After President Barack Obama touted record-low gasoline prices during his tenure in his State of the Union address Tuesday, he quickly promised to make energy more expensive for Americans by making oil and coal “reflect the costs” of global warming.
“Now we’ve got to accelerate the transition away from dirty energy,” Obama said. “Rather than subsidize the past, we should invest in the future – especially in communities that rely on fossil fuels.”
“That’s why I’m going to push to change the way we manage our oil and coal resources, so that they better reflect the costs they impose on taxpayers and our planet,” he said. “That way, we put money back into those communities and put tens of thousands of Americans to work building a 21st century transportation system.”
Obama didn’t offer any specifics on what exactly he would do to make producing oil and coal reflect the alleged costs they impose on the climate, but the president already has some tools to make using fossil fuels more expensive.
For starters, the Obama administration has developed what’s called the “social cost of carbon” estimate — a measure of the incremental economic cost of emitting carbon dioxide into the atmosphere. The highly contentious SCC estimate is already being used to justify costly regulations on coal-fired power plants and stricter emissions standards for cars.
Obama can also raise the cost of drilling for oil or mining coal on federal lands. The Interior Department is already pressing to increase the amount coal companies pay to mine on federal lands amid cries from environmentalists to make these companies pay more. With coal prices low from lagging demand, companies would be hard-pressed to pay higher royalties to the government.
“None of this will happen overnight, and yes, there are plenty of entrenched interests who want to protect the status quo,” Obama said. “But the jobs we’ll create, the money we’ll save, and the planet we’ll preserve – that’s the kind of future our kids and grandkids deserve.”
It’s not clear if Obama will also raise rates on oil production on federal lands, especially since he’s been heavily criticized for lagging crude extraction on government-owned property. While oil production has boomed on private and state lands thanks to hydraulic fracturing, production on federal lands has faltered.
The Energy Information Administration reported in July that “oil production from federal lands decreased 4% between FY 2003 and FY 2014,” due to huge decreases in offshore production.
Obama does, however, mention using money from oil and coal to fund massive amounts of infrastructure spending. What’s not clear, however, is how the administration will be able to redirect billions of dollars without support from Congress.
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