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Energy Funding Is Spared the Axe in the President’s Budget

But Obama faces a fight with Republicans over his proposed spending plan.
February 17, 2011

The release of markedly different proposed budget plans from President Obama and Republican members of the House of Representatives over the last several days marks the beginning of a legislative contest that will likely last most of the year, and that could have a major impact on funding for the development of clean energy. The House plan includes big cuts for clean-energy research, while the president’s plan would in some cases double spending.

The president’s plan looks ahead to fiscal year 2012, which starts in October. Congress failed to pass a fiscal year 2011 budget last year, and the government is operating on stopgap bills that keep funding at 2010 levels. The latest expires in early March, and this week, the House started debate on a bill meant to fund the government for the rest of the year.

Because of the big differences between the House bill and Obama’s goals for energy funding, among other things, some experts say that it could be difficult to come to an agreement by the March deadline, making a government shutdown possible. The stakes are high on the form this bill takes, not only because the House cuts could have a big impact on the functioning of government agencies this year, but also because it will serve as a baseline for the 2012 budget negotiations.

President Obama’s proposed budget includes major cuts in many areas in response to concerns about federal budget deficits and the national debt. But the president includes big increases in support for clean energy, including money for R&D and for deploying existing clean-energy technologies, which include renewable power such as wind and solar, conventional low-carbon energy sources such as nuclear power, and electric-powered vehicles. Obama plans to pay for these increases in large part by eliminating 12 tax breaks to oil, gas, and coal companies.

The House bill cuts U.S. Department of Energy R&D by $1.38 billion compared to 2010 levels, while the president’s budget request increases it by $2.15 billion. According to an analysis of the bill by the Center for American Progress, money for research, development, and deployment of renewable energy in the Republican plan would be cut by $800 million from $2.2 billion. “This cut is really drastic,” says Daniel Weiss, senior fellow and director of climate strategy at the Center for American Progress.  Because of costs associated with terminating employees and closing down labs, in some cases, the cuts may not even be possible over the six months that would remain in the fiscal year, says Patrick Clemins, director of the R&D Budget and Policy Program at the American Association for the Advancement of Science.

The House bill provides $50 million for the Advanced Research Projects Agency for Energy (ARPA-E), which funds high-risk research projects. That is enough money to keep the agency’s offices open, but not enough for it to award many new research grants, Clemins says. The president is requesting $550 million for ARPA-E. His budget also includes $146 million to support three existing Energy Innovation Hubs and to start three new ones. The hubs are designed to address basic research challenges in specific areas in energy while also pushing to develop prototypes and help bring research advances to market. The House bill contains no funding for new hubs, and by severely cutting DOE programs, it could put funding for the existing hubs in jeopardy, Clemins says. 

The House bill would also eliminate loan guarantees for non-nuclear energy projects, including solar projects. The Solar Energy Industry Association says that this will stop funding for six projects that are going forward based on conditional loan commitments from the government.  Another 20 projects that have yet to receive such commitments would also lose out on funding.

William Bates, vice president of government affairs at the Council on Competitiveness, says  that the House bill should be considered the opening move in bargaining among the Republican controlled House, the Democratic Senate, and President Obama. Because there has historically been strong Republican and Democratic support for funding R&D in agencies such at the National Science Foundation and the National Institutes of Health, he expects that they will continue to get steady funding, in spite of the fact that these agencies stand to lose $2 billion between them under the current House bill. 

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