Will the Recession Derail Obama's Alternative Energy Plans?

President Obama is now turning his attention to what could be a more far-reaching and revolutionary objective than even his much-ballyhooed economic stimulus plan: transforming America into a "green" society based not on fossil fuels but on renewable energy, conservation, and careful restraint in the production and consumption of energy.

"This is about changing the future of our country in a way that gives us some security, gives us independence, and really captures what's great about this country—our ability to solve problems in ways that make us better," says Carol Browner, senior White House adviser for energy and climate change.

Reducing reliance on foreign oil—one of Obama's major goals—is not a new idea. Presidents as ideologically diverse as Richard Nixon, Jimmy Carter, and George W. Bush have pushed for it for many years, and Bush famously declared that he wanted to end America's "addiction" to foreign oil in 2006. But so far, little has really changed.

What is different, according to senior administration officials, is a new zeitgeist. Obama believes that Americans are fed up with fluctuations in gasoline and home-heating oil prices, worried about reliance on unsavory oil-rich regimes, concerned about climate change driven by burning fossil fuels, and ready to modify their lifestyles to cope with the sagging economy and, they hope, save themselves some money.

Even business leaders, who in many cases have opposed plans to curtail energy consumption as enemies of growth and an unwarranted intrusion into the private sector, seem ready for compromise, according to White House strategists. "No one's worshiping at the altar of market fundamentalism any more," says a senior administration official, "and so I think you're going to see a very different political culture. And our debates are going to be more about what government should do than about whether government should be. And I think that's already a very profound kind of change." Team Obama is increasingly trying to look at today's economic crisis as an incubator for a huge social transformation toward the greening of America. "It is time," Obama told a joint session of Congress, "for America to lead again."

Marching orders. Browner notes that environmentalists are now working with CEOs to find the best ways to reduce greenhouse gases, and many business executives have concluded that the time may be right to address climate change. "You even have CEOs saying, 'Even in this down economy, it's better for us to know today what's going to be expected of us in terms of how we use energy, in terms of greenhouse gas emissions, so as we come through the recovery we can plan for all of that. Give us our marching orders.' "

Adding to the new dynamic, Obama aides say, is that the new president is ready to push as hard as he can for a "new energy culture" and is at least as committed to energy independence as any of his predecessors.

The details, of course, all are still being worked out. The White House will have to negotiate with Democrats in Congress, along with at least a handful of Republicans. But Obama aides still predict "significant legislation" will pass this year. This may be overly optimistic, however, given how skeptical many lawmakers are about the cost and the expanded federal role that Obama envisions.

For now, Obama is sticking to his campaign pledges, which included helping to create 5 million new jobs by investing $150 billion over the next decade in new energy development. Obama said that within 10 years, he wants to save more energy than the United States currently imports from the Middle East and Venezuela combined. He also talked about putting more than 1 million plug-in hybrid cars on the road by 2015—vehicles that can theoretically get up to 150 miles per gallon. He wants to ensure that 10 percent of America's electricity comes from renewable sources such as wind and solar by 2012, and 25 percent by 2025. And he set the goal of implementing "an economywide cap-and-trade program to reduce greenhouse gas emissions 80 percent by 2050."

Another component involves persuading individual Americans to change their ways in an attempt to "exalt the concept of responsible citizenship," a key aide says. "People have to become much more conscious about energy use, about where their energy comes from," says Browner, "and I think that many people take seriously the opportunity to do things at home, whether it's to use more efficient light bulbs, to buy more efficient appliances, to add insulation."

Encouraging this new culture was at the heart of the administration's $787 billion package, which Obama signed into law in February. As a first step toward his long-term goals, it includes the nation's largest investment in clean energy, with some $70 billion in spending and tax cuts devoted to renewable domestic energy, energy research, boosting green energy manufacturers, and the weatherization of federal buildings and homes to conserve energy and save on heating and cooling costs. The administration estimates that the full package will create nearly a half-million jobs by the end of next year solely from investments in energy transmission, improved battery technology, and energy efficiency.

Obama has taken a particular interest in the "smart grid," an ambitious project to digitally update old-fashioned electric wires across the country. Among the advantages, the new system would give homeowners information on how efficiently they are using electricity inside their residences. The smart grid also could send power from residential solar panels, wind turbines, and plug-in electric cars to be fed into the grid, and it would allow homeowners and small businesses to sell power to their neighbors or back to the grid. "It's taken us 35 years to get as many renewables as we have today," says Browner. "If we're going to double that in the near term, part of what we have to be thinking about is how we're going to move those renewables to where the people are, and a smart grid is a piece of that." The full-scale grid would cost $400 billion over 10 years but save between $46 billion and $117 billion over 20 years by reducing inefficiency and power failures, according to the Department of Energy.

Family affair. To Obama and his senior policy team, including Browner, chief economic adviser Larry Summers, and Treasury Secretary Tim Geithner, energy is an essential part of a much broader agenda. "The president has said many times that the test of the success of our economic policy is not measured in the health of the stock market, the credit spreads of the banks, or the level of GDP," says a senior administration official. "It's measured in the life experience of American families. And so if we are creating jobs, if we are increasing economic security by stopping the downturn, if we are addressing core systems in the economy that don't work as well as they could—healthcare and education—if we are making the world safer for Americans and their children, which is, after all, the ultimate objective of our energy policies, then I think we are doing the right thing for and by American families."

Obama's energy agenda has been largely submerged so far beneath public concern about the economy and crowded out of media coverage by the financial crisis. But over the coming months, Obama's goals for a green America will emerge as one of his most ambitious objectives, and one of the most difficult to achieve.

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Updated on 3/9/09