Obama's Energy and Environment Budget: Lofty Goals in Need of a Financial and Political Base
February 15, 2012 · By Daphne Wysham
President Barack Obama's 2013 budget proposal offers a window into which battles he aims to fight and which ones he intends to avoid. Here's a breakdown of the energy policies embedded in the proposed budget.
First the good energy news: The Obama Administration clearly views action climate change as a priority, regardless of inaction on Capitol Hill. In this document, President Obama isn't shy about using the words “climate change,” contrary to efforts to steer clear of this language on Capitol Hill and in prior presidential speeches. And climate change, as the Pentagon has noted, is a far greater threat to the world than terrorism. So tackling climate change and the U.S. role in stopping it should be both discussed openly and tackled vigorously if we are to have a safe, secure and energy-independent future.
However, just as mentioning the words “climate change” matter, so, too, does clarity in the meaning of other words — such as “renewable energy” and “clean energy.” In this budget document, as in his State of the Union speeches, it is clear that the Obama Administration joins industry in obfuscating what they really mean by those terms, which, in reality, will mean a longer delay in getting truly clean, renewable energy up and running.
Obama is eager to highlight in his 2013 budget, as in the past, his desire for a nationwide push on public transit and high-speed inter-city rail that would provide 80 percent of Americans with access to a passenger rail system. If approved by Congress, this measure could have a significant impact on U.S. greenhouse gas emissions and public transportation options. Perhaps high gas prices in the future will make this effort more politically viable on Capitol Hill — where members of Congress remain beholden to oil industry lobbyists — than it has been in the past.
Also, on the positive side of the ledger: Obama proposes eliminating $4 billion in annual fossil fuel subsidies and cutting oil and gas tax incentives by $41 billion over 10 years. Oil, gas, and coal companies have seen record profits in recent decades, and so this cut in subsidies is long overdue. But it isn't enough. Another $80 billion in subsidies for the fossil fuel industries could be trimmed from the budget over the next 10 years while safeguarding both public health and the environment. (See below.)
His Interior Department budget proposes an $86 million subsidy for renewable energy development on public lands to produce 11,000 megawatts of clean energy by the end of 2013 — enough energy to power more than 20,000 homes. This is welcome but small compared to the dirty energy subsidies that have been in place for decades.
Obama’s Transportation Department budget features healthy infusions of cash for public transit — $108 billion over six years — as well as $47 billion for high-speed rail over six years.
Mediocre News Masquerading as Good News:
Obama is also pushing energy efficiency in public and commercial buildings, by encouraging non-residential energy efficiency targets of 20 percent increases in efficiency over 10 years. While this is welcome, a more ambitious target, as laid out by the group, Architecture 2030, would have all buildings — residential and non-residential — be carbon neutral by 2030. This more ambitious target is in our interest from a climate perspective, would save people money at a time of economic austerity, and could greatly benefit workers in the hard-hit construction trades while rejuvenating the tax base in towns across the United States as construction work is stimulated. It could also be coupled with refinancing packages for small businesses based on their energy efficiency that would help them avoid bankruptcy.
While Obama’s proposed State Department budget makes reference to “promoting low-emissions economic development” around the world, this goal runs counter to the actual policies that are being carried out by the various development banks where the U.S. State Department (together with the Treasury Department and EPA) plays a decisive role in shaping investment policies — such as the World Bank, the Asian Development Bank, and the Inter-American Development Bank — and U.S. export credit and insurance agencies, U.S. Export-Import Bank and Overseas Private Investment Corporation, where government finance continues to underwrite fossil fuel-powered infrastructure throughout the developing world disproportionately over renewable energy.
Obama’s Energy Department budget proposal delivers some positive news, such as $310 million for the “Sunshot Intiative to make solar energy cost competitive nationwide without subsidies by the end of the decade” and $95 million for wind energy, and $65 million for geothermal energy. However, as my Institute for Policy Studies colleague Robert Alvarez notes, most of the Energy Department’s budget is devoted to nuclear weapons upgrading, not energy development: “The Department of Energy Budget proposes to spend no more than 20 percent on actual energy activities. Of that nuclear energy continues to dominate research and development spending to shore up the department's aging nuclear sites. About 60 percent of Energy's budget is going mostly for nuclear weapons and the cleanup of nuclear weapons sites,” he explains.
Obama’s proposed Environmental Protection Agency budget has suffered some cuts relative to 2011 spending levels, but maintains its important focus on higher fuel-efficiency standards for cars and trucks, and public health measures.
While Obama’s push for renewable energy development, with $6.1 billion in loans to rural electric cooperatives and utilities in support of renewable energy development in rural areas, is a positive development, the budget lumps “advanced biofuels” in with “renewable energy.” Yet “advanced biofuels” aren't technically renewable, though Congress, under the “Energy Independence and Security Act of 2007” claims they are. Under their definition, “advanced biofuels” includes “fuel other than ethanol derived from corn starch, that has lifecycle greenhouse gas emissions, as determined by the EPA's administrator, after notice and opportunity for comment, that are at least 50 percent less than baseline lifecycle greenhouse gas emissions” and can include ethanol derived from trees, ethanol derived from sugar or starch other than corn starch; ethanol derived from waste material, including crop residue, other vegetative waste material, animal waste, and food waste and yard waste; biomass-based diesel; biogas (including landfill gas and sewage waste treatment gas) produced through the conversion of organic matter from renewable biomass; butanol or other alcohols produced through the conversion of organic matter from renewable biomass; other fuel derived from cellulosic biomass.
Incinerating these materials isn't “carbon neutral,” as some claim, and can have severe adverse public health and environmental impacts. In addition, using crops for fuel on scarce cropland contributes to the rise in the price of food globally, with devastating impacts for the poorest. Nevertheless, Obama’s proposed 2013 budget for the Department of Agriculture continues to subsidize “advanced biofuels” with a $200 million subsidy.
The Bad news:
Obama's “clean energy standard,” includes nuclear power, gas, and carbon capture and storage for coal burners, as well as authentically renewable energy (and several forms of so-called biomass-based energy that are becoming increasingly problematic). And this is what he continues to push for.
Nearly two years after the BP oil disaster, Obama is pushing for the development of over 75 percent of undiscovered technically recoverable offshore oil and gas reserves in the Outer Continental Shelf. While he's simultaneously calling for an expansion in regulatory oversight of this activity as called for in the National Commission on the BP Deepwater Horizon Oil Spill in its January 2011 report, through the creation of the Bureau of Ocean Energy Management and the Bureau of Safety and Environmental Enforcement, Congress has yet to pass a bill mandating the other recommendations contained in that report. While BP did pay a $20 billion settlement, little of that money has reached the victims of the spill, and the health of the communities in the coastal regions has been devastated — perhaps irreparably. The EPA’s attempts to respond to this debacle with chemical dispersants only added to the environmental and public health problems suffered by coastal residents. Vast quantities of oil remains at the bottom of the sea floor, undigested by microbes. Barring stronger measures to ensure such a crisis never happens again, opening up further offshore regions for drilling is reckless in the extreme.
Likewise, Obama's budget proposals include a $770 million subsidy for the development of “advanced small modular (nuclear) reactors,” despite the clear hazards revealed in the multiple nuclear meltdowns in Fukushima, Japan, the public health risks associated with all reactors, and despite the costs associated with uranium mining and waste disposal — costs that the private sector has been reluctant to bear for decades.
Although Obama's Interior Department budget proposal refers to reforms in royalties paid for private companies to use public lands and the collection of $3 billion over 10 years, this does not go far enough. Revenue could be far greater and the costs to the taxpayer far lower if the 1872 mining law, which allows mining companies to stake a claim on public lands for a mere $5 an acre (still!), while mining for highly lucrative oil, gas, gold and other minerals, were brought into the 21st century. Environmental protections are non-existent in these claims, resulting in the headwaters of roughly 40 percent of Western U.S. watersheds being polluted, according to the EPA, and the taxpayer picking up the bill for cleanup, estimated by Earthworks and others at roughly $32-72 billion. An amendment to this law could generate income on the order of $122 billion for U.S. taxpayers on public lands, discourage wasteful, hazardous and speculative investment on public lands, and ensure that highly profitable mining companies are forced to clean up their own messes.
This budget, much like Obama’s State of the Union speech, is unlikely to go far this year, with the gridlock on Capitol Hill. However, if Obama is reelected, and if the Democrats retake the House, a more ambitious version of these proposals could make a positive difference, both to our economy and to our environment.