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(John Kemp is a Reuters market analyst. The views expressed are his own)
By John Kemp
LONDON, Feb 15 (Reuters) - President Barack Obama's policy on energy and climate change remains inscrutable, full of strategic ambiguity, which probably suits him just fine.
The soaring rhetoric in his State of the Union address - "for the sake of children and our future we must do more to combat climate change" - masks a more complicated, some would say pragmatic, approach to the role of clean technology and fossil fuels in meeting future energy demands while curbing greenhouse gases.
The administration's commitment to tackling climate change by cutting emissions is not in any doubt. White House advisers are genuinely enthusiastic about the transformational potential of energy efficiency and zero-carbon technologies like wind and solar to meet future demand while sparking a new investment boom to fire up economic growth.
By contrast, the administration remains hostile to coal, and unsympathetic about gas and oil, even though hydraulic fracturing promises to bring more jobs and growth if some manufacturing is brought back to the United States to benefit from cheap gas prices, and free the country from dependence on oil imports from outside North America.
Advisers from the White House Council on Environmental Quality (CEQ) and other bureaus within the Executive Office of the President (EOP) have repeatedly briefed environmental activists to reassure them of the president's commitment to aggressive steps to promote clean technology and penalise polluting businesses.
The latest volley of green briefings came ahead of the State of the Union, where White House staff appeared to provide strong steering to environmental lobbying organisations about how to interpret the contents of the address, which gave it a stronger green gloss than the president's words alone might warrant.
In practice, the administration appears to be trying to find a middle way, one that keeps activists onside while not risking a complete breakdown in relations with the petroleum industry or being blamed for a new rise in energy prices.
SEEKING AN EQUILIBRIUM
Keystone XL is the most notable example of trying to keep all sides happy. Unwilling to anger activists by approving the pipeline, but also wary of the backlash from industry, the Canadian government, and the Washington establishment if the pipeline is blocked, the administration has played for time, postponing a decision again by insisting it needs more time to study the impact.
Some outside observers think that the administration will eventually approve the pipeline, but only after securing significant concessions, perhaps on an unrelated issue, like tougher emissions regulations for coal-fired power plants.
The same attempt to split differences is apparent with senior appointments. The three cabinet-level positions of most interest to climate activists and the energy industry are the Environmental Protection Agency (EPA), the Department of Energy, and the Department of Interior (which oversees oil and gas development on public lands).
All three have become vacant at the start of the second term. The president's nomination for secretary of interior, Sally Jewel, combines a background as an energy engineer and in business as well as strong conservation credentials, drawing support from both environmentalists and organisations lobbying on behalf of more development on public lands in the western states.
The White House has not yet announced new chiefs for the EPA and the Energy Department. The suspicion is they are being treated as a package, with staffers trying to find a balanced and complementary set of nominations.
DRILLING, FAST AND SLOW
On the controversial topic of fracking, the president has welcomed the potential contribution to domestic energy production and energy security while promising tough safeguards.
"The natural gas boom has led to cleaner power and greater energy independence," the president said in the State of the Union. "We need to encourage that."
He promised to speed up new oil and gas drilling permits and reiterated that natural gas, which burns cleaner than coal, is part of his "all of the above" approach to energy policy.
But the president was silent on fracking for oil, which has similar if not greater potential to transform the U.S. economy, but is far more controversial with his environmental supporters.
He spoke about the potential for producing oil and gas from public lands and offshore areas "we, the public, own together" and called for using some of the royalties to fund an Energy Security Trust Fund.
The trust fund idea has received a cautious welcome from Senator Lisa Murkowski from Alaska, the highest-ranking Republican on the Senate Energy and Natural Resources Committee, and one of the party's leaders on energy policy.
But it was twinned with a rhetorical commitment to use the trust fund to "drive new research and technology to shift our cars and trucks off oil for good".
The president has promised environmental activists that drilling on public lands will only be done with enhanced safety regulations.
The Interior Department's Bureau of Land Management (BLM) has been trying to draft new regulations governing hydraulic fracturing on public lands, but has withdrawn the rulemaking after receiving 170,000 comments and plans to issue new proposals later this year.
The EPA is developing its own guidance on the use of diesel fuel in hydraulic fracturing, which has drawn over 97,000 public comments.
Both rulemakings have been strongly opposed by the North Dakota state government as likely to add significantly to delays in obtaining drilling permits.
North Dakota's Department of Mineral Resources identified the BLM and EPA regulations as two of four big threats to sustained development of the Bakken shale oil fields in a presentation to the state House of Representatives last month. The EPA's guidance on diesel "could triple drilling permit approval time or worse," the department told lawmakers.
Like the other governments in the Interstate Oil and Gas Compact Commission, North Dakota argues it has successfully regulated fracking under state law, so there is no need for the federal government to become involved. North Dakota has also complained about the slow speed of federal drilling approvals where they are already needed and fears that new regulations will make the backlog worse.
The administration is struggling with all the contradictions that have bedevilled U.S. energy policy since the 1970s.
The president's commitment to tackling global warming and transforming the energy system into a cleaner one is sincere. But it wants the benefits from cheap energy, especially natural gas, too.
Senior officials still talk about the potential for creating millions of green jobs. But there is now a painful awareness of the potential benefits of many not-so-green ones as well, in oil, gas and energy-intensive industries like chemicals, fertilisers and heavy manufacturing that depend on cheap gas.
"All of the above" is an attempt to embrace the contradictions without being engulfed by them. The president is trying to persuade all sides (environmentalists and the clean technology industry, petroleum producers and manufacturers) that there is something in his policies for everyone.
The State of the Union was a classic example. It stuck to fairly broad phrases that committed Obama to very little specifically, but allowed everyone to project their own ideas and priorities on to the president.
Environmental activists are among the president's most wholehearted supporters, and he cannot afford to disappoint them. Fossil fuel industries contain some of his bitterest foes, but he must still find a way to work with them.
It is a tricky balancing act. Energy and climate has become one of the most polarising issues in U.S. politics. The administration's heart lies with clean tech, but its head says fossil fuels are too important to ignore. (Editing by Pravin Char)