Obama confident Senate will pass climate bill

President Obama gave a very lengthy “must-read” interview to theseveral reporters Sunday in which he spelled out a great deal of histhinking on the climate bill (transcript here). Since Senate passage of a climate bill depends crucially on Obama’sstrong messaging and lobbying effort, I will excerpt the interview intwo parts.

The wide-ranging interview gives Obama a chance to explain hisreaction to the House abandoning his goal of 100% auctions and how thebill fits into the international negotiation process.

Significantly, Obama argues that, as I and others have suggested,meeting the emissions targets with domestic clean energy strategieswill be cheaper and easier than the naysayers argued, and that we can then toughen the targets as the science — and other countries — demand.  We may

be able in this process to take a look at what kind ofprogress are we making five years from now, 10 years from now, 15 yearsfrom now. With the framework now in place we may find ourselves notonly able, but eager to move on that even more ambitious program.

Here’s the first half of the interview [and in Part 2, Energy Secretary Steven Chu and climate czar Steven Carol Browner chime in]:

President Obama:Well, we wanted to have you guys in because the vote on the energy billcame in on Friday, and although I made a statement, I didn’t have achance to talk to the press about it.

I think this was an extraordinary first step. You know, ifyou had asked people six months ago — or six weeks ago, for that matter— whether we could get a energy bill with the scope of the one that wesaw on Friday through the House, people would have told you, no way.You look at the constituent parts of this bill — not only a frameworkfor cap and trade, but huge significant steps on energy efficiency, arenewable energy standard, huge incentives for research and developmentin new technologies, incentives for electric cars, incentives fornuclear energy, clean coal technology. This really is an unprecedentedstep and a comprehensive approach.

And if you tie it together with what we’ve done earlier, both in thestimulus on R&D and weatherization programs and a whole host ofother steps, you take a look at the national fuel efficiency standardthat we put into place — I think it’s fair to say that overthe first six months we’ve seen more action on shifting ourselves awayfrom our dependence on foreign oil and fossil fuels than at any time inseveral decades.

The other thing I wanted to emphasize is the fact that as wetransition into this clean energy economy we are going to see, I think,an enormous amount of economic activity and job production emerging. Iknow that opponents of this bill kept on suggesting this was ajobs-killer, but everybody I talk to, when we think about how are wegoing to drive this economy forward post-bubble, keep on pointing tothe opportunities for us to transition to a clean energy economy as adriver of economic growth.

Just simple examples: weatherization, you know, we know that our buildings are hugely inefficient. Everytime we provide incentives for making our buildings more energyefficient those are jobs for welders, jobs for engineers, jobs for aconstruction industry that obviously is going to be in a tough way forsome time to come, high-skill and relatively low-skill jobs are goingto be generated in this process. When you look at our renewable energystandard — wind, solar — as a consequence of our Recovery Act you’realready seeing thousands of jobs being produced. This bill will buildon that and every time we make a wind turbine you’re looking at 400tons of steel, you have the potential for jobs not only in design butalso in manufacturing of wind turbines.

So I think that at the end of the day this bill represents an important first step. Thereare critics from the left as well as the right; some who say whodoesn’t go far enough, some who say it goes too far. I am convincedthat after a long period of inaction, for us to have taken such asignificant step means that we’re going to be in a position to advancetechnologically, obtain huge gains in efficiency. I think what we’regoing to see is that if we’re able to get this in place that it’s goingto be very similar to the Clean Air Act of ‘91 or how we approachedacid rain, where all the nay-sayers are proven wrong because Americaningenuity and technology moves a lot faster when incentives are inplace.

That’s part of the reason why I think you saw a lot of businessessupporting this bill — everybody from Starbucks to GE, because whatbusiness is looking for is clarity and certainty, and what this billsignals is that we’re not going to keep on being a prisoner of thepast, we’re going to reach for the future. The country that is able tolead on clean energy is the country that ultimately is going to be ableto compete effectively in the 21st century.

So that’s a little preface. I’ll just go around the room and Caroland Steve will chime in if and when you guys have some technicalquestions.

Media:Mr. President, you’ve, as a candidate and even after you were sworninto office, been an advocate of hundred percent auction of thepermits. That this bill obviously doesn’t do that, it gives away some85 percent, 60 of them to business. You know, why have you now sort ofendorsed a bill that goes in a different direction?

Obama: Well, I think that what wealways knew is that the transition from an old energy economy to a new,clean energy economy is going to be difficult. And there are going tobe different regions affected differently. And as we began the processof actually working a bill through Congress, a lot of those regionaldifferences come to the fore. So folks in regions that are highlyreliant on coal-burning power plants, they say to themselves this isgoing to cost us more than folks who have greater access to windpower/solar power. You’ve got heavy manufacturing that is alreadyhaving a tough time and needed to have some mechanism so that theycould transition.

And my general view was once we got a framework in place, some ofthese transition costs could be accommodated to ensure that certaincommunities are not hit a lot harder than others. But the overalldirection and the overall thrust is to reduce our emissions of carbonand incentivize clean energy production. And part of the region I thinkthat business was supportive and that ultimately we got support fromlegislators who in the past had been opposed is because of theflexibility that was built into this bill.

Media: Does it undercut theeffectiveness of the program? And does it complicate your plans torenew middle class tax cuts, which you had hoped would be paid for withthe revenue?

President Obama: Well, there is no doubtthat if we had not had some of these offsets then this would haveraised more revenue. But what is also true is I wanted to make surethat we had protected low- and middle-class workers and families fromspikes in electricity costs. And we wanted to make sure that therewasn’t huge regional variation. And I think that the balance that wasstruck in this bill is appropriate.

As I said before, I actually think that this is going to be similarto our efforts at controlling acid rain with the cap and trade. Ithink this is going to end up being much less costly, much moreefficient; technology is going to move much more rapidly than peopleanticipate. And we are going to have — be able in thisprocess to take a look at what kind of progress are we making fiveyears from now, 10 years from now, 15 years from now. With theframework now in place we may find ourselves not only able, but eagerto move on that even more ambitious program.

Exactly what Obama means “that even more ambitious program”is not entirely clear here, but he clarifies it later on, explainingthat, yes, stronger targets will ultimately be necessary and achievable.

And it also gives us an opportunity I think to go to theChinese and the Indians, who are going to be rapidly developing andwho, although per capita have a much smaller carbon footprint,generally have less-efficient industries. We’re going to be able totake a look at what they’re doing and, to the extent that they aretaking steps within their own economies to make progress, I think we’re going to be able to help leverage even greater gains internationally.

Media: Talking about the regionaldifferences, as you well know they’re much more pronounced in theSenate. What do you expect from the Senate from this bill and how doyou think it will change?

President Obama: One of thethings that we were convinced of was that we could not get the Senateto move aggressively until they saw how the politics aligned in theHouse. And I think now that you’ve seen somebody like a Rick Boucher ofVirginia able to enter into very constructive negotiations with a HenryWaxman of California, that, I think, provides a blueprint for how theSenate can proceed.

And I think that there is a clear sense on the part of the Americanpeople, on the part of governors — both Republican and Democrat, mayors— both Republican and Democrat — that the future is in clean energy andwe need to do something about it. So my expectation is that the Senateis going to move forward; they’re not going to have a bill that’sidentical to the House bill. This will end up in conference and thereare going to be a series of tough negotiations. But I think the abilityof the House to move forward is going to be a prod for the Senatetowards action.

[Obama was then asked about trade restrictions in the bill, which I’ll blog on later this week.]

Med One of the provisions thatgot added very late to this bill that senators had expressed somereservations about was the one that puts tariffs on goods imported fromcountries that don’t have these sort of restrictions. What do you thinkof that revision and would you like to see the Senate strip it out?

President Obama: At a time when theeconomy worldwide is still deep in recession and we’ve seen asignificant drop in global trade, I think we have to be very carefulabout sending any protectionist signals out there. There were a numberof provisions that were already in place, prior to this last provisionyou talked about, to provide transitional assistance to heavymanufacturers. A lot of the offsets were outdated to those industries.I think we’re going to have to do a careful analysis to determinewhether the prospects of tariffs are necessary, given all the otherstuff that was done and had been negotiated on behalf ofenergy-intensive industries.

So certainly it is a legitimate concern on the part of Americanbusinesses that they are not disadvantaged vis-a-vis their globalcompetitors. Now, keep in mind, European industries are looking at aneven more ambitious approach than we are. And they obviously haveconfidence that they can compete internationally under a regime thatcontrols carbons. I think the Chinese are starting to move in thedirection of recognizing that the future requires them to take a cleanenergy approach. In fact, in some ways they’re already ahead of us — onfuel efficiency standards, for example, they’ve moved beyond wherewe’ve moved on this.

There are going to be a series of negotiations around this and I amvery mindful of wanting to make sure that there’s a level playing fieldinternationally. I think there may be other ways of doing it than witha tariff approach.

Media: One of my questions isabout just the whole — how all this is going to work, and some of thepolitical risks of having this very large bureaucratic system and alsoin dealing with the perception that even if you were just trying toaddress regional differences that at the end of the day this is a billweighed down with special interest provisions, and whether that wouldbe a political — could turn into — both of those things could turn intopolitical liabilities going forward.

Obama: Well, here’s my generaltheory, that if you want to avoid potential political liabilities thenyou just do nothing around here in Washington. That seems to be theworking theory. That’s what’s happened over the last several decadeswhen it comes to energy. And my approach has been to say that ratherthan stand pat with a status quo that we know isn’t working, that weneed to reach out and shape our future.

Are there going to be glitches and bumps in the road inimplementation? Absolutely. I don’t think that any of us anticipatethat there aren’t going to be some aspects of the transition to a cleanenergy economy that don’t stir up some political opposition. And Ithink that finding the right balance between providing new incentivesto businesses, but not giving away the store, is always an art — it’snot a science because it’s never precise.

But on balance I think what you have with this legislation is a billthat business can embrace, but is tough enough that by 2020 we willhave seen significant reductions in carbon emissions, we will have seenthe kind of certainty in clean energy that the wind industry and thesolar industry and the biomass industry has been hungry for. You’regoing to see farmers making a series of very concrete decisions aboutreforestation and tilling and the economic benefits of puttingwindmills on their acreage, that are going to have huge benefits forrural communities.

I think that when we look back 10 years from now, 15 yearsfrom now, we’re going to say to ourselves this was a moment when wedecided to take action, to strengthen our economy, create jobs, andimprove our environment. And I think what seems controversial now isgoing to seem like common sense in hindsight.

Media: We’re engaged now in aseries of international negotiations leading up to Copenhagen inDecember. Quite a number of European governments, even some scientistsand environmental groups say that the emissions targets in this billare not strong enough. They’re unlikely to get stronger in the Senate.Is this in some ways the highwater mark or is there an advantage to youto saying this is where we are now and going to Copenhagen and sayingwe will continue to work to strengthen it?

Obama: Well, you know, I had aconversation with Chancellor Angela Merkel, who has been a leader onthis issue in the European Union. And you heard her quotes, she saidthere’s a sea change in terms of U.S. support.

Now, they would like to see even more aggressive targets. Myargument to her and to the Europeans is we don’t want to make the bestthe enemy of the good. We did not get into this situation overnight,we’re not going to get out of it overnight. By putting a framework inplace that is realistic, that is common-sensical, that protectsconsumers from huge spikes in electricity costs while setting real,meaningful targets — what we are doing is changing the politicalconversation and the incentive structures for businesses in thiscountry.

My strong belief is, is that innovation and technology aregoing to accelerate our process beyond these targets, and that we’regoing to look back and say we can do even more. But I thinklegitimately people want to make sure that we are not setting such highgoals without having even put a framework into place that it — well,let me phrase it this way: I think legitimately people want theframework in place and for us to make strong, steady, gradual progress,as opposed to trying to shoot for the moon and not being able to getanything done.

Media: In other words we are moving as far and as fast as we can right now in this country, politically?

President Obama: I think that theWaxman-Markey bill represents a great start. And I suspect that theSenate is going to come in — that there’s going to be a strong overlap,but not perfect overlap; the final legislation that emerges is probablynot going to satisfy the Europeans or Greenpeace. On the other hand, Ithink that when you’ve got corporate leaders like Jeff Immelt,legislators from coal regions like Rick Boucher, and Al Gore allagreeing that this is worth doing, that’s a pretty good coalition towork with.

Media: Do you think the Senate isactually going to be able to get something done this summer? You’ve gota lot of things, between health care….

Obama: How the Senate times allthis stuff is going to be, obviously, up to Harry Reid and theleadership in the Senate. But with the House having taken the lead andset a benchmark, I think the Senate is going to recognize now is thetime to act.

So how all this stuff gets sequenced is hard to gauge. It may bethat the Senate decides to do health care before they do energy. We’vestill got financial regulation in place. And the air traffic controlsystem on all this legislation, how we land all of it I think is goingto require enormous hard work and a deft touch by legislative leaders.What we want to do is to simply encourage the Senate and the House toseize the day, seize the opportunity.

The most important message that I want to deliver — and it’s thesame message that I’m delivering on health care — is everybody knowswhat we’re doing isn’t working. Everybody knows that. There’s nocontradiction. That the most vocal opponents to this legislation allhave to admit that the status quo is unacceptable. So then you askthem, well, okay, what should we do? And they’re sort of mumbling andmuttering and vague allusions to, well, maybe we ought to do morenuclear power.

Well, I’ll tell you what, there is a serious approach to nuclearpower in this building. “Well, we need to focus on production, that’swhat will free ourselves from dependence on foreign oil.” I’ve alreadysaid I’m happy to see us move forward on increasing domesticproduction, including offshore drilling — but we can’t do that inisolation from all these other important steps that need to be taken.

So if the starting point is to acknowledge that we can’t keep ondoing the same things that we’ve been doing and expecting differentresults, then it means that now is the time to act. And I’m confidentthat ultimately the Senate is going to feel as the House did and, astough as this may be, they’re going to go ahead and move forward.

Media: But Mr. President, can Iask you, when you look at how the negotiations may go, do you have afloor or a bottom line for you about how many permits you’re willing togive away? And then as you look at the House bill as it starts tooverlay the Senate where they may go, you raise concerns about thetariff in there. Are there other issues, though, that you think areimportant not to delete as the Senate takes — that’s one issue youdon’t want, it seems, in the bill, but is there something you thinkthat should be in a bill in the House that you’re willing to fight for?

Obama: Well, here’s mybottom line. I think you have to have meaningful targets so that by2020, by 2050 we are actually seeing reductions in carbon emissions. Ithink we have to have a strong push toward energy efficiency. We knowthat’s the low-hanging fruit, we can save as much as 30 percent of ourcurrent energy usage without changing our quality of life. So we’ve gotto go in that direction. I think that there has to be a strongrenewable energy component in it. And it has to be deficit-neutral,consumers have to be protected from huge spikes in electricity prices.

So I’ve got some broad criteria the House bill meets. There aregoing to be provisions in the House bill and in the Senate bill which Iquestion, in terms of their effectiveness. I’m not going to have aline-item veto, so ultimately — you know, I’ll take a look at the finalproduct. And if it meets those broad criteria — moving the countryforward on energy efficiency — then it’s a bill that I will embrace.



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