With only one year to go before the next presidential election, President Obama has begun to focus more intently on his legacy. As such, for much of this year, he has emphasized his belief that climate change is an existential threat that must be addressed through clean energy. If that's the case, he must explain his decision to gut the Renewable Fuel Standard and hand Big Oil a decisive political victory. One lingering question is, did high-level White House staffers with close ties to oil companies undermine the RFS, once a centerpiece of the country's environmental and national security policies?
Climate change has been on Obama's agenda since he first arrived on the national political scene. "I'm Barack Obama," he said in a campaign ad in 2008. "I don't take money from oil companies or Washington lobbyists" -- groups he felt were undercutting efforts to protect the environment -- "and I won't let them block change anymore." That same year, he declared: "We must end the age of oil." His commitment to that goal did not falter. In January 2015, in his State of the Union Address, he proclaimed: "No challenge -- no challenge -- poses a greater threat to future generations than climate change."
As if to underscore his conviction, Obama instructed his administration to devise the Clean Power Plan. Using the Clean Air Act, the Environmental Protection Agency developed a proposal that would impose regulations on coal-burning power plants to cut carbon emissions by 32 percent by 2030, based on 2005 levels. When the EPA published the new rule on the Federal Register on October 23, 24 states -- half the country -- filed a lawsuit claiming the federal government was trying to control state power grids by illegally interpreting a portion of the Clean Air Act.
The Obama Administration was unfazed. "We believe," White House Deputy Press Secretary Eric Schultz said, "this approach has been shaped by data, shaped by science, and represents a balanced, pragmatic view of how to tackle [climate change]." If that's true, some observers ask, why is the Administration undercutting its credibility on the subject by proposing to weaken the RFS, a move that has enraged green energy companies in particular and the environmental community in general?
The Renewable Fuel Standard, created by legislation passed by the United States Congress in 2005 and expanded in 2007, established the goal of reducing oil consumption by requiring oil companies to blend biofuels into the national fuel supply. Under the law, increasing amounts of biofuels would be blended into the transportation supply until 36 billion gallons of renewable fuels -- mostly ethanol -- would be blended each year by 2022. This level of blending would lessen the country's dependence on foreign oil and reduce the amount of greenhouse gasses released into the atmosphere -- the main cause of climate change. If an oil company chose not to blend the minimum amount of biofuel, it would be required to purchase credits, called RINs. Lawmakers believed this financial penalty would guarantee compliance.
Throughout the end of the administration of George W. Bush, the RFS worked well. It was so successful that in 2008 Obama promised to continue its enforcement if he were elected president. Indeed, on his website, he announced plans to make the RFS even stronger, vowing to "seek to surpass these [RFS] targets and establish a requirement to produce at least 60 billion gallons of biofuels, including cellulosic ethanol and biodiesel, by 2030."
But after Obama was elected, something happened. Oil companies aggressively lobbied his administration to weaken the RFS -- seemingly to no avail. Then, in July 2013, according to Reuters, "Congressman Robert Brady contacted Vice President Joe Biden on behalf of [the] Carlyle [Group], which bought two struggling refineries in his district in 2012. They had been on the brink of closure due to lower margins then; now they were threatened by biofuel mandates" -- RINs -- "whose cost eclipsed the salaries of all refinery workers combined." As Brady told Reuters: "I talked to the vice president and I told him what the issue was, and he said, 'We've got to try to fix that.' And we fixed it."
At the same time, Congressman Patrick Meehan of Pennsylvania was lobbying the administration on behalf of Delta Airlines, owner of a troubled oil refinery in his district, which also wanted the cost of RINs reduced. Whatever Biden did to "fix" the RIN problem for the Carlyle Group would help Delta as well. Indeed, it would help any company that owned a refinery. As it happens, most oil refineries are owned by oil companies, so Biden's solution could prove to be a boon for Big Oil. And what exactly did Biden propose as a fix? Modify the RFS.
It became apparent this was underway in November 2013 when the Administration published a proposal for a new methodology concerning the RFS. For a year and a half nothing happened. Then, in May 2015, the EPA announced new RFS regulatory requirements that would be finalized by November 30. Under the new regulations, 16.3 billion gallons of biofuel would be required to be blended in 2015, down four billion from the original legislation, and 17.4 billion gallons in 2016, down five billion. With these requirements, the original goal of 36 billion gallons would not be met by 2022.
Obviously, Biden didn't weaken the RFS on his own. In the Administration, which advisors were involved? A small core group. Gene Sperling, the National Economic Council director, and James Stock, a member of the Council of Economic Advisors, played key roles. Heather Zichal, an advisor to the president on energy and climate change, met with representatives of oil refiners and their lobbyists. Bob Perciasepe, a deputy administrator at the EPA, met with representatives of the biofuels industry to reveal how the RFS would be modified. Ronald Minsk, Stock's deputy, played an important role as well, taking meetings at the White House with, among other companies, Shell, the Carlyle Group, and Delta Airlines.
In the end, after the RFS was modified, these advisors left the administration. Heather Zichal joined the board of Cheniere Energy and became a fellow at the Atlantic Council, which receives funding from oil companies, including Chevron, ExxonMobil, Shell, Statoil, Occidental Petroleum, Pioneer, and ConocoPhillips. Bob Perciasepe was named president of the Center for Climate and Energy Solutions, which is funded by, among other oil companies, Shell, BP, and ConocoPhillips. James Stock became a fellow at the National Bureau of Economic Research, which receives funding from ExxonMobil and Shell, and the Center for Global Energy Policy, which receives funding from ExxonMobil and has on its advisory board officers from Statoil and SunEdison Rural Electric Utility Company. For one recent academic paper, critical of the RFS, Stock worked with co-author Chris Knittel, an outspoken critic of the RFS who, as an academic, has received major funding from Chevron.
On November 30, Obama will make an appearance at the United Nations Framework Convention on Climate Change in Paris. The meeting is being touted as a global solution to the problem of climate change. One question is obvious. How in good faith can Obama lobby world leaders to fight climate change when his own administration has weakened the RFS, a law -- signed by George W. Bush no less! -- that has reduced greenhouse gas emissions since its inception a decade ago? The answer is also obvious. He can't.