Reality bites Barack

I feel sorry for Barack Obama. Notwithstanding his comfortable victory last week and his remarkable oratory skills, he does not have a hope in hell of living up to the "supernova” expectations that now engulf him.

In saying this, I draw a lesson from the last American "supernova.”

I first saw John Kennedy and his brother Robert at the cinema. Even as a young courts and crime reporter in South Africa, this was the best way to get news because radio and newspapers were still part of the apartheid machine.

Many of the qualities I saw first in John Kennedy and later his brother Robert are the same things I see in Obamania. We will never know what sort of president Bobby Kennedy would have made, but his older brother was already in deep trouble halfway through his first term.

Obama will face major problems – not least being the war in Afghanistan, the war in Iraq and the task of extricating the US from the multi-layered economic abyss into which it is descending.

For me, a telling quote was to be found in a New York Times. "On the shoulders of a first-term senator, with the power of inspiration but no executive experience, now falls the responsibility of prosecuting two wars, protecting the nation from terrorism and stitching back together a shredded economy.”

Add to this the observation in several quarters that Obama will need to deliver on his campaign promises to guarantee health care and deliver tax breaks for the middle class because they delivered the real polling difference between him and McCain.

Looking at energy, and climate change policy, to which it is joined at the hip, I wonder how Obama can emerge from the next four years pointing to genuine "success.”

The early – and essentially meaningless – bit will be embracing the Kyoto treaty, but even here Obama won’t find things all that easy because he cannot bypass the US Senate for ratification.

What people who rave against Bush don’t seem to understand is that Clinton would not even take the Kyoto treaty near the Senate, having been warned off by a 95-0 vote masterminded by Democrats led by the formidable Senator Robert Byrd (who is still there at age 90).

More recently a 2007 vote in the House of Representatives on an attempt to legislate on climate change policy attracted only 155 supporters, all Democrats, well below the 218 needed for passage – in a chamber with 435 members. The manufacturing wing of the Democrats is strong in the House.

Democratic Rep Mike Doyle, a member of the lower house’s energy committee, said last week that it would be a mistake to see fast Congressional passage of climate-related legislation as a "slam dunk.” That committee, after dozens of hearings in the past 12 months, seemed to support the notion of a levy on electricity utilities to create a fund for new coal generation technology.

A Senate ratification vote in Obama’s first year – and the debate that will surround it – will set out the political realities by which the new president’s negotiators (including Al Gore?) will be constrained by at Copenhagen 13 months from now.

How far the developing nations, led by China and India, will be prepared to go in agreeing to a new climate change protocol will be very dependent on how much pain the US, Canada, the EU and countries like Australia are prepared to wear. And it will be influenced by whether or not Obama carried his campaign hostility to free trade – and therefore to Chinese, Indian, Brazilian imports – into the presidency.

With Congressional elections to be held in 2010, the chance that Obama will embrace any high cost, radical stance on climate change is already zero.

Some idea of the political difficulty involved may be appreciated when you learn that, as part of this month’s national elections, a proposition in California to require the state’s power utilities to source half their supplies from renewable energy by 2025 (instead of the current 20 percent by 2010) was rejected by 66 percent of those who voted. And this is a state where Obama won 61 percent of the presidential vote.

Political hardheads among the Democrats already know that implementation of Obama’s promised emissions trading scheme would require a carbon cost of about $US25 per tonne. This would translate, according to recent research, into an increase in electricity prices of between a quarter and a third in the predominantly coal-fired 24 states in the midwest and south-east US.

What Obama proposed during the election campaign, apart from emissions trading, was massive support for energy research, new fuel standards to drive transport-related abatement and a big increase in subsidies for renewable energy. He played the game of sounding supportive of extractive and energy-intensive industries in swing states while running a broader message that he will pursue clean energy and a large long-term cut in US emissions.

High on the agenda for the renewable energy sector will be a move away from the current tax credit scheme for wind and solar that has to be renewed by Congress every year, creating sleepless nights for investors as the annual deadline approaches.

Obama has promised to come up with a scheme to provide $US150 billion over 10 years for low-carbon energy supply, claiming this would deliver five million jobs. How soon this can be implemented when the US is confronting a massive federal deficit is problematical.

Perhaps the big hint has been Obama’s repeated statements that a new energy policy will be his administration’s first priority – once the economic mess is cleaned up.

Meanwhile a safe bet would be for most of the Washington DC action on the energy and emissions issues in the next four years to be taking place on Capitol Hill rather than in the White House.

Keith Orchison, director of consultancy Coolibah Pty Ltd and editor of Powering Australia yearbook, was chief executive of two national energy associations from 1980 to 2003. He was made a Member of the Order of Australia for services to the energy industry in 2004.

More from Business Spectator