President's Budget Draws Clean Energy Funds from Climate Measure

Kevin Eber, NREL
March 05, 2009 | 3 Comments

President Barack Obama released a rough outline of his proposed budget for fiscal year (FY) 2010 last week, and the document proposes to support clean energy development with a 10-year investment of US $15 billion per year, generated from the sale of greenhouse gas (GHG) emissions credits. The funding hinges on the passage of an economy-wide GHG emissions program, under which the Obama administration intends to reduce U.S. GHG emissions to 14% below 2005 levels by 2020 and to 83% below 2005 levels by 2050.

Under the proposed cap-and-trade program, all GHG emissions credits would be auctioned off, generating an estimated $78.7 billion in additional revenue in FY 2012, steadily increasing to $83 billion by FY 2019 (and presumably increasing more beyond that, although the budget proposal doesn't look any further). The president's proposed budget directs $15 billion per year of those funds toward clean energy technologies, while directing the remaining funds toward a tax cut.

According to President Obama, the clean energy funds will be used "to develop technologies like wind power and solar power, and to build more efficient cars and trucks right here in America."

The budget proposes to provide DOE with $26.3 billion in FY 2010, representing a 10% increase above the DOE appropriations for FY 2008 (Congress is currently working on the appropriations for FY 2009). Those funds would be in addition to the funds provided by the American Recovery and Reinvestment Act of 2009, which provided $39 billion for energy programs.

Although the president's proposed budget doesn't provide a breakdown of the DOE funds, the proposal highlights loan guarantees for innovative energy technologies, as well as accelerated research, development, demonstration, deployment, and commercialization of clean energy technologies, including biofuels, renewable energy, and energy efficiency.

The budget proposal also specifies $50 million for the U.S. Department of Interior to conduct resource assessments, environmental evaluations, and technical studies needed to support renewable energy development on public lands.

"President Obama's budget is up front and honest about the challenges America faces and makes hard choices to bring the deficit down," said Energy Secretary Steven Chu. "At the same time, it invests in our economic future by supporting clean and renewable energy sources that will put Americans back to work while ending our dangerous dependence on foreign oil. By investing in groundbreaking research, making homes and businesses more energy efficient and deploying solar, wind, biomass and other clean energy, this budget will help ensure that America once again leads the world in confronting our global economic, energy and climate challenges."

Click here to read the president's budget announcement.

Kevin Eber is a senior science writer at the National Renewable Energy Laboratory. In that capacity, he has promoted energy efficiency and renewable energy technologies for nearly 20 years.

This article was first published in the U.S. Department of Energy's EERE Network News and was reprinted with permission.

3 Comments

Tom Henkel
March 6, 2009

It's too bad that the Republicans continue to bad-mouth the word "tax". For decades, our progressive tax policies have been used to encourage public behavior that supports the public good. Several examples are gasoline taxes that pay for highways, investment tax credits that encourage business expansion, payroll taxes that support Social Security and Medicare, mortgage tax deductions that support home ownership, property taxes that pay for public schools, and oil depletion allowances that encouraged domestic oil production and reduced prices. (Sorry to cite this one.) European countries have heavily taxed gasoline forever to encourage fuel-efficient vehicles. Now many people believe that steps need to be taken to reduce carbon emissions by changing public behavior, and the most direct way to do so is to increase the cost of burning fossil fuels. I support a progressive carbon tax program that uses part of the proceeds to fund RE development and deployment, and the rest to provide rebates to low and moderate income families who will be most affected by rising energy costs. A carbon cap and trade program seems too complex and wide open to manipulation.

Daniel Crowell
March 6, 2009

A carbon tax would be better. The cap and trade scheme is just that, a scheme. However, the concept of 'polluter pays' is a good one. First it takes the moral high ground (if we have any left) by saying that if you negatively effect society then you must compensate for your actions. Second, it provides a financial incentive to reduce the amount of pollution, by which you become more competitive. Third, the industry that will grow up to resolve the issues will be driven by, more or less, market forces and not govt edict.
Yes the tax will be passed on. But that tax will be passed on one way or another. We can do nothing and run the planet into the ground (...strange how that metaphor does not work with that statement...). The tax then will be in disease, war over resources, and potentially catastrophic climate change.
While many may and should argue over the form/format of the work that must be done, almost anything is better that the former administrations "Ostrich play".

Steven Mielke
March 5, 2009

This seems like a ghastly idea. It is an enormous tax on energy usage and a huge federal bureaucracy, neither of which are desirable. Even a carbon tax would be better than a cap and trade program. The revenues, which would ideally be temporary (if the goal is really to reduce CO2 emissions) are then used mostly to fund things totally unrelated to energy matters, and this gives life to a whole new set of special interests that would profit from the failure of renewable energy (because then this tax revenue would remain). What a mess! The best way to achieve CO2 reductions is to fund additional R&D; when affordable technologies finally emerge they will rapidly replace the current polluting ones. Of course, this funds scientists and engineers rather than politicians and bureaucrats, so it probably will find little support.