Between the Lines: Obama’s 2012 State of the Union address

In his 2012 State of the Union address Jan. 24, President Obama announced his intention to sign an executive order to cut through “red tape” that hinders infrastructure construction.

After a lengthy discussion about U.S. energy, including the need to develop clean energy, Obama briefly mentioned transmission.

“Building this new energy future should be just one part of a broader agenda to repair America’s infrastructure,” he said, naming a power grid that “wastes too much energy” along with “crumbling roads and bridges.”

In order to facilitate the repair of such infrastructure systems, Obama said he would sign an executive order in the next few weeks to clear away “red tape” that slows down construction projects.

“But you need to fund these projects,” he said. “Take the money we’re no longer spending at war, use half of it to pay down our debt, and use the rest to do some nation-building right here at home.”

The thrust of Obama’s discussion about energy, though, was the nation’s investment in clean energy.

Clean energy should not suffer at the hands of the oil industry, he said. The era of taxpayer incentives for the oil industry should give way to an era of incentives for clean energy.

“We’ve subsidized oil companies for a century,” Obama said. “That’s long enough. It’s time to end the taxpayer giveaways to an industry that rarely has been more profitable, and double-down on a clean energy industry that has never been more promising.”

According to a 2009 Environmental Law Institute study, U.S. fossil fuel subsidies from 2002 to 2008 totaled $72bn, while during the same period, renewable subsidies totaled $29bn, over half of which supported corn ethanol. Fossil fuels included petroleum and its byproducts, natural gas and coal products. Renewable energies included wind, solar, biofuels, biomass, hydropower and geothermal.

During his speech, Obama called for an “all-out, all-of-the-above” energy strategy that includes a diversified U.S. generation portfolio.

Domestic natural gas supplies are enough to last the United States 100 years, he said, adding that public research dollars played an important role in the development of shale gas extraction technology. Though the resource has been there to exploit for decades, adequate shale gas technology has taken decades to develop.

“Our experience with shale gas, our experience with natural gas, shows us that the payoffs on these public investments don’t always come right away. Some technologies don’t pan out; some companies fail,” Obama said, apparently indirectly referencing the bankruptcy of Solyndra.

The Obama administration has come under fire for its $528m loan to the failed solar technology company.

“But I will not walk away from the promise of clean energy. … I will not cede the wind or solar or battery industry to China or Germany because we refuse to make the same commitment here,” he continued, later calling for the passage of clean energy tax credits.

Obama, in his American Recovery and Reinvestment Act of 2009, provided a three-year extension of the production tax credit (PTC) for electricity generated from wind, geothermal, biomass, hydropower, landfill gas, waste-to-energy and marine facilities. The extension ends Dec. 31. The tax credit for solar energy expires in 2016.

EEI President Tom Kuhn in a Jan. 25 statement said Obama’s call for an “all of the above” strategy is something the U.S. power industry has been advocating for years, and reiterated that generation provided from coal, natural gas, nuclear and renewable energy are all needed.  

“The need for diversity carries over into the transportation sector, as well,” he noted. “The steady adoption of plug-in-electric vehicles gives Americans the choice to fill up at the pump or plug in at home. The extremely low operating costs of PEVs—which run on the equivalent of $1 per gallon of gasoline, make a compelling case for moving to greater use of electricity as a transportation fuel.”

About Rosy Lum 525 Articles
Rosy Lum, Analyst for TransmissionHub, has been covering the U.S. energy industry since 2007. She began her career in energy journalism at SNL Financial, for which she established a New York news desk. She covered topics ranging from energy finance and renewable policies and incentives, to master limited partnerships and ETFs. Thereafter, she honed her energy and utility focus at the Financial Times' dealReporter, where she covered and broke oil and gas and utility mergers and acquisitions.