Blog Post

Parsing the State of the Union

Feb 15, 2013 | Peter Nelson, Clayton Munnings

President Obama's remarks on climate change on Tuesday were a mix of specificity and vagueness. It seems no two climate wonks interpret his State of the Union the same, leading to more questions than answers.

The President linked specific trends—including high temperatures over the past 15 years and increased frequencies and intensities of heat waves, droughts, wildfires and floods—to climate change, marking a change from his previous speeches that reflects his increasing willingness to emphasize climate dangers without masking his message in energy independence or job creation. This must please climate advocates.


Obama SOTU


Mr. Obama was vague when it came to climate policy. True, he did propose specific energy policies—like the Energy Trust—but did not clarify his strategy to regulate carbon. Here is what he said:

“I urge this Congress to pursue a bipartisan, market-based solution to climate change, like the one John McCain and Joe Lieberman worked on together a few years ago. But if Congress won't act soon to protect future generations, I will. I will direct my Cabinet to come up with executive actions we can take, now and in the future, to reduce pollution, prepare our communities for the consequences of climate change, and speed the transition to more sustainable sources of energy.”

The confusion mostly lies in what “executive action” means. Does it mean the much anticipated EPA standards for existing power plants? If yes, this is a threat that wonks are well aware of; During the Waxman-Markey debates the message to opponents was: “pass a bill that prices carbon or the EPA will regulate it.” If you thought this threat was already explicit, you might think that repeating it buys the EPA more time to issue regulations.  If you think that threat was not yet explicit until Tuesday night, then Mr. Obama’s speech formalized it and outlined a game plan that you might huddle around.

But, what if “executive action” means something other than EPA regulations? There is a list of potential executive actions, but many (if not all of them) do not seem to hold the emissions reduction potential and political power that the EPA regulations do. This is the approach that at least one wonk thinks the administration is taking: small steps for now with no (or very little) effort toward the more important EPA regulations. For the President to actually expect any of these other executive actions to inspire a carbon pricing bill requires making a mountain out of a molehill.

You might see Mr. Obama’s reference to the McCain-Lieberman cap and trade bill as more a nod to general climate bipartisanship than explicit support of market based mechanisms. An alternative read on this reference is that Mr. Obama mentioned markets to leave the door open for carbon pricing to enter into tax reform discussions.

Proponents of this approach face a steep climb up the President’s agenda, competing with immigration and gun control for his political capital.  But if policymakers do get to this point they will face a difficult question. A likely prerequisite for a majority vote would be an exemption from the EPA regulations that have been held over opponents’ heads; the difficult question facing proponents of climate legislation is: what kind of carbon pricing bill is worth trading away EPA regulations?