Three Reasons for the President to Highlight Energy and Climate Legislation in the State of the Union Address

Here are three reasons energy and climate should be a top legislative priority for President Obama and Congress this spring:

1. Jobs

Ask employers what’s going to convince them to hire more people and they will all tell you the same thing - we need more demand. Demand is what drives growth. Demand is what leads bankers and others to free up the capital employers need to invest in new technologies, new production facilities, and new workers.

An energy and climate bill that promotes energy efficiency and clean energy sources, cuts foreign oil dependence, and sets firm limits on carbon pollution will generate trillions of dollars of new demand for low carbon technologies and hundreds of billions of dollars in incentives to take advantage of these business opportunities. Opportunities that will help create 1.9 million new jobs by 2020 by; 1) improving the energy efficiency of homes and offices (employing electricians, plumbers, construction workers, and engineers), 2) finding and developing alternative sources of energy, 3) building cleaner cars, 4) repairing our crumbling infrastructure, 5) training and educating workers, and 6) transitioning our major polluting industries into low carbon providers of energy services. This means building carbon, capture and storage into coal plants and improving the efficiency rates of domestic oil production through enhanced oil recovery, both huge jobs creators in their own right.

This also means enhanced job security in sectors like automotive manufacturing where the bill provides access to nearly $50 billion in re-tooling incentives and government guarantees to produce cleaner cars. Cleaner cars that the American consumer wants to buy, built with technology that will keep our workers competitive.

2. National Security

Retired Generals and Admirals have recently argued that "America's current energy posture constitutes a serious and urgent threat to national security"- a fact made clear by two fairly shocking conclusions drawn from a recent International Energy Agency (IEA) report.

The first is that oil demand from China and India is expected to double over the next two decades. A rise in demand that is particularly unnerving when you consider that two-thirds of existing fields will have shut down production by this time (see graph below):

This combination of rising demand and the need to replace a significant amount of existing oil fields with new finds is expected to accelerate the resource grab we are starting to see take shape around the world.

The second shocking conclusion drawn from the report is that the winner inevitably will be neither the US nor China but the OPEC nations, which are expected to see their oil-export revenues increase five-fold to nearly $28 trillion over the two decades (see graph below):

The economic threat from this massive transfer of wealth, driven in large part by US import demand, adds to other so-called “threat multipliers” the US military must face under climate change - threats that the Military Advisory Board expects to directly challenge the effectiveness of our military, such as; 1) more extreme weather-related events, 2) greater demands on naval operations due to the opening of the Arctic Ocean, 3) threats to US naval bases due to rising seas levels, 4) more humanitarian relief challenges for US forces, and 5) heightened regional tensions due to a rising number of "failed" states.

Indeed, if we truly want to reduce our dependence on foreign oil, passing comprehensive energy and climate legislation is the way to get us there.  Under the House-passed climate and energy bill, NRDC forecasts that the US could cut its oil dependence in half compared to business as usual. This would be accomplished by a combination of cleaner cars and incentives for using CO2 capture at coal plants to recover oil stranded  in existing domestic oilfields, using a well-established technique known as enhanced oil recovery with CO2. This is a recipe for a double benefit that would dramatically reduce our demand for foreign oil (see graph below) and generate more than $800 billion in additional oil royalty revenues over the next four decades for states and the federal government through increased domestic production.

3. Competitiveness

As Thomas Friedman has noted, clean tech is “the next great global industry” and we can either decide to take the lead and “clean the world’s clock in clean-tech”, or fall behind and let others reap the benefits. Trillion dollar opportunities exist for American businesses focused on the global building efficiency, industrial efficiency, renewables, and advanced vehicle markets (see table below). Areas of investment which pay for themselves in lower energy costs and will help re-power the American economy over the long term.

In sum, passing energy and climate legislation pays back with jobs, enhanced energy independence, and competitiveness gains that are difficult to beat and while the Senate is expected to chart its own course and offer its own set of energy and climate solutions, it is imperative - for our economic health and security - that the President and our legislators roll up their sleeves and pass a bill through the Senate this spring and the full Congress this year.