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The President's 2013 Budget Request / ENERGY

Budget Request Previews Campaign Theme

February 13, 2012

If there was any doubt what President Obama’s energy message will be on the campaign trail, his 2013 budget proposal released on Monday helps bring it into focus.

As he seeks a second term, the president will continue his full-throated calls for new clean-energy projects and push ahead cautiously for expanded oil and gas drilling — all while keeping controversial issues like climate-change regulations on the back burner.

The 2013 funding request tells far more about campaign talking points than about policies that will be enacted into law, since it’s not expected that Congress will pass a budget this year.

 

Obama has asked Congress to increase spending on renewable-energy projects by about $500 million – almost the same amount the Energy Department lost on its failed loan guarantee to the bankrupt solar company Solyndra.

The proposed spending increase, which would take the Energy Department’s renewable spending up to $2.3 billion from $1.8 billion in 2012, is a clear signal that Obama plans to push ahead with robust calls for clean energy on the campaign trail, despite the Solyndra controversy.

“The United States is competing in a global race for the clean-energy jobs of the future,” said Energy Secretary Steven Chu after unveiling a request for a 3.2 percent budget increase, to $27.2 billion. “The choice we face as a nation is simple: Do we want the clean-energy technologies of tomorrow to be invented in America by American innovators, made by American workers and sold around the world, or do we want to concede those jobs to our competitors?”

The administration is also proposing once again to slash long-standing tax breaks to coal, oil, and gas companies, a move which would raise $46 billion over 10 years to help pay for the clean-energy program. Democrats have tried and failed for years to end these tax breaks, and they’ll likely have as little success this year as in years past.

The White House knows this, of course, but proposing to cut tax breaks to oil companies gives Democrats an important talking point in an election year likely to see plenty of voter outrage over rising gasoline prices. It also helps set the stage for a debate on broader corporate-tax reform in 2013. Although oil companies have fought tooth-and-nail against the rollback of their tax breaks, they’ve said they would be willing to come to the table in 2013 as part of the tax-reform debate.

On the other side of the drilling equation, however, the Interior Department, which oversees offshore oil drilling and regulation, includes plans to increase both drilling and oversight. Overall, the 2013 budget request proposes $11.4 billion for Interior, an increase of about 1 percent from the 2012 enacted level of $11.2 billion.

The department's Bureau of Ocean Energy Management and its Bureau of Safety and Environmental Enforcement, new offices created in the wake of the disastrous BP oil spill, would together receive $386 million next year, an increase of about $28 million from the current budget, in order to ramp up permitting and inspections of offshore drilling operations.

A portion of the proposed $386 million would also go toward completion of a Gulf of Mexico lease sale to round out a 2007-2012 exploration and production plan. Some funds also would go for implementation of the leasing plan for 2012-2017, which Obama touted in his State of the Union address as opening up more than 75 percent of oil and gas resources on the Outer Continental Shelf. 

Meanwhile, the White House is proposing to take some tentative steps to address climate change, even as regulations requiring power plants to reduce greenhouse gases remain in limbo.

The proposed Environmental Protection Agency budget for fiscal 2013 is $8.3 billion, down from $9 billion last year. But EPA is requesting $34 million to implement its greenhouse-gas standards for power plants, an increase of $7 million from this year’s enacted budget. It does not say when EPA plans to announce or implement the climate rules, however.

Rules to regulate greenhouse-gas emissions from power plants have been pending at the White House’s Office of Management and Budget for regulatory review since early November, longer than the normal review time. EPA had said the rules would come out by the end of January. But election-year politics are quickly taking over, and experts predict the White House will keep the rules in the draft stages for awhile.

While it is very unlikely to emerge from Congress unscathed, the administration’s EPA budget proposal is an important blueprint for Obama’s priorities, and the continued cuts EPA is facing show the president’s priorities have shifted away from the agency.

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