Obama proposal promotes clean tech, slashes fossil energy

The White House continued efforts today to beef up investment in nuclear and renewable energy technologies in its $29.5 billion fiscal 2012 spending request for the Department of Energy.

The clean-tech increases would come at the expense of fossil energy spending, including the perennial request to eliminate billions in tax incentives for the oil and gas industry.

The budget request is a 12 percent increase over fiscal 2010 spending levels and a 4 percent increase over expected spending levels for the current fiscal year, which ends Sept. 30. Congress late last year passed a temporary spending bill to fund the government through early March. Lawmakers are still debating a spending bill to fund the government for the rest of this year.

President Obama's spending request would boost DOE's loan guarantee authority for nuclear power plants by $36 billion, and it would add $200 million in credit subsidy to support energy efficiency and renewable energy loan guarantees. It would also boost spending at the agency's Office of Science and the Advanced Research Projects Agency-Energy (ARPA-E), which invest in energy technology research, as well as in the department's renewable energy and energy efficiency research programs.

The request would double the number of "Energy Innovation Hubs," and it would contribute $580 million in advanced technology vehicle research and development in an effort to reach a goal of 1 million electric vehicles on the road by 2015.

The DOE spending increases accompany a total budget request that would trim $1.1 trillion from the federal deficit over the next 10 years and eliminate dozens of government programs.

Some DOE programs will face the chopping block, including the department's ultra-deepwater and unconventional natural gas research program. And despite President Obama's touting the need to boost the nation's percentage of electricity produced from low-carbon sources like "clean coal" technology, the agency's carbon capture and sequestration programs would have to tighten their belts under the president's request.

The White House request also makes good on the president's promise in his State of the Union address to propose the elimination of a dozen oil and gas tax breaks. A summary of the budget request says eliminating the tax subsidies for oil, gas and other fossil fuel producers would save the government $4 billion a year.

Such proposals to cut the oil industry tax incentives are not likely to progress in the Republican-controlled House and a narrow-margin Senate. The renewable energy, efficiency and science spending increases could also face resistance on Capitol Hill, where House lawmakers are currently debating legislation that would chop $100 billion in federal spending.

Energy research

The 2012 proposal would advance the administration's plan to double funding for certain basic research agencies, echoing the doubling for the National Institutes of Health that took place under the administrations of Bill Clinton and George W. Bush.

DOE would receive $1.99 billion in fiscal 2012 for basic energy sciences under the request, up 13 percent from the $1.76 billion included under the fiscal 2011 annualized figure from the continuing resolution (CR), and 8.2 percent higher than the administration's $1.84 request for last year.

A top R&D priority for the Obama administration has been ARPA-E, which would be funded at $550 million next year under the request.

The president asked for $300 million for that agency last year, but ARPA-E, which received $366 million through the American Recovery and Reinvestment Act, had no funding through the first 2011 continuing resolution and would be receiving its first major, annual budget appropriation.

The 2012 figure also includes increases for two new research approaches championed by the president and Energy Secretary Steven Chu -- Energy Frontier Research Centers, a series of almost 50 programs targeting major research challenges, and Energy Innovation Hubs, a small group of tightly focused research centers working on particular energy goals.

The 2012 request includes doubling the number of Energy Innovation Hubs from three to six.

"Innovation and breakthroughs often happen when scientists and thinkers from different disciplines have a chance to work together on some of our toughest problems," the White House said in describing the rationale for expanding the program. Officials compared it to the approach used in the Manhattan Project and the development of radar technology.

The new hubs would focus on rare earth and other critical materials, battery and energy storage, and smart grid and electric transmission technologies. The three existing hubs are authorized at up to $25 million per year each.

In the weeks leading up to today's budget release, DOE officials have taken the offensive in arguing for the importance of these new research programs. They will face a challenge in convincing congressional appropriators, who have proved skeptical in the past, that they are not duplicative but each represent a distinct element of a concerted R&D program.

Other Office of Science programs are represented less aggressively in the budget request. The administration is asking for $80 million for high-energy physics, about the same as was programmed under the annualized CR figure.

Nuclear physics would get about $605 million under the request, 12 percent more than the $540 million for that under the CR calculation, sustaining work on several major facilities projects.

Renewable energy, energy efficiency

The administration is looking to increase spending for renewable energy and energy efficiency programs at DOE by 42 percent over expected spending levels for the current fiscal year.

Energy efficiency programs for buildings and industry would see the biggest increases under the president's request, at 93 percent and 233 percent over expected 2011 spending levels, respectively. The large proposed budget increases are linked to an existing building efficiency hub and a planned critical materials hub.

The department's vehicle technology program would see an 89 percent increase over expected 2011 levels as the administration pushes to reduce the use of petroleum fuels in transportation.

And the department's solar energy, biomass and geothermal energy programs would also see spending increases of more than 50 percent over expected 2011 levels.

The department's wind and water energy programs would see modest increases or static funding under the current request, while others, like the hydrogen technology program, face cuts.

The cuts to the hydrogen program were expected. President George W. Bush had included hydrogen cars as a centerpiece of his renewable energy and energy independence agenda. But the Obama administration has worked for the past two years to eliminate the program. Last year, it requested zero dollars for the program. Congress didn't honor the request, and the program is expected to spend $132 million this fiscal year. The 2012 request would cut the program's budget to $100 million.

Fossil energy

Fossil energy programs face a 32 percent cut from expected 2011 spending levels.

The president's request would zero out spending at the department's natural gas and unconventional fossil energy technology programs.

The bulk of the $453 million in proposed fossil spending would go toward coal with carbon capture and storage (CCS) technology research, although the spending levels for such research would be lower than previous requests or current spending.

The administration says it wants to focus its CCS spending on developing capture technology for retrofits and new power plants; carbon dioxide storage monitoring, verification and accounting; advanced coal-fueled systems that support carbon capture and storage, like integrated gasification combined cycle and oxy-combustion technologies; and cross-cutting research.

The administration's request, like its fiscal 2011 request, includes no funding for the FutureGen program, a $1 billion public-private project envisioned as a commercial-scale integrated gasification combined cycle power plant with carbon capture and sequestration capability.

FutureGen was conceived and then axed by George W. Bush's administration before being resurrected by the Obama administration in 2009. Last year, the administration canceled its original plans to build a new low-emissions plant, instead planning to retrofit an existing coal-fired power plant.

The Strategic Petroleum Reserve would also face significant cuts under the administration's request. The White House request proposes cutting the budget for the fuel reserve by 50 percent.

Increases slated for NNSA

The National Nuclear Security Administration, the semi-autonomous agency within DOE responsible for managing and maintaining the country's nuclear weapons capabilities, would receive a significant boost under the proposed budget, largely in response to new spending called for in a recent infrastructure assessment.

NNSA would get $11.8 billion in new budget authority in 2012, nearly 20 percent more than the 2010 enacted level. "This is the first of a multi-year effort," officials explained in the budget, consistent with a report on the nuclear weapons infrastructure submitted to Congress in November of last year.

The budget would improve and replace aging facilities and infrastructure, continue nuclear weapon life extension programs, and fund stockpile surveillance and stewardship programs, officials said, as well as naval reactor funding, including a new spent fuel handling infrastructure for certain ballistic missile submarines.

The budget also reflects a shift of certain NNSA funding to the Defense Department, a long-discussed change that the administration said reflects "their close partnership and shared commitment." Defense would then make allocations to NNSA each year, the budget says.