Obama fiscal plans strive for breakthrough energy research and low-carbon transportation

Clean energy research and low-carbon transportation are priorities in President Obama's $3.7 trillion budget request. But the document unveiled yesterday offers only a modest stab at reducing greenhouse gas emissions and adapting to climate change.

Its release was met with a yawn in some climate circles, as advocates look for bolder action by the administration in other areas, like regulation. The budget strengthens breakthrough energy research, maintains high-speed rail investments and offers nearly $1 billion in foreign climate aid, while making another attempt to slash some $4 billion in fossil fuel subsidies.

"To make America a magnet for good jobs, this budget invests in new manufacturing hubs to help turn regions left behind by globalization into global centers of high-tech jobs," Obama said yesterday in the Rose Garden. "We'll continue our march towards energy independence and address the threat of climate change."

Advocates applauded those potential infusions, but some say there are no game changers in a proposal stocked with ideas that have already battered against Republican opposition and tightening budget belts.

"It's less a question of spending on big-ticket [climate] items right now than it is on using regulatory action," said Manik Roy, a vice president with the Center for Climate and Energy Solutions. He points to the administration's forthcoming carbon dioxide standards on new power plants, potential standards on existing plants and efforts to reduce "climate forcers" like methane as having a much bigger impact on rising temperatures. "They wouldn't show up in a budget request," Roy said.

The same goes for global climate assistance, where the international community has been expecting big things from newly minted Secretary of State John Kerry. If they were looking for signs of change in his first budget plan, though, they didn't find it.

About $909 million will go toward "strategic investments" to fight climate change, with $481 million coming from the State Department and the U.S. Agency for International Development to promote "low-emission, climate-resilient development." It remains unclear, though, what specific renewable energy and disaster resilience programs are included in that figure. Meanwhile, a few buckets of funding for World Bank climate change assistance saw moderate bumps, prompting some praise from environmentalists.


Positive signals, yes; blockbusters, no

"They're headed back in the right direction," said David Waskow, international climate policy director for Oxfam America. The Clean Technology Fund overseen by the World Bank saw a proposed bump of $216 million over the 2013 congressional allocation of $186 million. A related pot of money called the Strategic Climate Fund is slated for $68 million, compared to the $50 million it received this year.

"It's going to require us to see some of the numbers in more details, but it seems good that they want to put something out that sends a stronger, positive signal than they did last year," Waskow said. While no blockbuster climate change funding announcements came from Kerry's first budget, most said they didn't expect any.

"We saw good, healthy but modest increases across the board, but at least it's pointing in the right direction," said Andrew Light, a senior fellow at the Center for American Progress think tank. "It's premature to use this as a litmus test of where Kerry's commitments are, because I think he would not have had a chance to really put his imprint on this budget."

The budget release comes as the State Department under Special Envoy for Climate Change Todd Stern hosts a high-level meeting on mobilizing private climate change financing to fulfill a pledge wealthy countries made to deliver $100 billion annually by 2020 for global warming assistance. Representatives from Australia, Canada, Denmark, the European Commission, France, Germany, Italy, Japan, New Zealand, Norway, Poland, Switzerland and the United Kingdom are expected to attend.

Michael Wolosin, director of research and policy at the consulting group Climate Advisers, said that in the international realm, like the domestic one, the budget process is not where the major new trends will be found.

"The money is not where we need to look for leadership. It's not recognizing the new reality to expect that we will see a significant ramp-up in public finance right now. I think what we need to be looking for are other policy measures," he said.

Obama's budget does include one major new proposal that he first unveiled earlier this year: the Energy Security Trust. It would apply $2 billion over a decade into transportation research to reduce oil use -- for example, research on batteries -- and would be funded through oil and gas royalties. Another spending item would apply $200 million into resiliency programs along the coastlines.

Paul Bledsoe, an energy consultant and former Democratic aide, said the budget reflects Obama's commitment to addressing climate change. But he notes that it's a small contribution compared to the revenue that a price on carbon could generate.

"A central reason for a market-based climate approach is so the government doesn't have to carry the load in investment in the technology development," Bledsoe said.

Climate programs survive EPA cuts

Meanwhile, the president's overall budget for U.S. EPA -- $8.15 billion -- dipped 3.5 percent from what Congress allocated for fiscal 2012, but climate programs did not fall on the chopping block.

Programs designed to study, adapt to and mitigate climate change and improve air quality would receive $176.5 million under Obama's budget request, $8.1 million -- or 5 percent -- over fiscal 2012. The funds apply to mandatory activities like greenhouse gas reporting and vehicle standards, but also voluntary programs like the Global Methane Initiative and Energy Star.

"This request reflects our ongoing efforts to change the way EPA does business," said acting Administrator Bob Perciasepe. "This will allow us to deal with the budget realities of today, while also thinking about the challenges that the future may hold."

EPA is expected to finalize the first-ever greenhouse gas standards for future power plants this spring, and could propose standards for existing plants later this year. Under the terms of a legal settlement, EPA must also regulate climate-warming gases from oil refineries. Environmental groups have recently pushed EPA to address methane leaks, which contribute to climate change, from the nation's booming oil and gas sector.

Obama's budget asks that Congress allocate $257.3 million for state grant funding for air programs, an increase of $21.5 million -- 9 percent -- over what was enacted in 2012. Last year, the president asked for slightly more -- $302 million, a 28 percent increase from what had been enacted in the previous year.

The administration's effort to boost state-level resources is appreciated but falls short, said Bill Becker, executive director of the National Association of Clean Air Agencies.

"We are several hundred million dollars short of what is needed to run on a national level," he said, referring to the core permitting programs like the one for greenhouse gases. "There's one thing we've understood from industry over the years: It's that certainty trumps everything else." The cost to industry from a lack of certainty is even greater than that from a lack of funding, he said.

Boost to solar, cuts to fossil fuels

At the Department of Energy, Obama asked for an 8 percent funding increase above 2012 enacted levels to $28.4 billion. That includes a proposed increase to basic research funding of 5.7 percent to more than $5 billion.

The Energy Department also wants a $104 million budget increase to $379 million for the Advanced Research Projects Agency-Energy, a program that funds high-risk, high-payoff energy innovations. In applied energy, the administration allocated $615 million to promote and lower costs for wind, solar, geothermal and water power generation.

Deputy Energy Secretary Daniel Poneman, speaking yesterday at the department's budget briefing, reaffirmed Obama's commitment to an "all of the above" energy policy. "This is a winning strategy for national security, energy and the environment," he said.

Cuts will come from "unwarranted and unnecessary" fossil fuel subsidies, where the department estimates it can save $4 billion annually, as well as cuts in energy consumption in federal buildings. Fossil fuel groups blasted the proposed cuts, while environmentalists praised them.

"President Obama's 2014 budget demonstrates a fundamental misunderstanding of the American oil and natural gas industry and its tax treatment," Virginia Lazenby, chairman of the Independent Petroleum Association of America, said in a statement. "What the President calls 'subsidies' are neither loopholes nor subsidies but business deductions, congruent with those received by many U.S. industries from accounting to manufacturing."

Countered Daniel Weiss, a senior fellow and director of climate strategy at the Center for American Progress, "By eliminating nearly $40 billion in unnecessary special tax breaks for Big Oil over the next 10 years, President Obama's proposed budget makes the tax code more fair while investing additional revenue to support the middle class."

DOT works on climate change resilience

Over at the Department of Transportation, President Obama proposes to spend $200 million on infrastructure projects to improve climate change resilience at the community level. The money would come from a $50 billion pot of immediate stimulus-style spending to spur economic growth and job creation through infrastructure development.

"I think the lesson from Hurricane Sandy is that we have to put more money into making our transportation system more resilient to extreme weather, and this is a sign that the administration agrees with that," said Nick Nigro, senior manager of transportation initiatives at the Center for Climate and Energy Solutions.

The president previously proposed this type of immediate innovation spending as part of the fiscal cliff negotiations and the American Jobs Act, but the initiative failed to take hold in Congress and could stall again.

Also included in the budget plan:

  • $757 million for the Integrated Resource Restoration program within the U.S. Forest Service to help the nation's forests adapt to climate change, a fivefold increase from its current $146.4 levels. The increase would allow the project to move from the pilot phase to full-scale across the Forest Service's nine regions.
  • $100 million strategic investment for the Interior Department's renewable energy efforts, a $26 million increase over the enacted amount for fiscal 2012.
  • $71 million for Interior's climate change science budget, a $13 million increase. Much of those funds would go to the U.S. Geological Survey's science centers.
  • $40 billion at DOT for passenger rail systems, including high-speed rail, consistent with the president's goal to provide 80 percent of Americans with convenient access to rail transport in less than 25 years.
  • $1 billion for DOT's Next Generation Air Transportation System, level with the previous year. NextGen will establish more accurate aircraft navigation and communication systems, which will allow for more direct flight routes, less fuel burn and less emissions.
  • $282 million for next-generation advanced biofuels research within the DOE budget, and a $575 million investment in cutting-edge vehicle technologies -- a 75 percent increase over 2012 enacted levels.

"That's a big sign that the administration wants to get the auto industry ready for the next generation of advanced vehicles," said Nigro. "We have some pretty good cars on the road now ... that plug in, but if they're going to reach the mass market, they need to be more affordable."

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