Getting green and energy independent: Nice try?
By Stefanie Heerwig

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"We'll continue our march towards energy independence and address the threat of climate change," President Barack Obama announced ambitiously April 10. According to his proposal, the U.S. should half its oil imports by 2020 and double its energy productivity by 2030. A high aim, but possible as some experts like Christine McEntee, executive director and CEO of the American Geophysical Union, suggest, especially because the plan is carefully tailored and radically wide-ranging.

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Do green energy plans conflict with energy independence?
  • 1. Yes
  • 2. No

Along Obama's long line of initiatives to bring the U.S. on an independent green grid is an overall increase in funding in clean energy activities across all agencies by 30 percent, making up about $60 billion in total, but still hinging behind the European Union's annual funding into green energy of $101 billion. Yet, more strikingly, the plan would also include the elimination of fossil-fuel subsidies making up $4 billion year, according to Obama's proposal.

This all might sound convincing at first sight. However, being pragmatic and looking at the politics of fossil fuel subsidies, it might rather be a difficult enterprise to undertake. Going truly green would not only mean the phasing out of subsidies the U.S. officially reported in line with the Pittsburgh Communique, but it would also necessitate a real break with a powerful oil lobby and pose a possible threat to U.S. energy independence.

In fact, taking the recent IMF estimate of the costs of U.S. fossil fuel subsidies aside, a true phase-out of subsidies could cut revenue flows from the state to the fossil fuel industry by at least $6 billion a year, according to the most recent OECD estimates.

But, more importantly, even implementing a cut of $4 billion would be a difficult balancing act given the entanglement of U.S. politics and its oil industry. In search of political "pork," politicians have received at least $43 million from the fossil fuel lobby since January 2011. In turn the industry, of course, has benefited with some practitioners as Utt estimating 100-1 returns relative to lobby expenditure at least since 2008. The result is something often referred to as a mutual hostage situation.

And then still remains a more fundamental problem. Aren't fossil-fuel subsidy reforms and energy independence mutually exclusive, at least in the short term to medium term? In the end, it might be natural to conclude that subsidy cuts and go-green policies ultimately negatively affect investment into fracking, the foundation of the country's future energy independence. Already now the presidential proposal suggests a cut of funding into research on natural gas technology by 15 percent. So, what about energy independence and getting green now?

Stefanie Heerwig is a research consultant in the energy sector. She has contributed to a series of papers on "oil-to-cash" and fossil-fuel subsidy reforms that are about to be published by the Center for Global Development, a Washington based think-tank. She holds a BA (Hons) degree in economics and politics from the University of London's School of Oriental and African Studies.