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Obama Victory Reopens Door to Emissions Curbs and Possible Carbon Tax

Reelected, Obama said he plans to ensure that the U.S. is a global leader in research, technology and clean energy. The "fiscal cliff" might even open the door again to carbon tax discussions
Obama



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Speaking last week in Washington DC, US President Barack Obama reminded voters of the plan they had effectively endorsed by re-electing him. One of his key objectives, Obama said, would be to ensure that the United States “is a global leader in research and technology and clean energy, which will attract new companies and high-wage jobs to America”.

A different objective will be in the spotlight this week when Obama visits New York, a city still recovering from the damage caused by Hurricane Sandy on October 29th. Climate change could make storms like Sandy more common in the future. And New York’s mayor, Michael Bloomberg, cited climate concerns when he endorsed Obama for re-election (see Nature 491, 167–168; 2012), saying that the president has “taken major steps to reduce our carbon consumption, including setting higher fuel-efficiency standards for cars and trucks”. When he accepted that endorsement, Obama acknowledged that “climate change is a threat to our children’s future, and we owe it to them to do something about it”.

Yet this new opportunity to confront climate change and invest in science and technology comes with towering obstacles. The election did not end the polarization of Congress — Republicans retained control of the House of Representatives, and the Democrats only slightly strengthened their narrow majority in the Senate. And the ‘fiscal cliff’ looms large — automatic tax increases and spending cuts, the legacy of earlier budget battles, will hit on January 2nd unless the outgoing Congress finds a way to avert them in the session that begins this week (see Nature 487, 414–415; 2012).

The cuts, totaling some $136 billion, would apply to all discretionary spending next year, including defense, and would eat deeply into federal science budgets (see ‘At the precipice’). Congressional leaders expect Obama to play an active part in brokering a deal to avoid the fiscal cliff, which economists say could plunge the fragile US economy back into recession. The outcome will foreshadow Obama’s prospects for achieving other objectives — including those relevant to science — during his second term.

Climate Opportunity
Obama may have to develop his climate plans without some high-profile lieutenants. Energy secretary Steven Chu and Environmental Protection Agency (EPA) administrator Lisa Jackson are both rumored to be stepping down. During Obama’s first term, both became lightning rods for Republican attacks — Chu for his role in approving a $535-million government loan guarantee to Solyndra, a solar-energy company that later went bankrupt, and Jackson for implementing greenhouse-gas regulations. But even without Chu or Jackson, the administration’s approach to renewable energy and global warming would change very little, says Michael Gerrard, director of the Center for Climate Change Law at Columbia University in New York. “I suspect we would have continuity in the broad policy approaches.”

Obama’s election victory, combined with growing alarm in the United States over severe weather events, such as Hurricane Sandy and the severe drought in the Midwest this summer, could bolster efforts to curb carbon emissions. Jackson laid the foundation for such reductions after the US Supreme Court ruled in 2007 that carbon dioxide is a pollutant, which allowed the EPA to regulate the gas under the Clean Air Act. Jackson went on to craft the first US greenhouse-gas regulations for vehicles, and in March proposed a rule that would effectively ban the construction of new coal-fired power plants unless they are equipped to capture and sequester roughly 50% of the carbon dioxide they emit. The agency next plans to propose rules for existing power plants, then oil refineries. The details of those rules are unclear. The EPA could, for example, set energy-efficiency standards for different types of power plant or take a more flexible approach that would let states — which normally implement air-quality rules — decide how to proceed.

There is also an outside possibility that Congress’s struggle to avoid the fiscal cliff could bring another approach to the fore: a carbon tax. To avoid the automatic spending cuts and tax rises, lawmakers must find new ways to raise revenue. So far, the House has focused on closing tax loopholes, but those efforts are expected to come up short. As an alternative, a carbon tax has been quietly gaining traction in policy meetings, even among some conservatives.

“A carbon tax is certainly not likely as a starting point, but we think it could become extremely attractive if the lawmakers begin to run out of options for generating revenue,” says Mark Muro, a senior fellow at the Brookings Institution, a non-partisan think tank in Washington DC.

Although the idea of any tax — let alone one on carbon — is anathema to most conservatives on Capitol Hill, the idea offers something for everybody in the current budget crunch. A tax would reduce emissions and raise revenue for energy research and development — outcomes that environmentalists would welcome — and it would generate extra revenue that conservative lawmakers could use to offset lower tax rates on individuals and businesses.

In August, economists at the Massachusetts Institute of Technology (MIT) in Cambridge reported that the United States could raise $1.5 trillion over ten years and reduce emissions to 14% below 2006 levels by 2020 by instituting a tax of $20 per ton of carbon in 2013 and increasing it by 4% a year. Less than 20% of that revenue would be enough to fund a massive boost in federal investments in clean-energy research and development — from $3.8 billion in 2012 to $30 billion annually, Muro says. The administration has yet to weigh in on the idea, and some on Capitol Hill think that is just as well. If pushed prematurely, the idea could wither in the political spotlight before law­makers have a chance to fully consider its merits. “We’re trying to generate interest,” a senior House aide told Nature. “The more discussion there is, the better.”

Funding Fears
Basic research has historically fared well under Democratic and Republican administrations, but many university administrators were nonetheless relieved by the election’s outcome. They wondered whether Republican candidate Mitt Romney would side with other Republicans — including Paul Ryan, his running mate and chairman of the House budget committee — who advocate severe spending cuts to government programs as a way of reducing the deficit. “Thank God we don’t have to find out,” says Stewart Smith, dean for research at Princeton University in New Jersey.

Universities that receive grant money from federal science agencies are nonetheless bracing themselves for the fiscal cliff that awaits if Congress cannot reach a budget deal or find a way to extend the bargaining window before January 2nd. The administration’s Office of Management and Budget estimates that most funding agencies would have their budgets slashed by 8.2% in the absence of an agreement. Claude Canizares, vice-president for research at MIT, says that the result would be a loss of $40 million in research revenue at the university, which drew $619 million in research support in 2011. An 8% cut in funding to the US Department of Energy (DOE) would mean an 8% loss in staff at the DOE Princeton Plasma Physics Laboratory, of which Smith will become vice-president in January.

Advocates for biomedical research are equally concerned about the prospect of the cuts. “I don’t know how you spare anyone or anything” at the US National Institutes of Health (NIH), says Jennifer Zeitzer, director of legislative affairs at the Federation of American Societies for Experimental Biology in Bethesda, Maryland. The automatic cuts would slash the agency’s $30.7-billion budget by $2.5 billion, a portion of which would be exacted from every NIH institute and center.

That prospect, in combination with other pressures on medical research budgets, is “chilling”, says Ann Bonham, chief scientific officer at the Association of American Medical Colleges in Washington DC. She notes that the Patient Protection and Affordable Care Act, the health-care-reform law that is the signature policy achievement of Obama’s first term and will ultimately extend health insurance to more than 30 million now-uninsured US citizens, also mandates a $155-billion cut in government payments to hospitals. That could hurt the large teaching hospitals that support much US medical research (see Nature 487, 13–14; 2012). Bonham worries that the confluence of stresses will consign the biomedical research enterprise to “death by 1,000 cuts”.

Supporters of Obama’s health-care reform argue that it will eventually curb soaring US government outlays for health care, thereby shrinking the deficit and producing more revenue for agencies, including the NIH. If the plan works, the reform is “likely to be a long-term gain for research”, says Ezekiel Emanuel, a medical ethicist and health-policy expert at the University of Pennsylvania in Philadelphia, who was the senior health-policy adviser to the White House budget office from 2009–11. Science could also benefit from another Obama goal: immigration reform. One result of such reform could be more ‘H-1B’ visas for foreign scientists and engineers, a need that both candidates emphasized during the campaign.

In the meantime, Obama’s science agenda will depend on cooperation with a Congress that includes some new faces. Last week’s general election not only returned him to office and decided state ballot measures; it also marked the end of some key lawmakers’ terms. The chairmanship of the Senate energy and water committee is being vacated by the retiring Jeff Bingaman, a Democrat from New Mexico. Some observers expect Ron Wyden, a Democrat from environmentally friendly Oregon, to fill the spot. Although generally liberal, Wyden is known for crossing the aisle to work with Republicans. “Wyden is a very thoughtful guy; he likes to think outside the box,” says Michael Lubell, director of public affairs for the American Physical Society in Washington DC.

In the House, it’s unclear who will chair the spending subcommittee that funds the NIH. The current chairman, Denny Rehberg of Montana, relinquished his House seat in a failed bid for the Senate. The science, space and technology committee is losing its chairman, Ralph Hall of Texas, who is stepping down in accordance with Republican term limits. Jim Sensenbrenner of Wisconsin, Dana Rohrabacher of California and Lamar Smith of Texas all want the job. Lubell says that his money is on Smith, a co-sponsor of patent-reform legislation who has also tried to make it easier for foreign graduates with science degrees to remain in the United States.

For now, Obama’s victory has created an opening for compromise after two years of Congressional gridlock. With the fiscal clock ticking, the coming weeks may well set the tone for the next four years.

This article is reproduced with permission from the magazine Nature. The article was first published on November 13, 2012.

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