Federal Budget Could Boost California Energy Goals

By Published On: February 18, 2011

President Obama's 2011-12 budget proposal includes funding increases for renewables and energy efficiency programs that could help California achieve its energy policy goals. Fossil fuel programs would see reductions. "Especially during a time of fiscal challenges, it makes little sense to provide incentives for fossil fuel producers when the Nation's priority is to increase the demand for and supply of clean energy," noted the proposed budget's justification for the decrease in fossil subsidies. The administration stated that "removing these subsidies would reduce greenhouse gas emissions and generate $43.6 billion of additional revenue over the next 10 years decade. These terminations free up resources to invest in clean energy development and production, which is critical to the Nation's long-term economic growth and competitiveness." Rep. Fred Upton (R-MI), House Energy & Commerce Committee chair, criticized Obama for seeking to pick "winners and losers" in his budget, including promoting renewable energy at the expense of fossil fuel. The Department of Energy's overall budget would grow from $26.4 billion this year to $29.5 billion. Obama's proposal would ramp up funding for DOE energy efficiency and renewable energy programs from about $2.2 billion to $3.2 billion, or by 44 percent. Funding for fossil energy programs would decline from $939 million to $521 million, or by 45 percent. DOE's new Advanced Research Projects Agency for Energy--known as ARPA-E--would get $550 million to fund research and development of breakthrough energy technologies that could lower the cost of solar energy, fuel cells, and other technologies. "If this budget is enacted, I expect the solar industry to more than double in 2012," stated Rhone Resch, Solar Energy Industries Association president. The budget would provide DOE $300 million to offer as credit subsidies that could stimulate what it estimates as $3 billion to $4 billion worth of renewable energy projects. DOE would get $36 billion in loan guarantee authority to help finance six to eight new nuclear power plants, though the money would not be spent so it does not represent actual budget appropriations, only budget authority. Obama's budget would increase funds for the Federal Energy Regulatory Commission from $298 million to $304 million. FERC noted in its budget document that it is self-supporting, deriving its income from fees levied on regulated energy industries. FERC's budget does include belt-tightening measures, including reductions in staff travel and contracts. The 2 percent increase is due largely to escalation of staff salaries and a $3 million increase in office rent. The Department of Interior-- which grants rights of way for renewable energy projects, power transmission lines, and natural gas pipelines on federal land, as well as oil and gas drilling rights--would get $17.8 billion in budget authority, down from $19.8 billion. But, the proposal would bump up spending by the Bureau of Land Management and other offices on permitting renewable energy projects, with funding rising from $69 million to $72.9 million. The goal, according to the Interior Department, is to permit 10,000 MW of new renewable energy projects on federal land by the end of 2012. Many projects remain pending before BLM aimed at providing renewable power in California. The Environmental Protection Agency would see its overall budget cut from $10.3 billion to $8.9 billion. The agency would see funding for programs to control greenhouse gases increase $56 million to a total of some $253 million. The proposed spending comes as Republicans fight to overturn EPA's legal authority to control greenhouse gases. The Department of Health and Human Services would see a decline in budgeted money to help poor people in California and other states cope with energy bills under the federal Low Income Home Energy Assistance Program. Funding would drop from $5.1 billion to $2.57 billion. The program also would be tightened to guard against fraud. HHS noted that if a separate administration legislative proposal is enacted, it would increase total LIHEAP funding to $5.3 billion, including money carried over from previous years. Last year, HHS said, it provided assistance grants totaling $4.5 billion due to high home heating bills. The budget faces a series of hearings before Congressional committees in the months ahead and is supposed to be enacted before the federal 2011-12 fiscal year begins Oct. 1.

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