What is "Clean Energy," President Obama?

President Barack Obama has launched what is to be a new era of clean energy development in the U.S., announcing that this could be a “Sputnik moment.” During the Jan. 25 State of the Union address, he urged Americans to rally around a new goal: Obtaining 80 percent of America's electricity from clean energy sources by 2035.

While to some, Obama’s announcement means the accelerated growth of renewable energy, “clean energy” can be broadly defined. To conservationists, "clean energy" would likely mean 100 percent renewable energy. To others, "clean energy" could mean 100 percent clean coal. My understanding is that President Obama is referring to a combination of all the resources – renewable energy, nuclear, natural gas, and yes, even clean coal.

“It is a very ambitious goal, and it is also a very vague and broad goal,” said Jeff Davis, co-head of the renewable energy practice at the Mayer Brown law firm.

Currently, the U.S. coal fleet generates roughly half of all electrical output. “There are reports that we’ll still be using the same percentage from coal in 2035. It will just be clean coal,” Davis said. According to the North American Electric Reliability Corporation, coal-fired generation will drop to less than one-third of total generation by 2030 – less than half, but still a sizeable amount.

While the definition of clean coal is unclear, renewable energy is expected to continue to grow in the coming decades. Davis said that the ripening of this “low-hanging fruit” – wind and solar is “key to the continued support of clean energy.”

In order to reach the goal of 80 percent clean energy by 2035, Denise Bode, CEO of the American Wind Energy Association, said renewable energy incentives and policies must reach a place of predictability allowing that “energy sources that will never run out ... instead of keeping renewable energy on a constant one-year footing.”

In December, the U.S. House approved the passage of a tax bill that includes a one-year extension of Section 1603 (Treasury Grant Program). Incentives for renewables typically have been extended one year at a time, leaving renewable energy industries little room to plan long-term projects and investments.

“It’s time to reorient the tax code to predictable policies,” Bode said. “Predictability of the permanent incentives for conventional energy sources is as important as the amounts.”

Davis said that incentives for renewable energy are a must, but the source for funding incentives is questionable. “A large part of the State of the Union address focused on deficits and reducing them, but at the same time the President is talking about providing incentives for clean energy. How do we pay for these incentives?”

The President seemed to signal that energy incentives could come from the reduction of oil subsidies. The oil subsidies vs. renewable energy incentives debate will be an interesting one to watch as it unfolds in the new Congress, given the historic way in which the different sides of the aisle have voted.

According to Obama, clean energy is an “investment that will strengthen our security, protect our planet and create countless new jobs for our people.” If clean energy is defined as renewable energy, then this goal could prove to be lofty. But if clean energy is a mix of clean coal, nuclear, renewable energy and natural gas, then this goal is undoudtedly attainable. The current and proposed U.S. Environmental Protection Agency (EPA) emissions control regulations alone are enough to guarantee that all existing coal in 2035 will be "clean."

“It’s advantageous to define the goal broadly in order to achieve it,” Davis said.

While the bar has been set, it will be up to Congress to pass legislation that allows the goal of 80 percent clean energy by 2035 to come to pass.