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Obama on the future of cap and trade

By Juliet Eilperin

During President Obama's town hall meeting in New Hampshire Tuesday, the president acknowledged that Congress might opt for an energy-only bill this year when it comes to climate change, rather than a comprehensive cap-and-trade bill.

For the signifiance of the remarks, we asked Jason Grumet, president of the Bipartisan Policy Center for his read. Here's what he said: "There is growing agreement among just about everyone in the climate debate that key aspects of existing legislation must be renegotiated to maintain the possibility for action this year."

But for another take, see why Joe Romm, a senior fellow at the Center for American Progress, thinks Obama's comments show the president is sticking with his commitment to placing a price on carbon.

Read this section of the transcript, and decide for yourself:

Q First of all, thank you for coming to New Hampshire. We are very pleased and proud that you're here. And we are grateful for the opportunity to talk.

Now, in your discussions, you have said that you're ready to listen to anybody with a good idea. Well, I'd like to go out on a limb and say I think I've got a good idea; I'd like to share it with you.

THE PRESIDENT: Good, please do.

Q When we talk about energy issues in this country, we are talking about jobs; we're talking about dependence on international oil, some coming from difficult places that are feeding terrorist organizations that are causing harm to our citizens; we are talking about a problem of keeping our money here at home as opposed to send it overseas when we purchase that foreign oil.

I think what we can do is we need to put all of these issues together in one basket, and first set a date by which time we can be independent enough of foreign oil; I can't say that we could be completely independent, and I think you understand the reasons why.

But if we can invest in technology here at home, to develop clean technology, place that technology in developing countries, not only just where they can have energy and electricity to be productive with, but establish with that an economic system where they have jobs and they are opening up new markets that we can sell our products into and that we can build our relationships with their leaders through.

And at home, if we can focus on making ourselves more energy efficient, because we are a very inefficient country when it comes to the use of energy, just like all of the industrialized countries. These two things, I think, done first can help us to avoid having to do cap and trade and other aspects with environmental controls that are going to have negative impacts on our economy. We need to make productive use of our technology and our people so that we can clean up the economy, put people to work, and then if that isn't sufficient enough, we then go to the kinds of programs that have been talked about at the Copenhagen summit. (Applause.)

THE PRESIDENT: Well, let me respond by talking more broadly about energy. First of all, those are such good ideas I've already adopted them, although I didn't know they came from you. (Laughter.)

Number one, we have to invest in innovation and new technologies. There's no doubt about it. And by the way, we've got to upgrade some old technologies. I know it's controversial in some quarters, but if you're serious about dealing with climate change then you've got to take a serious look at the nuclear industry. If you are serious about climate change, you've got to figure out is there technology that can allow us to sequester coal and the emissions that are set out.

The reason for that is not just for the United States. China is building a coal-fired plant once a week, just about -- India is doing the same -- because coal is cheap. And unless we can come up with some energy alternatives that allow us to franchise that technology so that they are equipped to burn that coal cleanly, we're going to have problems no matter what we do in this country when it comes to the environment. So technology is key. And, by the way, we can make significant profits and create huge jobs just upgrading traditional technologies. Then you've got the whole clean energy sector, which is ready to take off if we provide the kind of seed capital, the kind of R&D credits that are necessary.

This past recession almost killed a lot of our homegrown clean energy sectors. And the industry will tell you. You talk to the wind industry or the solar industry, if we hadn't passed the Recovery Act and all the support for clean energy, a lot of them would have completely gone under and we would have been ceding leadership as we already have, unfortunately, to a lot of countries like Spain and Germany and Japan that are doing a lot more work on it. So this is a huge engine for job creation, and we've got to make those investments.

The third thing you said, energy efficiency. We are one of the least efficient advanced economies when it comes to energy usage. And it's estimated that we could probably lop off 30 percent of our energy consumption just on efficiency without changing our lifestyles significantly. I say "significantly" because you'd have to start buying LED batteries or LED light bulbs. But it's still a light bulb. You don't have to sit in the dark. You don't have to use gas lanterns. You just have to make the investment. And one of the things that a company like ARC Energy is doing is trying to bring down the unit cost for each of those light bulbs.

A school building like this, guarantee you that we could make this school probably 10-15-20 percent more energy efficient. But the problem is school budgets a lot of times don't have the money to put the capital up front to make it more energy efficient. So are there ways we can help universities and schools and other institutions -- more efficient? We could retrofit every building in this country that was built over the last 50 years and get huge increases in energy, huge decreases in greenhouse gas emissions. But it requires some seed money. It requires some work. And that's why part of our jobs package is actually -- it's a very simple concept: Hire people to weatherize homes that will save those homeowners' heating bills, or cooling bills, and at the same time put people back to work and train them in things like insulation and heating systems. o there's a lot of opportunity there.

Now, here's the only thing I would say. The most controversial aspects of the energy debate that we've been having -- the House passed an energy bill and people complained about, well, there's this cap and trade thing. And you just mentioned, let's do the fun stuff before we do the hard stuff. The only thing I would say about it is this: We may be able to separate these things out. And it's conceivable that that's where the Senate ends up. But the concept of incentivizing clean energy so that it's the cheaper, more effective kind of energy is one that is proven to work and is actually a market-based approach. A lot of times, people just respond to incentives. And no matter how good the technology is, the fact of the matter is if you're not factoring in the soot that's being put in the atmosphere, coal is going to be cheaper for a very long time. For the average industry, the average company, we can make huge progress on solar, we can make huge progress on wind, but the unit costs -- energy costs that you get from those technologies relative to coal are still going to be pretty substantial. They're going to get better, but it might take 20-30-40 years of technology to get better.

And so the question then is: Does it make sense for us to start pricing in the fact that this thing is really bad for the environment? And if we do, then can we do it in a way that doesn't involve some big bureaucracy in a control and command system, but just says, look, we're just going to -- there's going to be a price to pollution. And then everybody can adapt and decide which are the -- which are the best energies. And that's -- that's, by the way, remember acid rain? hat's how that got solved, was basically what happened -- the Clean Air Act slapped a price on sulfur emissions. And what ended up happening was all these companies who were saying this was going to be a jobs killer, et cetera, they figured it out. They figured it out a lot cheaper than anybody expected. And it turns out now that our trees are okay up here in New Hampshire. That's a good thing. So we should take a lesson from the past and not be afraid of the future. (Applause.)

On Wednesday at a meeting with Democratic lawmakers at the Newseum, Obama made a point of saying he's still hopeful the Senate will pass a comprehensive climate bill. The transcript follows:

THE PRESIDENT: But -- hold on, just one last thing I want to say about this: In order for us to maximize it, part of it is the good work that Jeff has been doing in terms of just finding the right incentives. We've got to be open-minded about a whole range of technologies. We've got to look at clean coal technology. We've got to look at nuclear technology.

We're going to be making some significant announcements this year. This is an example, Blanche, of where we can't be stuck in the past in terms of how we see these things. We're not going to be able to ramp up solar and wind to suddenly replace every other energy source anytime soon, and the economy still needs to grow. So we've got to look at how to make existing technologies and options better.

But -- and this is just the point that I wanted to make because it came up in New Hampshire yesterday -- we still -- one of the best ways to be on the forefront in energy is to incentivize clean energy, and discourage the old sources or methods that aren't going to work in the future.

And so the fact that Joe Lieberman is working with Lindsey Graham, John Kerry has been all over this -- the three of them are coming together to try to find a workable, bipartisan structure so that we are incentivizing and rewarding the future -- and understanding that there's a transition, so that we've got to make sure that the disruptions are minimized as we move into this new energy future -- that's going to be vital.

So don't give up on that. I don't want us to just say the easy way out is for us to just give a bunch of tax credits to clean energy companies. The market works best when it responds to price. And if they start seeing that, you know what, dirty energy is a little pricier, clean energy is a little cheaper, they will innovate, and they will think things through in all kinds of innovative ways.

So I want to congratulate specifically John Kerry, Joe Lieberman, and Lindsey Graham, who it probably doesn't help him for me to compliment him -- (laughter) -- but has been very thoughtful in terms of how they're approaching this issue.


Juliet Eilperin

 |  February 3, 2010; 11:51 AM ET Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   StumbleUpon   Technorati  
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