, but that changed with Citizens United in 2010,” says Sen. Whitehouse, referring to the Supreme Court decision that unleashed a flood of corporate cash into American politics. “I’ve had Republicans who come up to me and say, ‘You think you have problems with the Koch brothers. You don’t know what problems are.'”
McCarthy, who is no shrinking violet, has spent much of the last year traveling around the country, talking with governors, utility execs, public-utility commissioners and concerned citizens about the upcoming EPA proposals. “We’ve had over 300 meetings around the country,” McCarthy says. “We’ve had a great deal of support to take action. What states are looking for is flexibility to make these rules work – and that’s our goal, too. This is about how to address a public-health issue, while continuing to create jobs and grow our economy.” For Obama, success or failure of the EPA proposal will likely come down to whether utility execs and state leaders believe that the benefits of leaping to a clean-energy economy outweigh the political risks. “I expect a lot of people will run around with their hair on fire, claiming the rules are too tough, but will admit behind the scenes that they can work with them,” says Heather Zichal, who was Obama’s deputy assistant on energy and climate until last year. If too many states revolt, the lawsuits will multiply and the courts could drag out the rule-making process until after Obama leaves office, which means it could get killed by the next administration. If that happens, any hope of meaningful carbon reductions in the foreseeable future vanishes, and the next administration might as well encourage residents of Miami, Norfolk and even Washington, D.C., to start building boats.
The trouble with EPA rule-making is that it isn’t sexy. It’s bureaucratic, complex and slow. In terms of actually making a difference on climate, the power-plant rules are by far the most important action Obama will take in the second term. But the decision that everyone will most be paying attention to, and which will inspire all kinds of entertaining idiocy on Fox News, is the decision on whether Obama approves the Keystone XL pipeline.
“Five years ago, it would have gone through without comment,” says Zichal. But a few things happened that prevented that: Republicans tried to bully it through, which grabbed the attention of activists in Nebraska and elsewhere, who made the pipeline a litmus test of the president’s commitment to ending our dependence on fossil fuels. The protests paid off, at least initially. The president rejected the pipeline in 2012 based on local environmental concerns; TransCanada, the Canadian company that hopes to build the pipeline, then rerouted it and reapplied for a permit from the State Department, which is still pending (a final recommendation is due to be sent to the president at the end of May). In a speech last year, the president vowed to approve Keystone “only if this project does not significantly exacerbate the problem of carbon pollution” – a standard that would, by any common-sense measure, kill the dirty-oil pipeline right there.
For the White House, the fight over the pipeline has become a kind of albatross, one that is getting in the way of more constructive progress. Sources close to the president say he is eager to get it off his plate. “I’m confident that the president is aware of every nuance of this debate,” says Zichal. Activists meet him everywhere he goes with handwritten signs urging him to kill the pipeline, and he gets letters from Democratic senators in tough re-election fights, including Mary Landrieu of Louisiana and Mark Pryor of Arkansas, arguing that if he delays approval of the pipeline any longer, it could cost them the election.
What senators like Landrieu and Pryor fear, of course, is the Koch brothers’ attack machines. Koch Industries is indeed one of the largest landowners in northern Alberta, holding leases to more than a million acres in the tar-sands region, and they stand to profit hugely if the pipeline is approved. But as with the power-plant rules, the impact that rejecting Keystone will actually have with the electorate is far from clear. Tiernan Sittenfeld, an analyst with the League of Conservation Voters, points out that in the 2012 election, Keystone supporters spent $11 million to target anti-Keystone candidates in 18 races – and none of them lost. In the 2014 election, it doesn’t hurt that billionaire Tom Steyer has pledged that his political-action committee, NextGen Climate Action, will spend $100 million targeting climate deniers and Keystone supporters. “President Obama is obviously very committed to this issue,” Steyer told me in an e-mail. “My goal is to support him in this in any way I can.”
Exactly how the president has weighed the decision on Keystone is a closely guarded secret in the White House, known only to a few senior advisors like Valerie Jarrett and Dan Pfeiffer. But it’s no surprise that I was told recently by members of the administration that the pipeline would, in fact, be rejected. “If the president is really serious about his legacy on climate change, he can’t have that and approve Keystone,” an Obama insider told me. “The only question now is the timing of the announcement.”
Inside the beltway, there was speculation that the President could announce a decision on the pipeline early this summer. But late in the afternoon on Good Friday – the darkest depths of the news cycle – the State Department released a statement that a decision on the pipeline would be once again delayed: “Agencies need additional time based on the uncertainty created by the ongoing litigation in the Nebraska Supreme Court which could ultimately affect the pipeline route.” The White House denies the move was in any way political. “I know there’s a great urge and has always been to make this about politics,” White House press secretary Jay Carney said later. “The issue here has to do with a court decision in Nebraska and its impact on the ability for the State [Department] process to continue for agencies to be able to comment.”
Republican Senator Lisa Murkowski of Alaska, a pipeline supporter, called the delay “a stunning act of political cowardice.” But Jane Kleeb, founder of Bold Nebraska and one of the leaders of the anti-pipeline movement, described the move to me as “a pretty brilliant move” that will give red state Democrats like Mary Landrieu and Mark Begich an easy and highly theatrical way to distance themselves from the president in the mid-terms, as well a rallying point for oil and gas money to support them. “Obama just used oil and gas to get red state dems elected,” Kleeb wrote. “No way will gas and oil push against Landrieu and Begich.”
“Sometimes the art of politics is the art of delay,” says Kalee Kreider, a D.C. consultant who works on climate issues.
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The big issue, however, is the next global-climate summit, in Paris in December 2015, when a new international treaty to reduce carbon pollution will be hammered out. “Are we going to be on track to come to an agreement that will limit warming to 2 degrees Celsius, which is the threshold scientists have set for dangerous climate change?” Podesta wonders aloud. “Our goal is to give leadership and credibility to that effort.”
Tim Wirth, vice chair of the U.N. Foundation and an outspoken advocate of action on climate change, argues the State Department – the agency that represents the U.S. in international climate negotiations – is “a tribal bureaucracy,” and that to put too much faith in these international agreements is unwise. He praises Obama for his recent moves on the domestic front, but thinks he could be more creative internationally: “How do we think differently about energy and climate? How are we going to deal with the Ukraine? How about a crash program to insulate buildings and cut their dependence on Russian natural gas? What about renewables? The Ukraine is not far from Germany, the solar capital of the world – why can’t we help the Ukraine go solar too?”
But the sad truth is that even if Obama manages to pull off the climate trifecta – implementing EPA power-plant rules, killing Keystone and forging a global agreement to cut carbon pollution – he won’t have done enough. He won’t have pushed through a price on carbon. He won’t have stopped oil drilling in the Arctic. He won’t have cut subsidies to Big Oil and Coal that distort the energy market. But he will have changed the political calculation about what is possible. Already Hillary Clinton is talking about the need for a mass movement on climate; Podesta believes climate will emerge as a key issue in the 2016 presidential race. As for Republicans, “being hostile to science is not a good way to win elections,” says Steve Schmidt, a prominent GOP consultant. Sen. Whitehouse believes that energy politics are changing so quickly that Congress may well take up legislation again in the not-so-distant future that puts a price on carbon.
As for how history will judge the president, Podesta has banned that kind of talk from the White House. “It’s not helpful in the day-to-day task of getting our work done,” he explains. “Besides, if we don’t take serious action on climate now, we may not have any history to look back on anyway.”
This story is from the May 8th, 2014 issue of Rolling Stone.
