Royal Dutch Shell Group .com Rotating Header Image

Obama surges ahead in the race to be green

February 6, 2009

The President’s bold speech on renewable energy has thrown down the gauntlet to the rest of the world’s leaders

The green race is on. Did you notice? Barack Obama fired the starting gun a week ago, but most Europeans were looking the other way. Ed Miliband, the Climate Change Secretary, is on the track, but has no one to hand his baton to – his colleagues in the Government are off expanding Heathrow and coal power. Coming up behind him are people who saw dollar signs flashing in President Obama’s strident words about oil last week.

Going low-carbon is no longer a seminar subject for caring greens. It’s a real live competition to beat the oil regimes and make profits, in which the new environmentalists will be alpha males.

The President’s speech was astonishing. “America will not be held hostage to dwindling resources, hostile regimes and a warming planet,” he said, on his sixth day in office. The US would no longer “bankroll dictators” but would create its own energy from the Sun, wind and soil. Unchecked climate change would lead to “violent conflict, terrible storms and irreversible catastrophe”. It was wrong to deny the science, he said. It was wrong to think that clean energy would damage prosperity. This was not the lukewarm language of appeasement, aimed at the green lobby. It was the language of wartime: a declaration of war on fossil fuels.

In one week America has gone from playing the dirty, recalcitrant schoolboy to auditioning as the world leader on climate change. That’s quite a shift. And it has indicated to every energy investor and green entrepreneur that America is now the place to do business.

BP and Shell have abandoned their investments in renewable energy in Britain, in favour of the United States. The German power company e.on is close to pulling out of the London Array, Britain’s biggest experiment in wind power. Even the Bush Administration operated a more attractive regime of subsidies for renewables than Britain. Now the world has a White House that will invest and regulate on an unprecedented scale.

The first two executive orders signed by the President were, he said, a “downpayment” towards the green economy. One tightened fuel-efficiency standards for cars, an issue once thought to be politically untouchable. The other gave permission to states to move faster than the Federal Government. This was a triumph for Arnold Schwarzenegger, many of whose attempts to green California have been frustrated by George W. Bush. President Obama seems determined that Washington will not stand in the way of innovation. He is colour-blind: it doesn’t matter whether you’re from a red or a blue state if you’re green.

No country rises to a challenge like America. In the 1990s the US cap-and-trade scheme to limit acid rain worked far more quickly and cheaply than expected because, once companies saw the writing on the wall, they stopped moaning and invented clever alternatives.

Today 23 states have their own cap-and-trade schemes for capping carbon emissions. It will not be a huge step to take that national. Even the Republican Governor of Texas is proposing a $5,000 subsidy for his citizens who buy electric hybrid cars. President Obama faces an almighty fight over his stimulus package, which contains $90 billion of clean energy investments. But he is clearly determined to unleash a “big bang” that will change the energy game fundamentally.

For several years, I have been talking to investors and entrepreneurs who have been waiting for this moment. They want to grab some of the $16 trillion that the International Energy Agency thinks will be invested in energy infrastructure between now and 2030. They know that the low-carbon market could grow very fast.

It is no accident that some of the earliest clean-tech investors, such as Paul Allen, of Microsoft, and Vinod Khosla, of Sun, are dot-com billionaires. They remember how quickly fortunes were built when a critical mass of consumers suddenly shifted online. They know that canal barges ran out of customers long before they ran out of canals.

California has effectively outlawed the building of new fossil fuel plants. If the rest of the US follows suit, the big oil companies will have to move rapidly or risk running out of customers for their ageing infrastructure.

There is a long way to go. But what is particularly impressive about President Obama is his determination in the face of public apathy. By pressing the issue early and hard, he is showing true leadership. He wants to make insulated homes, clean technologies and connecting infrastructure a fait accompli. The risk for European politicians is that their own faltering steps will soon be outpaced. The EU carbon market is failing because its politicians speak green but keep shoring up old-fashioned industries.

Only one European leader seems to understand the need to unleash a “big bang”. Two weeks ago David Cameron launched an ambitious strategy for making Britain a low-carbon economy. It has put the Conservative Party way ahead of the field. While Labour writhes in the stranglehold of vested interests in the aviation and fossil fuel industries, the Tories, who are less naive about business, have plans to decentralise energy supply, invest properly in carbon capture, develop marine power and offshore wind, insulate all homes and build an “electricity internet” to help suppliers to make much more finely tuned decisions.

It is a big vision. It understands the need to offer the public what Mr Cameron calls the “holy trinity” of cheap, secure, low-carbon energy supplies. It also understands – which the Government does not – that Britain has very little time left to gain a commercial advantage in the clean energy field. There will be no prizes for coming third in a race in which the US is setting the pace.

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net, shell2004.com, shellshareholders.org, don-marketing.com and cybergriping.com are all owned by John Donovan. There is also a Wikipedia article: royaldutchshellplc.com

Comments are closed.

%d bloggers like this: