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Obama's Budget Holds Billions for Clean Energy Obama's Budget Holds Billions for Clean Energy

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Obama's Budget Holds Billions for Clean Energy

Secretary of Energy Steven Chu.(Liz Lynch)

February 11, 2011


President Obama will propose $8 billion for clean energy investments in his budget plan on Monday, and the vast majority of that will go to the Energy Department.

Of the roughly $4 billion in cuts Obama is proposing for DOE, $3.6 billion are wrapped up in subsidies for the coal, oil, and natural gas industries.

Obama’s proposed fiscal year 2012 budget for DOE cuts spending for hydrogen and fossil fuel research programs by almost 50 percent.


“Fiscal responsibility demands shared sacrifice—it means cutting programs we would not cut in better fiscal times,” Energy Secretary Steven Chu said in an internal e-mail sent out today to all DOE staff, labs, and sites. The e-mail, obtained by National Journal, included a fact sheet that outlined the cuts to the department.

That e-mail aside, Chu’s department is poised to be one of the few areas of the federal government that receives an injection of spending despite the bad “fiscal times,” as Chu stresseed in his e-mail.

Obama places bets on a clean energy future, and while Chu noted certain programs would be cut, others will receive huge boosts. The e-mail from Chu, titled “Winning the Future with a Responsible Budget” that continues the administration’s global competitiveness mantra, did not mention where specifically most of the $8 billion will go within the department.

In his State of the Union speech, Obama called for 80 percent of the nation’s energy to come from clean sources of energy, including renewable energy like wind and solar, and nuclear power, natural gas, and “clean coal” technology. That technology, technically called carbon capture and sequestration, is not commercially available, and experts say it won’t be for at least a decade. That’s not lost on Chu, yet he believes federal research and development for CCS is crucial. Coal-state lawmakers like Rep. Shelley Moore Capito, R-W.Va., and Sen. Jay Rockefeller, D-W.Va., have also said that.

Expect most of the money to go into such clean energy and innovation programs. One little-known program that should see a boost is the Advanced Research Projects Agency, which serves as the department’s innovation hub. It was established in 2007 but without a budget. The only time it has ever had funding was a $400 million injection from the 2009 stimulus package. Obama requested $300,000 for the agency in his budget last year, but Congress never approved that. Innovation has been a huge component of Obama’s agenda post-State of the Union talk, so this agency should be on the list of programs that will see a boost. R&D for CCS should also be a big winner, given Chu has underscored the importance of the technology, and because it’s essential to win over otherwise skeptical lawmakers from coal-producing states. Coal is used to generate almost half of the nation’s electricity and thus has a huge influence in lawmakers’ decisions. Obama has given big boosts to CCS before: $3.4 billion was allocated for that in the stimulus package.

According to the fact sheet obtained by National Journal on Friday, the budget proposal cuts the hydrogen technology program within the Office of Energy Efficiency and Renewable Energy (OEER) by more than 41 percent, or almost $70 million, “in order to focus on technologies at large scale in the near term,” the e-mail says. The administration has been trying to cut this budget for years. Retired Sen. Byron Dorgan, D-N.D., had always put the money back in because the University of North Dakota has a hydrogen research lab. But given Dorgan's retirement last year, that won’t be an issue this time. Other parts of the OEER should receive big boosts, especially renewable energy technologies like wind and solar. The Office of Fossil Energy’s budget is cut by 45 percent, or $418 million. The administration’s past two budgets have also slashed funding for fossil fuels.

The cuts announced to the department on Friday are not surprising and make sense, given Obama’s comments the past several weeks.

DOE’s budget and its focus on clean energy should be historic and symbolic. A little under half of the department’s roughly $26 billion budget always goes to nuclear weapons security so devoting anywhere near $8 billion to clean energy and innovation specifically will be notable. Clean energy funding in past budgets has been about $2 billion, depending on what programs are included in that calculation. Apart from the budget, the stimulus of 2009 allocated $36 billion to the Energy Department (almost all to clean energy). While that was a one-time payment, the administration has said that would pave the way for more federal clean energy investments.

That said, Obama’s budget may be only symbolic. It won’t pass in any form close to what’s in the fact sheet on Friday and will be in the full budget on Monday because of a GOP-controlled House and an overall political environment that does not lend well to billions of federal dollars going to anything but to the trillion-dollar deficit.

For starters, Congress has shown time and again that it won’t approve eliminating oil and gas subsidies, which is the major way Obama plans to pay for the clean energy investments. He has called to end oil and gas subsidies in his last two budget proposals, and to no avail. He faces universal opposition to do that from Republicans, and even seven Senate Democrats turned their backs on Obama’s call when they voted against an amendment offered by Sen. Carl Levin, D-Mich.

Nonetheless, the investments in clean energy will lay down a marker to Congress. And like nearly all past White House budget proposals that go nowhere, Obama will at least be able to say he proposed to invest $8 billion into clean energy.

Meanwhile, House Republicans are gearing up to release a continuing resolution that slashes $100 billion from Obama’s budget from fiscal 2011. And the majority of those cuts will come from the Environmental Protection Agency, Rep. Mike Simpson, R-Idaho, chairman of the Interior and Environment Appropriations Subcommittee, said Friday.

“It’ll either be in the underlying CR or in an amendment that someone will offer,” Simpson said Friday. “I don’t know who, but we’ve had a number of phone calls from other members who want to offer it if we don’t put it in the underlying bill.

“The majority of it's coming from the EPA, but there’s a lot from other agencies,” he said, emphasizing that the majority of House Republicans want to rein in the agency‘s authority, especially in regards to greenhouse gas rules.

The original proposal for the bill, which would fund the government through the end of the fiscal year, called for cutting EPA funding by $1.6 billion, but Simpson said Friday that the number would “probably” be closer to $2 billion.

If it is in the CR, Simpson said, it would ensure that the EPA would not be able to implement greenhouse gas regulations while Rep. Fred Upton’s Energy and Commerce committee continues to debate legislation to slash the agency’s authority.

Simpson said that every agency will likely get a cut “except perhaps Salazar’s reorganization of MMS and the BOEMRE,” referring to the Interior Department’s reorganization its offshore drilling oversight following the Gulf of Mexico oil spill. 

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