Obama’s State of Union will likely hit on a number of energy policy themes: climate change, promotion of offshore drilling, clean energy. The President’s statements on climate change were previewed in his January 21 inaugural address, when he declared “We will respond to the threat of climate change, knowing that the failure to do so would betray our children and future generations. Some may still deny the overwhelming judgment of science, but none can avoid the devastating impact of raging fires and crippling drought and more powerful storms. The path towards sustainable energy sources will be long and sometimes difficult. But America cannot resist this transition, we must lead it.”
The 2007 Supreme Court ruled the EPA must regulate greenhouse gasses under its existing Clean Air Act authority if it finds a scientific basis that such emissions pose a danger to public health. This summer, a Republican-led federal appeals court ruled that the EPAs compilation of the science of climate change was overwhelming and compelling, thereby requiring the Agency to act.
Obama has already used this authority to implement ground-breaking greenhouse gas emission rules for cars and trucks, and has proposed rules for new power plants that rule out the construction of conventional coal power plants. Tonight’s State of the Union will likely propose new rules over existing power plants.
And this is where Southern’s $100,000 contribution to Obama’s 2013 Inaguaration may become a factor. Southern Co was the only utility to make a contribution. Obama’s climate change rules for cars were developed with auto industry support - previewing a framework for how rules over existing power plants may play out. In 2009 Obama was content to let the House take the lead in putting together climate rules to ensure there’d be shared responsibility among the legislative & executive branches on economy-wide legislation that was sure to be controversial in some circles. While Obama quickly abandoned succeeding Senate efforts to draft a companion bill after concluding that the cap ‘n trade approach was too politically risky, Obama pivoted in his 2011 SOTU around a clean energy standard that promoted nuclear and natural gas that had very similar emissions reduction targets as the Waxman Markey bill.
While Obama’s preference is to have Congress lead (to help provide the political cover that legislative compromise produces), that won’t happen with the fractured 113th Congress. So Obama will likely announce that his EPA will tackle putting together rules over existing power plants – which is a big deal, since coal power plants represented over 1/3 of US greenhouse gas emissions in 2011. Southern Co operates the largest 3 greenhouse gas emitting coal power plants in the country. So any EPA deal on regulating existing plants will likely need some level of cooperation by Southern in order to smooth political disruptions.
The $100,000 Southern Co contribution to Obama’s inauguration ensures the company has a seat at the table at EPA negotiations. For a utility with a reputation as a stodgy, old-school operator of coal power plants, the company has shown itself to be adept at securing a number of large grants from the Obama Administration:
- $270 million in grants from the US Department of Energy and $133 million in federal investment tax credits for the $3.8 billion Kemper coal gasification plant.
- $165 million in grants from the US Department of Energy for the smart grid.
- At least $32 million in grants from DOE for Southern’s share of the National Carbon Capture Center.
But the big federal taxpayer subsidy is the proposed $8.3 billion loan guarantee to Southern to build a new nuclear power plant in Georgia. The details of the loan continue to be negotiated, but recently released documents show that Obama Administration officials have intervened to help speed the process along.
The question is whether the $100,000 inaugural investment will help secure beneficial loan guarantee terms. Either way, Southern Co clearly has more access to this White House, and we’ll be watching to see what role they play in proposed EPA regs over existing power plants.
Tyson Slocum directs Public Citizen’s Energy Program. Follow him on Twitter @tysonslocum