Flat DOE budget proposal has extra spending for renewables, research, efficiency programs

Source: Katie Howell and Hannah Northey • E&E • Posted: Tuesday, February 14, 2012

The Energy Department’s fiscal 2013 budget would remain mostly flat under President Obama’s spending plan released this morning.

The largely symbolic budget request released this morning would direct $27.2 billion in federal funding to DOE for fiscal 2013, up 3.2 percent from current spending levels.

The request maintains Obama’s previous priorities of investing heavily in clean and renewable energy research and development while slimming down budgets for traditional energy research programs.

“The United States is competing in a global race for the clean energy jobs of the future,” Energy Secretary Steven Chu said in a statement. “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?”

“This budget request includes responsible investments in an American economy that is built to last,” Chu added.

As in his previous budget requests, Obama would offset some of the clean energy spending increases by slashing a suite of tax incentives for the oil and gas industry, a move that is not sitting well with the industry’s main trade group.

“The president’s actions are inconsistent with his words,” Jack Gerard, president and CEO of the American Petroleum Institute, said in a conference call this morning with reporters. “What we heard two weeks ago in his State of the Union was a stark 180-degree change from his previous stance on oil and gas development. That heartened us, and yet two weeks after that public statement, we see policies included as part of his 2013 budget that will further discourage and discriminate domestic energy production.”

A summary of the budget request says slicing the oil industry’s tax breaks would save the government $4 billion a year. Despite the savings, the proposal — like many in the president’s fiscal 2013 spending request — is not likely to fare well with Congress. Lawmakers in both the House and Senate last year voted down proposals to trim the industry’s tax breaks.

Another spending request that is not likely to sit well with fiscally conservative members of Congress is the president’s proposed boosts for renewable energy, energy efficiency and science research and development programs.

The White House has targeted $2.7 billion for the Office of Energy Efficiency and Renewable Energy and $5 billion for the Office of Science, amounts that are up 47 percent and 2 percent over current funding levels, respectively. The spending levels represent an 80 percent funding increase for energy efficiency programs for industry and businesses, a 72 percent increase for geothermal energy research and a 58 percent boost for biomass energy.

“These funds are part of a broad energy strategy that emphasizes priorities in clean energy and advanced manufacturing, through grants, financing assistance and tax incentives that accelerate fundamental research, technology development and commercialization,” a White House budget summary says.

The White House also would boost spending for the Advanced Research Projects Agency-Energy, or ARPA-E, a program that supports risky energy technology research projects that would struggle to find private-sector funding. The fiscal 2013 request would direct $350 million to that agency, up $75 million from current funding levels.

The budget request calls for the creation of a new electricity systems innovation hub to join DOE’s growing group of sharply focused energy research groups. Chu created the first hubs after he joined the department and has been a strong advocate for them.

The budget request maintains operational funding for DOE’s troubled clean energy loan guarantee program but provides no new loan guarantee authority, an expected move in the wake of a scandal over a departmental loan guarantee to the now-bankrupt solar firm Solyndra LLC.

The budget request is not so generous to fossil energy research and development programs. The spending request would direct $429 million to coal, oil and natural gas research and development, including $12 million for a multiyear research study aimed at advancing technology to tap the United States’ vast shale natural gas deposits.

“Specifically, DOE, in collaboration with the Environmental Protection Agency and the U.S. Geological Survey, will focus on understanding and reducing the environmental, health and safety risks of natural gas and oil production from hydraulic fracturing in shale and other geologic formations,” the summary of the budget request says.

The request also proposes canceling the Ultra-Deepwater and Unconventional Natural Gas and Other Petroleum Research program, which is funded through oil and gas leasing revenues.

While the budget request faces a tough audience in Congress, at least one key lawmaker praised its provisions this morning.

“The President’s vision is to support the groundbreaking research that will ensure that America leads in making the clean energy technologies of tomorrow a reality, giving consumers new cost-saving energy choices and keeping our energy-related manufacturing base strong,” said Senate Energy and Natural Resources Chairman Jeff Bingaman (D-N.M.) in a statement. “That is what having a national energy policy means. It is about making thoughtful and forward-leaning choices, and I strongly support Secretary Chu’s efforts to keep us at the frontiers of innovation.”

Nuclear spending

The administration’s request would provide DOE’s Office of Nuclear Energy with about $770 million, up from the current funding level of $766 million.

That allotment includes $65 million for a federal cost-share program to develop small modular reactors, down from $67 million in current spending levels. Some industry sources expected provisions for SMRs to be as high as $90 million (E&E Daily, Feb. 13).

Last month, DOE announced it would offer up to $452 million over five years to develop a pair of designs for the miniature reactors. The money was available through the omnibus spending bill Congress passed at the end of last year.

In the fiscal 2013 budget request, the administration also included $74 million for the research and development of reactor concepts, down from $115 million in current spending levels, and $175 million for fuel cycle research, down from $186 million this year.

Those funds will allow DOE to continue implementing recommendations from Obama’s Blue Ribbon Commission on American’s Nuclear Future, an expert panel that urged the administration to revamp unworkable federal nuclear waste policies and look for new deep geologic and temporary waste storage sites.

The National Nuclear Security Administration would receive a small funding boost of $411 million under the proposed budget, up from $410 million in current spending levels.