(John Kemp is a Reuters market analyst. The views expressed are
By John Kemp
LONDON Feb 15 President Barack Obama's policy
on energy and climate change remains inscrutable, full of
strategic ambiguity, which probably suits him just fine.
The soaring rhetoric in his State of the Union address -
"for the sake of children and our future we must do more to
combat climate change" - masks a more complicated, some would
say pragmatic, approach to the role of clean technology and
fossil fuels in meeting future energy demands while curbing
The administration's commitment to tackling climate change
by cutting emissions is not in any doubt. White House advisers
are genuinely enthusiastic about the transformational potential
of energy efficiency and zero-carbon technologies like wind and
solar to meet future demand while sparking a new investment boom
to fire up economic growth.
By contrast, the administration remains hostile to coal, and
unsympathetic about gas and oil, even though hydraulic
fracturing promises to bring more jobs and growth if some
manufacturing is brought back to the United States to benefit
from cheap gas prices, and free the country from dependence on
oil imports from outside North America.
Advisers from the White House Council on Environmental
Quality (CEQ) and other bureaus within the Executive Office of
the President (EOP) have repeatedly briefed environmental
activists to reassure them of the president's commitment to
aggressive steps to promote clean technology and penalise
The latest volley of green briefings came ahead of the State
of the Union, where White House staff appeared to provide strong
steering to environmental lobbying organisations about how to
interpret the contents of the address, which gave it a stronger
green gloss than the president's words alone might warrant.
In practice, the administration appears to be trying to find
a middle way, one that keeps activists onside while not risking
a complete breakdown in relations with the petroleum industry or
being blamed for a new rise in energy prices.
SEEKING AN EQUILIBRIUM
Keystone XL is the most notable example of trying to keep
all sides happy. Unwilling to anger activists by approving the
pipeline, but also wary of the backlash from industry, the
Canadian government, and the Washington establishment if the
pipeline is blocked, the administration has played for time,
postponing a decision again by insisting it needs more time to
study the impact.
Some outside observers think that the administration will
eventually approve the pipeline, but only after securing
significant concessions, perhaps on an unrelated issue, like
tougher emissions regulations for coal-fired power plants.
The same attempt to split differences is apparent with
senior appointments. The three cabinet-level positions of most
interest to climate activists and the energy industry are the
Environmental Protection Agency (EPA), the Department of Energy,
and the Department of Interior (which oversees oil and gas
development on public lands).
All three have become vacant at the start of the second
term. The president's nomination for secretary of interior,
Sally Jewel, combines a background as an energy engineer and in
business as well as strong conservation credentials, drawing
support from both environmentalists and organisations lobbying
on behalf of more development on public lands in the western
The White House has not yet announced new chiefs for the EPA
and the Energy Department. The suspicion is they are being
treated as a package, with staffers trying to find a balanced
and complementary set of nominations.
DRILLING, FAST AND SLOW
On the controversial topic of fracking, the president has
welcomed the potential contribution to domestic energy
production and energy security while promising tough safeguards.
"The natural gas boom has led to cleaner power and greater
energy independence," the president said in the State of the
Union. "We need to encourage that."
He promised to speed up new oil and gas drilling permits and
reiterated that natural gas, which burns cleaner than coal, is
part of his "all of the above" approach to energy policy.
But the president was silent on fracking for oil, which has
similar if not greater potential to transform the U.S. economy,
but is far more controversial with his environmental supporters.
He spoke about the potential for producing oil and gas from
public lands and offshore areas "we, the public, own together"
and called for using some of the royalties to fund an Energy
Security Trust Fund.
The trust fund idea has received a cautious welcome from
Senator Lisa Murkowski from Alaska, the highest-ranking
Republican on the Senate Energy and Natural Resources Committee,
and one of the party's leaders on energy policy.
But it was twinned with a rhetorical commitment to use the
trust fund to "drive new research and technology to shift our
cars and trucks off oil for good".
The president has promised environmental activists that
drilling on public lands will only be done with enhanced safety
The Interior Department's Bureau of Land Management (BLM)
has been trying to draft new regulations governing hydraulic
fracturing on public lands, but has withdrawn the rulemaking
after receiving 170,000 comments and plans to issue new
proposals later this year.
The EPA is developing its own guidance on the use of diesel
fuel in hydraulic fracturing, which has drawn over 97,000 public
Both rulemakings have been strongly opposed by the North
Dakota state government as likely to add significantly to delays
in obtaining drilling permits.
North Dakota's Department of Mineral Resources identified
the BLM and EPA regulations as two of four big threats to
sustained development of the Bakken shale oil fields in a
presentation to the state House of Representatives last month.
The EPA's guidance on diesel "could triple drilling permit
approval time or worse," the department told lawmakers.
Like the other governments in the Interstate Oil and Gas
Compact Commission, North Dakota argues it has successfully
regulated fracking under state law, so there is no need for the
federal government to become involved. North Dakota has also
complained about the slow speed of federal drilling approvals
where they are already needed and fears that new regulations
will make the backlog worse.
The administration is struggling with all the contradictions
that have bedevilled U.S. energy policy since the 1970s.
The president's commitment to tackling global warming and
transforming the energy system into a cleaner one is sincere.
But it wants the benefits from cheap energy, especially natural
Senior officials still talk about the potential for creating
millions of green jobs. But there is now a painful awareness of
the potential benefits of many not-so-green ones as well, in
oil, gas and energy-intensive industries like chemicals,
fertilisers and heavy manufacturing that depend on cheap gas.
"All of the above" is an attempt to embrace the
contradictions without being engulfed by them. The president is
trying to persuade all sides (environmentalists and the clean
technology industry, petroleum producers and manufacturers) that
there is something in his policies for everyone.
The State of the Union was a classic example. It stuck to
fairly broad phrases that committed Obama to very little
specifically, but allowed everyone to project their own ideas
and priorities on to the president.
Environmental activists are among the president's most
wholehearted supporters, and he cannot afford to disappoint
them. Fossil fuel industries contain some of his bitterest foes,
but he must still find a way to work with them.
It is a tricky balancing act. Energy and climate has become
one of the most polarising issues in U.S. politics. The
administration's heart lies with clean tech, but its head says
fossil fuels are too important to ignore.
(Editing by Pravin Char)