Previewing climate and energy in 2016 State of the Union

President Obama is scheduled to deliver his final State of the Union address tonight. As in previous years, he is likely to address climate change, energy and environmental issues.  What will the 2016 State of the Union have to say about these topics?

We know from previous years' State of the Union speeches (2013, 2014, 2015) that energy, the environment, and climate change have played an increasing role in the Obama administration's priorities. While the administration released a "preview" video on Youtube for the 2016 address,  the brief clip doesn't include any substantive remarks about climate, energy, or the environment.

However, the Obama administration has been active on climate, energy and environmental issues, with key developments in the past year such as the adoption of the U.S. Environmental Protection Agency's Clean Power Plan regulations limiting power plant emissions of carbon dioxide and the denial of the Keystone XL pipeline's Presidential Permit application.  Indeed, President Obama has said that "no challenge poses a greater threat to our children, our planet, and future generations than climate change — and that no other country on Earth is better equipped to lead the world towards a solution."

Climate change, energy, and the environment are likely to be mentioned along with other administration priorities such as international relations, national security, gun violence, and the economy.  Indeed, the White House's State of the Union website features sections titled Economic Progress, Acting on Climate, Engagement in the World, Health Care Reform, and Social Progress and Equality.

Under the "Acting on Climate" heading, the administration website for this year's address notes the December 2015 Paris agreement on climate change, reduced domestic emissions, the largest investment in renewable energy in U.S. history, and associated job creation.  The website also provides a "Record on Climate Change", listing details of the administration's actions to address climate change.

President Obama's final State of the Union address to Congress will be streamed live at https://www.whitehouse.gov/sotu on January 12, 2016 at 9PM ET.

Declining demand for residual fuel oil?

Global demand for residual fuel oil is expected to decline, according to the U.S. Energy Information Administration.

A Maine State Ferry Service boat near Vinalhaven, Maine.

Residual fuel oil is basically what's left after gasoline and other lighter hydrocarbons are distilled from crude oil.  Industry recognizes several grades of residual fuel oil, including No. 5 (used in steam-powered vessels in government service and inshore powerplants) and No. 6 (used for the production of electric power, space heating, vessel bunkering, and various industrial purposes.) 

Because residual fuel oil is composed of the residue left after distillation, it can contain large amounts of contaminants such as sulfur, nitrogen, or heavy metals.  As environmental regulations limit emissions of pollution, residual fuel oil can become less attractive (or more expensive) as a fuel source for electric power generation or marine transportation.

The EIA notes declining global demand for residual fuel oil since the mid-1980s.  In a brief report, EIA projects that the electric power and heating sectors will likely be responsible for continuedlarge reductions in residual fuel oil demand.

EIA also points to tighter international emissions regulations for the marine transport sector.  Rules under Annex VI of the International Maritime Organization through the International Convention of Pollution from Ships (MARPOL, or Marine Pollution) require global controls on emissions of sulfur and nitrogen oxides.  While residual fuel oil with a sulfur level no more than 3.5% can be used to meet the MARPOL requirements throughout most of the oceans, stricter limits apply to designated emission control areas like the North Sea, the Baltic Sea, and coastal areas in North America and the Caribbean Sea.  These strict limits effectively require 0.1% sulfur content residual fuel oil or lower in the covered emission control areas.  EIA suggests that strategies for MARPOL compliance will likely include low-sulfur fuels (marine gasoil or intermediate fuel oil, or even liquefied natural gas or LNG), or using scrubbers or other technology to remove sulfur post-combustion from the exhaust.

At the same time, EIA notes that some developing countries' power sectors may rely on residual fuel oil as a "transitional fuel" if they are "more sensitive to price and less sensitive to environmental and health implications."

Obama's climate action plan

Today President Obama unveiled his climate change action plan.  The outline of his plan was set forth in a 21-page written document, couldpled with a speech delivered at Georgetown University and broadcast online at whitehouse.gov/live, presents his vision for a unilateral approach to controlling carbon emissions and mitigating the effects of climate change.

The Washington Monument.

President Obama's plan has three main focuses.  First, he proposed measures to reduce the emission of carbon dioxide and other greenhouse gases from domestic industry.  These measures include strict standards for carbon emissions from new and existing power plants, promoting investment in renewable energy, and improving energy efficiency in homes, businesses, and industry.  The plan calls for accelerated permitting and development of renewable electricity generation projects on federal lands ranging from Department of Defense properties to lands managed by the Department of the Interior.

Second, he proposed measures to prepare the country for the effects of climate change.  These measures include infrastructure improvements, such as preparing buildings and communities for sea level rise and more intense storms.  These measures are also designed to protect the economy and natural resources, for example conserving land and water resources, preparing for floods and drought, and managing agricultural sustainability.

Third, he called for the U.S. to lead international efforts to address global climate change.  Measures in this category include expanding international use of clean energy and energy efficiency technologies, negotiating global free trade in environmental services and goods, and strengthening global resilience to climate change.

While some of the measures are likely to find widespread support, others such as the power plant emissions standards are controversial.  The plan states that President Obama will issue a Presidential Memorandum directing the U.S. Environmental Protection Agency to "work expeditiously to complete carbon pollution standards for both new and existing power plants.”  The standards, which may be put into place by mid 2015, are likely to hit coal-fired power plants hardest. If they are imposed, the effect may be to force power plants with marginal economics to close or convert to other fuels such as natural gas.  Some fear the impact of new EPA regulations on the cost of electricity, while some proponents of climate action support efforts to price the cost of carbon emissions into electricity produced from coal to encourage a switch to natural gas and other lower-carbon fuels.  Indeed, the plan calls for promoting natural gas as a “bridge fuel” to help domestic and international markets move away from coal and oil, calling for the U.S. to "promote fuel-switching from coal to gas for electricity production and encourage the development of a global market for gas."

Notably, some elements that observers had speculated might be included in the plan were omitted.  For example, the plan does not call for taxing carbon emissions or imposing a federal cap-and-trade regime for carbon.  Likewise, the plan outline does not conclusively address current issues such as whether or not the Keystone XL pipeline or coal export terminals will be approved.  Rather, the outline is relatively bullish about the opportunities to help foreign nations develop projects featuring natural gas, nuclear power, clean coal, and energy efficiency without mentioning the U.S.'s role as importer or exporter.  That said, in his oral remarks, President Obama said that Keystone XL can only be approved if it is found to be in the national interest, including whether or not it exacerbates climate change-related problems.

All eyes are watching whether President Obama is able to implement his plan effectively.  In the coming months, we can expect the federal administration to roll out significant new policies outlined in the plan.  Whether the policies can be put into action, their impacts, and whether they are able to achieve his goals, remains to be seen.