Spending request hike to heat up debate on energy production

Source: Katherine Ling, Daniel Bush, Nick Juliano and Manuel Quiñones, E&E reporters • Posted: Tuesday, February 3, 2015

Energy programs would receive a significant boost under President Obama’s fiscal 2016 budget request, but steady or declining budgets for fossil energy programs will likely renew Republican criticism of the administration’s claims of supporting an “all of the above” energy plan.

The Energy Department’s energy and science programs would receive $10.7 billion out of the agency’s proposed $30 billion total discretionary budget request, a 5 percent increase from fiscal 2015 spending levels. The proposal includes boosts to clean energy technology, efficiency and science that are key to Obama’s Climate Action Plan to cut greenhouse gas emissions.

The president’s budget proposal is the opening bid in what is anticipated to be a heated disagreement on spending priorities between the White House and the GOP-controlled Congress, although science and some energy issues — along with infrastructure and defense — may be areas where the two parties could find some agreement.

Clean energy technology would receive a total budget of $7.4 billion under Obama’s spending plan — including funding proposals in the Defense and Agriculture departments and the National Science Foundation — a 13 percent boost from 2015 spending levels and a 7 percent bump from last year’s White House request.

The White House spotlights manufacturing in its proposal, calling for mandatory spending of $1.9 billion on 29 additional advanced manufacturing innovation hubs, which would build on last year’s congressional approval of $350 million for the National Network for Manufacturing Initiative. DOE currently oversees three such institutes. Obama’s request also presents a new proposal for a $5 billion federal investment fund — to be matched by private funds — to ensure U.S. innovation develops at home.

The White House request gives a nod to its “all of the above” energy plan, providing a significant hike to natural gas research but cutting spending for the fossil energy research programs from current spending levels. Spending priorities for energy production could be informed by the first report of the anticipated Quadrennial Energy Review, focused on the nation’s energy infrastructure, which is expected to be released this month.

Obama’s energy wish list renews its request for a permanent extension of the production and investment tax credits for renewable energy that the industry contends are crucial for business. The production tax credit, mainly used in support of wind projects, expired again on Jan. 1 after Congress provided a retroactive one-year extension late last year. The investment tax credit, which focuses more on solar energy, will expire in 2017.

“Our nation thrives when we are leading the world with cutting-edge technology in manufacturing, infrastructure, clean energy and other growing fields,” Obama said in a statement to Congress. “That is why the budget includes investments in cutting-edge advanced manufacturing research — to make sure we are leading the way in creating technology that supports our manufacturing sector,” advanced medicine, and agricultural research looking at climate resilience and sustainability, he said.

EERE

The budget proposes a nearly $800 million increase over current funding for DOE’s Office of Energy Efficiency and Renewable Energy, which funds research and development into wind and solar power, biofuels, and energy-saving technologies, among other areas.

While Congress delivered a slight boost for EERE with the $1.9 billion in this year’s spending bill, Republican majorities in both chambers are unlikely to go along with the $2.7 billion Obama is requesting for next year. This year will be the first of Obama’s presidency in which the GOP controls both chambers; in previous years, Democratic control in the Senate has shielded EERE from deeper cuts that House Republicans had proposed to boost DOE’s fossil and nuclear programs.

All of EERE’s program offices would see an increase over current-year funding if the president’s budget request were implemented.

The largest proposed increase would go to EERE’s efficiency-focused advanced manufacturing program, which would more than double to $404 million compared with the $200 million it received in the fiscal 2015 spending bill Congress enacted in December 2014.

Spending on research and development into more efficient buildings would grow to $264 million, a $92 million increase, under the president’s request, while the president proposes a 37 percent increase to $43 million for the federal energy management program, which helps agencies become more efficient. Spending on weatherization assistance would grow by $75 million compared with this year to $318 million under the president’s budget request.

Solar energy would see the bulk of increases proposed within EERE’s renewable energy portfolio. Its funding would grow by $104 million compared with current appropriations to a total of $337 million. Wind programs would receive a $39 million boost to $146 million, while geothermal would receive $96 million, a nearly 43 percent bump compared with this year. Water power programs would see the smallest budget increase, growing just $6 million to $67 million in the president’s request.

Nuclear

The Obama administration again this year zeroed out funding for the controversial nuclear waste repository under Yucca Mountain in Nevada, a project that Senate Minority Leader Harry Reid (D-Nev.) has vowed to kill despite growing optimism among proponents on Capitol Hill that the site will advance.

The Nuclear Regulatory Commission has been ordered by the courts to use what funds it has left to complete its review of Yucca Mountain, and last week it released the final safety reports for the project showing the site could safely store nuclear waste for 1 million years (E&ENews PM, Jan. 29).

But the budget request would provide funding for a program — expected to cost $5.8 billion during the first decade — for creating a pilot interim storage facility by 2021, a larger interim facility by 2025 and a final repository more than two decades later.

About 70,000 metric tons of heavy metal from spent nuclear fuel is currently being stored at 72 commercial nuclear plants around the country, a figure that is growing by 2,000 metric tons a year, according to the budget.

The administration said the interim site is intended to limit and ultimately end the government’s liability for not upholding its obligation to dispose of waste from U.S. reactors.

“The sooner that legislation enables progress on implementing a nuclear waste management program, the lower the ultimate cost will be to the taxpayers,” the budget blueprint said.

The administration also would provide $63 million in funding for the licensing of small modular reactors, down $8.5 million from the current spending level. The pot of money stems from DOE’s five-year program consisting of $452 million in cost-share funds.

Development of the small units — 300 megawatts or less — is seen as key to revitalizing an industry that has been hampered by stiff competition from cheap natural gas, a lack of carbon controls and waning demand for electricity in some parts of the country. Critics, however, have raised concerns about costs and unknowns related to building the units.

Overall, the budget would provide $1.017 billion for DOE’s Office of Nuclear Energy, up from the $914 million enacted in fiscal 2015.

Fossil

The president is proposing $562 million for fossil energy research and development efforts, roughly $10 million below the amount lawmakers appropriated late last year.

The bulk of fossil energy dollars goes to research carbon capture, sequestration and utilization technologies to make coal viable in a carbon-constrained world.

The new spending blueprint includes $44 million to fund research to make natural gas power generation cleaner, almost double previous amounts.

DOE has been promoting the need to boost research into also capturing emissions from natural gas. Similarly, the recent spending bill from lawmakers included a request for DOE to study gas-to-liquid technologies.

Congress generally ends up tweaking and boosting the fossil energy spending numbers. Pro-coal lawmakers, in particular, lobby to make sure DOE is spending enough money to help the industry comply with proposed environmental rules.

Separately, as in previous years, the president is proposing to cut several tax allowances for the coal industry. Lawmakers have always ignored the request.

But this year’s budget also includes two new tax credits worth $2 billion for carbon capture and sequestration. It’s among several proposals to help communities affected by the coal market downturn.

Science

The Office of Science funding would see a small increase from fiscal 2015 levels, up to $5.3 billion, reflecting largely bipartisan support to boost basic science research. The National Science Foundation funding would also jump to $7.7 billion, from current funding of $7.3 billion.

The Advanced Research Projects Agency-Energy (ARPA-E) would see an increase to $325 million, compared with $280 million for fiscal 2015.

Basic science research programs would see a sizable increase to $1.85 billion under the proposal. Other winners include high-energy physics, biological and environmental research, nuclear physics, and the Advanced Scientific Computing Research overseeing U.S. efforts into the next stages of supercomputing. Funding for science laboratory infrastructure would also see a boost in contrast to last year’s proposal, which saw cuts to its funding.

The administration continues its quest to cut the fusion programs, which Congress has continuously disregarded. But fusion funding is on shakier ground after Senate appropriators wanted to similarly decrease funding last year reflecting continued doubt about ITER, an international project that aims to demonstrate the scientific and technical feasibility of fusion energy. The Fusion Energy Sciences programs would be cut about $48 million to $420 million under the president’s fiscal 2016 proposal.