Energy policy is now a higher priority in the political agenda in America

We all watch attentively at what the United States does in energy policy or climate change policies. The divisions between the executive and congress get much attention. The divisions between the Republicans and the Democrats equally get much attention. With the next presidential election race gaining momentum, Nick Butler writes an excellent blog in the Financial Times about the political divide in America.

 

The sharp political divide on US energy policy

In just a year’s time, on the first Tuesday in November 2016, the US will vote for a new president. With a deep and widening divide between the two parties on climate change and environmental policy, the election will have major implications for the US energy industry. But the impact will not stop there. The move by President Barack Obama to impose tighter environmental controls on coal-fired power stations has helped encourage countries across the world to make commitments of their own on emissions reductions. China has begun to co-operate with the US on climate change — a massive shift on both sides from the approach that led to the failure of the Copenhagen climate conference in 2009. A change of government in Washington could put all this in jeopardy.

Historically, energy has not been a prominent issue in US presidential elections. The issue was barely mentioned in the debates before the 2008 and 2012 polls. Now, however, Mr Obama’s move against the coal industry has put the topic at the top of the agenda. The issue is divisive and the positions of the two parties have moved further apart in the last six months.

On the Democratic side, Hillary Clinton as the clear front runner for the nomination has begun marking out a series of policies which go further than the limited moves made by Mr Obama. Describing the president’s actions as “just the beginning of what is needed”, she has promised to block the controversial Keystone XL pipeline from the heavy oil fields of Canada, to ban drilling in the American Arctic and to launch a programme to have half a billion solar panels installed across the country. The green lobby, which includes key fundraisers such as the billionaire Tom Steyer, has become highly influential within the party and within her campaign.

On the Republican side, the fight for the nomination remains open but none of the leading candidates accept the science of climate change or believes that action is necessary. Donald Trump has dismissed climate change as a concept “created by and for the Chinese in order to make US manufacturing non competitive”, while Marco Rubio, considered by many to be the most likely nominee, last month launched a full-scale attack on energy and climate policies. Mr Rubio would allow the Keystone pipeline to go ahead, open up large areas for offshore drilling and remove existing Environmental Policy Agency regulations on emissions and fracking.

Trump, Rubio and the other Republican candidates are all supporting the collective legal action being taken by a group of business groups and up to 25 states against the Obama legislation on power plants — a case that now seems certain to end up in the Supreme Court.

In Europe, the arguments of the Republicans seem primitive and the general assumption is that against Mrs Clinton the Republicans are unelectable. But that is to misread the mood of the US electorate. Recent polls have shown that while Donald Trump would lose to Mrs Clinton, a contest with Mr Rubio would result in a tie. The US electorate is divided on climate change and there is a strong core of what in Europe would be called deniers. This stretches well beyond the eccentric fringe and the traditionally Republican areas of the country.

Climate change may not be the most prominent issue on people’s minds, but it is linked for many with the fear of Big Government and with declining job prospects among blue-collar workers. As Mrs Clinton moves to the liberal left to secure her party’s nomination, such groups are a natural target for a Republican party that is now unashamedly populist and anti-establishment. Republican majorities already control both houses of Congress and there is a strong fundraising base. A Republican victory and a fundamental shift in energy and environmental policy is entirely possible. If that happened coal would be reprieved, drilling would be opened up and government-supported research funding on alternatives would be reduced. Any commitments made by Mr Obama at next month’s climate conference in Paris would be torn up.

In what promises to be a fascinating election it will be worth watching very carefully what the major energy companies do. Their direct interests are at stake and it would be surprising if the well-organised lobbies for coal and oil were not supporting the Republican candidate.

But what will the international companies do? Will they endorse campaigns by groups such as the American Petroleum Institute (which they help to fund)? The standard line from the companies is that the “super-Pacs” (political action committees) set up by US staff — including senior managers — are legally independent and cannot be steered from abroad. No law exists, however, to stop the chief executives of the companies that have been issuing strong statements of support in Europe in favour of carbon taxes as the best way to solve climate change from advocating the same approach when speaking in the US. Clearly, in an election where energy is centre stage the companies cannot be caught saying one thing in Paris, France, but something completely different in Paris, Texas.

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