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Can Obama's Bold Stroke on Cleantech Innovation Survive Budget Cuts?

Innovators fear that the generous allotments targeted for renewables and efficiency in the DOE budget — the largest ever — could be in jeopardy

Mar 2, 2011

WASHINGTON—Clean technology innovators looking to sharpen this country's competitive elbows have every reason to be buoyed by the relatively bold numbers President Obama is floating in his 2012 Department of Energy budget.

Understandably, though, they fear that such generous allotments targeted for energy efficiency and solar, wind and other renewables could be in jeopardy.

Austerity, after all, is evolving into Capitol Hill's newest buzzword as House Republicans are wielding a buzz saw mentality toward a multitude of environment and energy programs designed to carry the federal government through September, when the 2011 fiscal year ends.

Despite this cleaver-heavy climate, however, Scott Sklar refuses to be a pessimist. He heads up the Stella Group, an energy marketing and policy firm in the nation's capital.

The newly minted 112th Congress, he noted, is still finding its footing. 

"Right now, what Congress is going through is, 'My opponent liked it so it's got to be bad,'" Sklar told SolveClimate News in an interview. "Every administration goes through this. Remember, when you get beyond all the rhetoric and the dialogue goes on, you will see some of that softened. So many of these are bipartisan programs."

Sklar was one of three panelists participating in a Capitol Hill briefing Tuesday focused on the 2012 DOE budget for energy efficiency and renewable energy. The nonprofit Environmental and Energy Study Institute organized the gathering.

Fred Sissine, an energy policy specialist with the Congressional Research Service, and Henry Kelly, acting assistant secretary with DOE's Office of Energy Efficiency and Renewable Energy (EERE), joined Sklar at the gathering.

Rosier Picture...

Overall DOE Energy Budget, 2012Briefly, the White House 2012 budget request for EERE programs is the largest ever. It rings in at a total of $3.2 billion, which is bordering on 11 percent of the total DOE budget. That's significant because it's a jump of $983 million — or 44 percent — above 2010 appropriations.

Those numbers first presented Feb. 14 are a reflection of what Obama laid out in his Jan. 25 State of the Union address as "our generation's Sputnik moment. We'll invest in ... clean energy technology — an investment that will strengthen our security, protect our planet and create countless new jobs for our people."

One concrete goal the president committed to during that speech is doubling the share of clean electricity — from 40 percent to 80 percent — by 2035.

Kelly emphasized that the 2012 budget is geared to meet three goals — national security by advancing domestic energy resources; environment by corralling greenhouse gas emissions; and economy by promoting clean energy jobs and business opportunities.

"The challenge we've got here is an enormous one," Kelly said.

Growth in EERE is especially prominent when compared to other DOE offices. For instance, funding for electricity delivery and energy reliability programs is set to rise $69 million — 41 percent over 2010 appropriations — but this part of DOE is much smaller, with total funding of just under $238 million.

Plus, nuclear energy and fossil energy programs are scheduled to be hit with reductions. Nuclear faces a decrease of $5.4 million, which is 0.6 percent below 2010 appropriations. Meanwhile, fossil will be lopped by $417 million, 44 percent below 2010 appropriations. Most of the savings for the latter will come from by slicing fossil energy research and development, as well as the Strategic Petroleum Reserve.

Contrasts With Grimmer 2011 Outlook

The reason that budget figures for 2011 are so strange and complicated is because Congress punted on its fiscal responsibilities last year.

House and Senate leaders — both then had Democratic majorities — failed to pass the 2011 White House budget during Decembers gridlock. Instead, they opted to approve a temporary spending bill that operates the government at fiscal 2010 levels through early March.

In theory, legislators have until Friday to craft another continuing resolution to set funding through Sept. 30, the end of the fiscal year. If House and Senate leaders can't compromise on a solution that funds government for the remainder of the fiscal year, the repercussions are that the government will repeat a less-than-desirable scenario from 1995 and 1996 and shut down.

However, with time ticking away toward that deadline this week, legislators spent Tuesday and Wednesday cranking out and approving an emergency-spending bill to fund the government through March 18. The temporary spending measure includes $4 billion in cuts and gives both chambers two weeks to cobble together some sort of compromise scramble to keep the government operating through the six-plus months remaining in this fiscal year.

With Democrats in power in the Senate and White House, it's unlikely that all $61 billion that House Republicans initially proposed shearing away from the 2011 budget will fly. Even though most legislators agree that spending needs to be reined in, Democrats and Republicans differ on which programs should go under the knife.

For instance, the GOP House majority has drawn the ire of the environmental and clean technology community by using the 2011 continuing resolution to remove $2 billion from the entire DOE budget. That reduction currently on the table means EERE would lose 35 percent of its funding.

Other programs on the chopping block include the Office of Science and Advanced Research Projects Agency-Energy (ARPA-E). The science office devoted one-fifth of its 2010 budget to energy innovation, according to numbers gathered by the Breakthrough Institute.

ARPA-E, which Energy Department Secretary Steven Chu modeled after a similar program in the Department of Defense, is a relatively new initiative designed to fund early-stage innovation projects that are deemed riskiest and most transformative. The GOP is intent on paring its budget by 75 percent.

The Breakthrough Institute, a progressive think tank, has railed against stripping "energy innovation investments across federal agencies" that amount to "merely a drop in the bucket of the $1.3 trillion federal deficit."

"Budget cuts would force the layoffs of scientists and engineers, shrink the capabilities of laboratories and universities to perform the most critical cutting-edge energy research projects," Breakthrough Institute policy associate Sara Mansur wrote in a Feb. 18 analysis of the 2011 continuing resolution,

"Cutting funds for highly-leveraged loan guarantee programs ... [would] steer private sector funds away from American entrepreneurs and small businesses looking to demonstrate and deploy their innovative energy technologies on American soil," she argued.

Bright Future for Solar Efficiency?

If Congress cooperates with Obama's 2012 budget request for DOE's EERE office, the only programs that would face reduced funding next year would be water power, and hydrogen and fuel cell technologies.

Solar, wind, geothermal and biomass are all due for significant boosts, as are programs that focus on increasing the efficiencies of buildings and vehicles.

For example, "SunShot" is a solar photovoltaic initiative with the ambitious goal of enabling "grid parity" by the end of this decade. That translates to reducing the price of unsubsidized, utility-scale solar by 75 percent so the cost drops from $3.80 per watt to $1 per watt — which is between 5 and 6 cents per kilowatt hour. 

"We want to be sure this success happens in the United States," Kelly said about the cooperative "SunShot" venture involving EERE, ARPA-E and the science office.

The following numbers compiled by the Environmental and Energy Study Institute lay out a sampling of comparing Obama's EERE funding requests for 2012 to what Congress appropriated in 2010:

  • $283 million increase in vehicle technologies program (93 percent increase)
  • $251 million increase in the building technologies program (115 percent increase)
  • $225 million increase in the industrial technologies program (239 percent increase)
  • $213 million increase in the solar energy program (88 percent increase)
  • $124 million increase in the biomass and biorefinery R&D program (57 percent increase)
  • $123 million increase in the weatherization and intergovernmental activities program (46 percent increase)
  • $58 million increase in the geothermal program (136 percent increase)
  • $47 million increase in the wind energy program (61 percent increase)
  • $10 million decrease in the water power program (21 percent decrease)
  • $70 million decrease in the hydrogen and fuel cell technologies programs (41 percent decrease)

Congressional Coalition Watching, Waiting

As executive director of the House Sustainable Energy and Environment Coalition, Sam Ricketts is encouraged by how President Obama has walked the talk on his DOE EERE budget for 2012.

But watching a Republican House majority flush with tea party rookies try to eviscerate "green" programs from the 2011 budget, the 48 members of the Democrats-only House coalition know eternal budget vigilance is necessary to keep any gains proposed for 2012.

The caucus, chaired by Reps. Jay Inslee of Washington and Steve Israel of New York, was organized two years ago specifically to advance policies government-wide that address clean energy innovation, environmental protection and climate change.

Ricketts pointed out that Senate Democrats rejected the House GOP's first shot at deep spending cuts. Now, he added, Democrats and Republicans are a long way apart on funding for clean energy programs and other priorities as 2011 budget negotiations continue.

Despite that, Ricketts said that his caucus is hopeful that bipartisan congressional support can be garnered for clean energy investments the president has proposed for 2012.

It's difficult for anybody to predict what might transpire during upcoming negotiations on next year's budget. House Republicans aren't likely to lose their fervor for deficit reduction and a balanced budget.

In that atmosphere, can Senate Democrats prevail in protecting programs they say are necessary to keep the country on sound environmental footing and give Americans a green job edge?

"Other countries are moving ahead aggressively," Ricketts said about the sprint for clean technology where the United States is slipping as a front-runner. "We're either going to need to take a lead or we're going to be buying these solar panels from foreign competitors."

"What we're asking now is this," Ricketts said. "Are we going to invest in sectors that will drive growth in the 21st century or are we not?"

Energy Independence Possible

In his presentation, Sklar, president of the Stella Group, pointed out that handfuls of independent studies confirm that this country has the technological potential to harness enough energy from renewable sources to be self-reliant.

"We have a hell of a lot of potential in this country," he said, adding that the pursuit of energy solutions reflects the reality that answers will arrive in the form of silver buckshot, not a bullet.

Private investments worldwide in renewable energy have grown from $39.24 billion in 2001 to $336.78 billion through 2009, Sklar emphasized. About $46 billion of that latter figure was forked over by American interests.

He predicted that those who have shelled out their share of greenbacks will rebel if the motivation to proceed on a DOE budget with a strong renewables portfolio becomes bogged down in politics. Venture capitalists won’t stand for the federal government turning its back on clean technology.

"Do you really think Congress is going to let that go [down the drain]?" he asked rhetorically. "Are the Republicans really going to let that happen?"

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