President Obama gave a very lengthy “must-read” interview to the several reporters Sunday in which he spelled out a great deal of his thinking on the climate bill (transcript here). Since Senate passage of a climate bill depends crucially on Obama’s strong messaging and lobbying effort, I will excerpt the interview in two parts.
The wide-ranging interview gives Obama a chance to explain his reaction to the House abandoning his goal of 100% auctions and how the bill fits into the international negotiation process.
Significantly, Obama argues that, as I and others have suggested, meeting the emissions targets with domestic clean energy strategies will 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 of progress are we making five years from now, 10 years from now, 15 years from now. With the framework now in place we may find ourselves not only 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 bill came in on Friday, and although I made a statement, I didn’t have a chance to talk to the press about it.
I think this was an extraordinary first step. You know, if you 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 we saw on Friday through the House, people would have told you, no way. You look at the constituent parts of this bill — not only a framework for cap and trade, but huge significant steps on energy efficiency, a renewable energy standard, huge incentives for research and development in new technologies, incentives for electric cars, incentives for nuclear energy, clean coal technology. This really is an unprecedented step and a comprehensive approach.
And if you tie it together with what we’ve done earlier, both in the stimulus on R&D and weatherization programs and a whole host of other steps, you take a look at the national fuel efficiency standard that we put into place — I think it’s fair to say that over the first six months we’ve seen more action on shifting ourselves away from our dependence on foreign oil and fossil fuels than at any time in several decades.
The other thing I wanted to emphasize is the fact that as we transition into this clean energy economy we are going to see, I think, an enormous amount of economic activity and job production emerging. I know that opponents of this bill kept on suggesting this was a jobs-killer, but everybody I talk to, when we think about how are we going to drive this economy forward post-bubble, keep on pointing to the opportunities for us to transition to a clean energy economy as a driver of economic growth.
Just simple examples: weatherization, you know, we know that our buildings are hugely inefficient. Every time we provide incentives for making our buildings more energy efficient those are jobs for welders, jobs for engineers, jobs for a construction industry that obviously is going to be in a tough way for some time to come, high-skill and relatively low-skill jobs are going to be generated in this process. When you look at our renewable energy standard — wind, solar — as a consequence of our Recovery Act you’re already seeing thousands of jobs being produced. This bill will build on that and every time we make a wind turbine you’re looking at 400 tons of steel, you have the potential for jobs not only in design but also in manufacturing of wind turbines.
So I think that at the end of the day this bill represents an important first step. There are critics from the left as well as the right; some who say who doesn’t go far enough, some who say it goes too far. I am convinced that after a long period of inaction, for us to have taken such a significant step means that we’re going to be in a position to advance technologically, obtain huge gains in efficiency. I think what we’re going to see is that if we’re able to get this in place that it’s going to be very similar to the Clean Air Act of ’91 or how we approached acid rain, where all the nay-sayers are proven wrong because American ingenuity and technology moves a lot faster when incentives are in place.
That’s part of the reason why I think you saw a lot of businesses supporting this bill — everybody from Starbucks to GE, because what business is looking for is clarity and certainty, and what this bill signals is that we’re not going to keep on being a prisoner of the past, we’re going to reach for the future. The country that is able to lead on clean energy is the country that ultimately is going to be able to compete effectively in the 21st century.
So that’s a little preface. I’ll just go around the room and Carol and Steve will chime in if and when you guys have some technical questions.
Media: Mr. President, you’ve, as a candidate and even after you were sworn into office, been an advocate of hundred percent auction of the permits. That this bill obviously doesn’t do that, it gives away some 85 percent, 60 of them to business. You know, why have you now sort of endorsed a bill that goes in a different direction?
Obama: Well, I think that what we always 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 to be different regions affected differently. And as we began the process of actually working a bill through Congress, a lot of those regional differences come to the fore. So folks in regions that are highly reliant on coal-burning power plants, they say to themselves this is going to cost us more than folks who have greater access to wind power/solar power. You’ve got heavy manufacturing that is already having a tough time and needed to have some mechanism so that they could transition.
And my general view was once we got a framework in place, some of these transition costs could be accommodated to ensure that certain communities are not hit a lot harder than others. But the overall direction and the overall thrust is to reduce our emissions of carbon and incentivize clean energy production. And part of the region I think that business was supportive and that ultimately we got support from legislators who in the past had been opposed is because of the flexibility that was built into this bill.
Media: Does it undercut the effectiveness of the program? And does it complicate your plans to renew middle class tax cuts, which you had hoped would be paid for with the revenue?
President Obama: Well, there is no doubt that if we had not had some of these offsets then this would have raised more revenue. But what is also true is I wanted to make sure that we had protected low- and middle-class workers and families from spikes in electricity costs. And we wanted to make sure that there wasn’t huge regional variation. And I think that the balance that was struck in this bill is appropriate.
As I said before, I actually think that this is going to be similar to our efforts at controlling acid rain with the cap and trade. I think this is going to end up being much less costly, much more efficient; technology is going to move much more rapidly than people anticipate. And we are going to have — be able in this process to take a look at what kind of progress are we making five years from now, 10 years from now, 15 years from now. With the framework now in place we may find ourselves not only able, but eager to 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, explaining that, yes, stronger targets will ultimately be necessary and achievable.
And it also gives us an opportunity I think to go to the Chinese and the Indians, who are going to be rapidly developing and who, although per capita have a much smaller carbon footprint, generally have less-efficient industries. We’re going to be able to take a look at what they’re doing and, to the extent that they are taking 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 regional differences, as you well know they’re much more pronounced in the Senate. What do you expect from the Senate from this bill and how do you think it will change?
President Obama: One of the things that we were convinced of was that we could not get the Senate to move aggressively until they saw how the politics aligned in the House. And I think now that you’ve seen somebody like a Rick Boucher of Virginia able to enter into very constructive negotiations with a Henry Waxman of California, that, I think, provides a blueprint for how the Senate can proceed.
And I think that there is a clear sense on the part of the American people, on the part of governors — both Republican and Democrat, mayors — both Republican and Democrat — that the future is in clean energy and we need to do something about it. So my expectation is that the Senate is going to move forward; they’re not going to have a bill that’s identical to the House bill. This will end up in conference and there are going to be a series of tough negotiations. But I think the ability of the House to move forward is going to be a prod for the Senate towards action.
[Obama was then asked about trade restrictions in the bill, which I'll blog on later this week.]
Med One of the provisions that got added very late to this bill that senators had expressed some reservations about was the one that puts tariffs on goods imported from countries that don’t have these sort of restrictions. What do you think of that revision and would you like to see the Senate strip it out?
President Obama: At a time when the economy worldwide is still deep in recession and we’ve seen a significant drop in global trade, I think we have to be very careful about sending any protectionist signals out there. There were a number of provisions that were already in place, prior to this last provision you talked about, to provide transitional assistance to heavy manufacturers. A lot of the offsets were outdated to those industries. I think we’re going to have to do a careful analysis to determine whether the prospects of tariffs are necessary, given all the other stuff that was done and had been negotiated on behalf of energy-intensive industries.
So certainly it is a legitimate concern on the part of American businesses that they are not disadvantaged vis-a-vis their global competitors. Now, keep in mind, European industries are looking at an even more ambitious approach than we are. And they obviously have confidence that they can compete internationally under a regime that controls carbons. I think the Chinese are starting to move in the direction of recognizing that the future requires them to take a clean energy approach. In fact, in some ways they’re already ahead of us — on fuel efficiency standards, for example, they’ve moved beyond where we’ve moved on this.
There are going to be a series of negotiations around this and I am very mindful of wanting to make sure that there’s a level playing field internationally. I think there may be other ways of doing it than with a tariff approach.
Media: One of my questions is about just the whole — how all this is going to work, and some of the political risks of having this very large bureaucratic system and also in dealing with the perception that even if you were just trying to address regional differences that at the end of the day this is a bill weighed down with special interest provisions, and whether that would be a political — could turn into — both of those things could turn into political liabilities going forward.
Obama: Well, here’s my general theory, that if you want to avoid potential political liabilities then you just do nothing around here in Washington. That seems to be the working theory. That’s what’s happened over the last several decades when it comes to energy. And my approach has been to say that rather than stand pat with a status quo that we know isn’t working, that we need to reach out and shape our future.
Are there going to be glitches and bumps in the road in implementation? Absolutely. I don’t think that any of us anticipate that there aren’t going to be some aspects of the transition to a clean energy economy that don’t stir up some political opposition. And I think that finding the right balance between providing new incentives to businesses, but not giving away the store, is always an art — it’s not a science because it’s never precise.
But on balance I think what you have with this legislation is a bill that business can embrace, but is tough enough that by 2020 we will have seen significant reductions in carbon emissions, we will have seen the kind of certainty in clean energy that the wind industry and the solar industry and the biomass industry has been hungry for. You’re going to see farmers making a series of very concrete decisions about reforestation and tilling and the economic benefits of putting windmills on their acreage, that are going to have huge benefits for rural communities.
I think that when we look back 10 years from now, 15 years from now, we’re going to say to ourselves this was a moment when we decided to take action, to strengthen our economy, create jobs, and improve our environment. And I think what seems controversial now is going to seem like common sense in hindsight.
Media: We’re engaged now in a series of international negotiations leading up to Copenhagen in December. Quite a number of European governments, even some scientists and environmental groups say that the emissions targets in this bill are 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 you to saying this is where we are now and going to Copenhagen and saying we will continue to work to strengthen it?
Obama: Well, you know, I had a conversation with Chancellor Angela Merkel, who has been a leader on this issue in the European Union. And you heard her quotes, she said there’s a sea change in terms of U.S. support.
Now, they would like to see even more aggressive targets. My argument to her and to the Europeans is we don’t want to make the best the 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 in place that is realistic, that is common-sensical, that protects consumers from huge spikes in electricity costs while setting real, meaningful targets — what we are doing is changing the political conversation and the incentive structures for businesses in this country.
My strong belief is, is that innovation and technology are going to accelerate our process beyond these targets, and that we’re going to look back and say we can do even more. But I think legitimately people want to make sure that we are not setting such high goals without having even put a framework into place that it — well, let me phrase it this way: I think legitimately people want the framework 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 get anything 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 the Waxman-Markey bill represents a great start. And I suspect that the Senate is going to come in — that there’s going to be a strong overlap, but not perfect overlap; the final legislation that emerges is probably not going to satisfy the Europeans or Greenpeace. On the other hand, I think that when you’ve got corporate leaders like Jeff Immelt, legislators from coal regions like Rick Boucher, and Al Gore all agreeing that this is worth doing, that’s a pretty good coalition to work with.
Media: Do you think the Senate is actually going to be able to get something done this summer? You’ve got a lot of things, between health care….
Obama: How the Senate times all this stuff is going to be, obviously, up to Harry Reid and the leadership in the Senate. But with the House having taken the lead and set a benchmark, I think the Senate is going to recognize now is the time to act.
So how all this stuff gets sequenced is hard to gauge. It may be that the Senate decides to do health care before they do energy. We’ve still got financial regulation in place. And the air traffic control system on all this legislation, how we land all of it I think is going to 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 to seize the day, seize the opportunity.
The most important message that I want to deliver — and it’s the same message that I’m delivering on health care — is everybody knows what we’re doing isn’t working. Everybody knows that. There’s no contradiction. That the most vocal opponents to this legislation all have to admit that the status quo is unacceptable. So then you ask them, well, okay, what should we do? And they’re sort of mumbling and muttering and vague allusions to, well, maybe we ought to do more nuclear power.
Well, I’ll tell you what, there is a serious approach to nuclear power in this building. “Well, we need to focus on production, that’s what will free ourselves from dependence on foreign oil.” I’ve already said I’m happy to see us move forward on increasing domestic production, including offshore drilling — but we can’t do that in isolation from all these other important steps that need to be taken.
So if the starting point is to acknowledge that we can’t keep on doing the same things that we’ve been doing and expecting different results, then it means that now is the time to act. And I’m confident that ultimately the Senate is going to feel as the House did and, as tough as this may be, they’re going to go ahead and move forward.
Media: But Mr. President, can I ask you, when you look at how the negotiations may go, do you have a floor or a bottom line for you about how many permits you’re willing to give away? And then as you look at the House bill as it starts to overlay the Senate where they may go, you raise concerns about the tariff in there. Are there other issues, though, that you think are important not to delete as the Senate takes — that’s one issue you don’t want, it seems, in the bill, but is there something you think that should be in a bill in the House that you’re willing to fight for?
Obama: Well, here’s my bottom line. I think you have to have meaningful targets so that by 2020, by 2050 we are actually seeing reductions in carbon emissions. I think we have to have a strong push toward energy efficiency. We know that’s the low-hanging fruit, we can save as much as 30 percent of our current energy usage without changing our quality of life. So we’ve got to go in that direction. I think that there has to be a strong renewable 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 are going to be provisions in the House bill and in the Senate bill which I question, in terms of their effectiveness. I’m not going to have a line-item veto, so ultimately — you know, I’ll take a look at the final product. And if it meets those broad criteria — moving the country forward on energy efficiency — then it’s a bill that I will embrace.