Obama ups renewables funding, cuts fossil subsidies

www.environmental-finance.com
05 February 2010

Clean energy was a winner in US President Barack Obama's proposed budget, with major funding increases despite his pledge to control spending. In his fiscal year 2011 budget, Obama proposed giving the Department of Energy (DOE) lending authority to support about $40 billion in loan guarantees for innovative clean energy programmes. The president also asked for $2.4 billion for the DOE's energy efficiency and renewable energy programme, a 5% increase from last year. This includes $300 million for solar energy research, development and deployment – a 22% increase over last year's investment – and $123 million for wind, a 53% increase.

To pay for the extra funding for clean energy and other initiatives, the president proposed eliminating more than $2.7 billion in tax subsidies for the fossil fuel sector. "One of the best ways to be on the forefront in energy is to incentivise clean energy and discourage the old sources or methods that aren't going to work in the future," Obama said. For the Environmental Protection Agency, the budget requests $43 million in additional funding for regulatory initiatives to control greenhouse gas (GHG) emissions, including implementation of its GHG reporting rule.

Not featured in the president's budget were the $646 billion revenues from a proposed federal cap-and-trade system included in last year's budget. Environmental groups were generally supportive of the budget. "President Obama's 2011 budget proposal is a refreshing reminder of what it means to have a president who puts the public ahead of the polluters," said Anna Aurilio, the Washington, DC office director of Environment America. But renewable energy advocates criticised Congress for failing to follow the president's lead and enact comprehensive climate and energy legislation.

"It's not OK when there is a game going on in the field that our team, the Congress, is in the locker room discussing how to play the game," said Michael Eckhart, president of the American Council on Renewable Energy in Washington, DC. Although 2010 should be a good year for the renewable energy sector with stimulus money flowing to projects and the financial system starting to recover, the industry needs Congress to enact a policy framework, including a strong national renewable electricity standard, Eckhart said.

"The biggest single problem in the economics of clean energy is the lack of demand, meaning until there is a government intervention of some kind there's just not enough natural demand for clean electricity in the US," said Reed Hundt, a principal at business consulting firm REH Advisors and co-chairman of the Coalition for the Green Bank. The president's budget now goes to the Senate and the House of Representatives, which will consider the requests, make changes and draft their budget resolutions over the next few months.