Losing the Future
House Republican Budget Cuts Would Strangle Innovation
SOURCE: AP/J. Scott Applewhite
President Barack Obama’s State of the Union on January 25, 2011, waved the green flag for innovation and competition in the clean-tech sector. He proposed a number of programs to speed the development and manufacturing of domestic energy efficiency and renewable energy sectors to help American businesses race with their Chinese, German, and other competitors. But before the president’s proposals had completed their initial laps in Congress, the Republicans’ proposed House “continuing resolution” (or spending bill) for the remainder of fiscal year 2011 waves the yellow caution flag that they would slow down—if not outright halt—the promise of America’s clean-tech revolution and all the ensuing companies and jobs it would create.
The proposed bill would slash clean-tech and energy investments by nearly 30 percent, devastating this growing but immature industry that struggled during the Great Recession. The House Appropriations Committee majority brags that it “cuts climate change funding bill-wide by $107 million, or 29%, from the fiscal year 2010 enacted level.” The proposed budget includes many other cuts that would harm innovation, the economy, and public health (see table).
The previous 111th Congress passed a continuing resolution that would fund nearly all of the federal government through March 4, 2011. The proposed House GOP spending bill would fund the government for the remainder of FY2011, which ends September 30, 2011. The House Appropriations Committee majority claims its bill would cut spending by more than $100 billion between now and October 1. And clean energy, one of the great hopes for American global competitiveness, is one of its biggest targets.
The proposed budget bulldozes the building blocks of clean-tech innovation and economic growth. It would slash spending for science, information, research and development, infrastructure, job training, efficiency, domestic manufacturing, solar and wind power, and transit options that could help reduce our oil dependence. Here are the details.
Science: The truth is out there but we’re not going to look
The proposed budget would slash funding for scientific study of our atmosphere and the consequences of the past 150 years of massive carbon-dioxide pollution on our climate. Some representatives seek a $379 million cut in NASA’s programs to study climate change from space that would deprive scientists of essential knowledge about our increasingly chaotic climate. The bill would also devastate America’s clean energy and other scientific research by cutting the Department of Energy’s Office of Science by 18 percent.
Information: Ignorance is bliss
In addition to flattening funding for scientific investigation, the House Republicans’ proposed spending bill would devastate the federal government’s ability to study, understand, and communicate vital information about our changing energy sector. It would cut the Department of Energy’s independent Energy Information Agency by nearly one-sixth. EIA is the preeminent collector and disseminator of vital statistics and projections of energy production, consumption, and pollution.
The budget also would wipe out the “Greenhouse Gas Registry” that collects data on companies’ carbon-dioxide pollution. These two cuts would save a paltry $25 million. For comparison, this is just one-twentieth of the $500 million spent on military bands in 2010. The large congressional climate science denier caucus clearly believes that ignoring the problem will make it go away.
Research and development: Keep inventors in their garages
Venture capitalist John Doerr, an early investor in Google Inc. and other companies, worries we are falling behind in the clean energy race because investments in R&D are completely inadequate to drive innovation and growth:
America spends only about $5 billion—about half a percent—per year on new energy R&D. … America spends more on potato chips than we do on our new energy R&D.
An essential element of innovation and competition is to nurture new technologies so they can be built and commercialized. Many inventions require continued investment across the technology innovation cycle—from invention at the federal labs and publicly sponsored universities, to public-private partnerships aimed at commercializing and licensing new technologies, to technical assistance to make our manufacturers the most advanced and efficient in the world. Finally, new technologies need market demand to help bring them to scale.
The House Republican spending bill slashes key elements of this invention support system, including the Economic Development Administration. One of its programs, the Energy Regional Innovation Cluster program, focuses on fostering regional partnerships to discover and develop breakthroughs in invention, commercialization, and deployment of clean energy technologies. Next fiscal year, the budget would also halt the low-carbon technology efforts of the DOE’s Loan Programs that are essential to support investment in clean energy technologies, including renewables and nuclear. In 2010, the Loan Programs Office was the world’s largest renewable energy projects financier. Without this office and the credit subsidies required to execute its mandate, many leading clean energy companies will struggle to overcome the industry’s "valley-of-death" financial gap to fully commercialize their technologies at scale.
In addition to these breakthrough programs, American prowess in innovation also depends on a strong advanced manufacturing sector to translate new ideas into marketable products. This leads to ongoing engineering improvements that generate second and third waves of innovation. The House Republicans’ budget undermines both sides of this innovation equation by slashing the budget of the National Institute of Standards and Technology, which houses both the Technology Innovation Program and the Manufacturing Extension Partnership.
The first program fosters public-private partnerships to develop new technologies. The second program works with mostly small- and mid-sized manufacturers to help them become more energy efficient and to access new markets, including emerging clean energy markets. Without investments in research, development, commercialization, and manufacturing, the United States stands poised to become the clean energy consumer of the future, not its inventor, manufacturer, and exporter.
Infrastructure: Keep the lights on?
The American Society of Civil Engineers produced a 2009 “Report Card for America’s Infrastructure,” grading key infrastructure segments. Energy received a “D+,” partly due to our aging and inadequate transmission system. ASCE determined that:
The U.S. generation and transmission system is at a critical point requiring substantial investment in new generation, investment to improve efficiencies in existing generation, and investment in transmission and distribution systems.
The proposed House spending bill ignores these infirmities and instead cuts funding for “Electricity Delivery and Energy Reliability” by one-fifth. This disinvestment in our electricity infrastructure will undermine performance and reliability.
Green job training: Who needs new jobs?
The worldwide clean-tech market should expand to $2.3 trillion by 2020. To compete in the global clean energy race, America must take a page from China’s playbook and begin to seriously train our workers in key skills like engineering and science, as well as in trades such as machining, welding, and pipefitting. This is critical for our future competitiveness, as well as essential if we are to keep our existing lights on and electricity flowing through the transmission grid. Fully half of America’s utility workforce is expected to retire in the next decade.
The American Recovery and Reinvestment Act of 2009 made a down payment on the future competitiveness and job readiness of America’s workers by investing $500 million to train people for existing jobs in weatherization, retrofitting, and the utility trades, as well as investing in science, technology, engineering, and math education, and related training for the clean energy jobs of the future. The House Republican spending bill would slash all job-training funds in half, leaving us ill prepared to compete with workers in other nations, whether in clean energy sectors or in other growing industries such as health care and telecommunications.
Oil: Let’s import more foreign oil!
ASCE included passenger and freight rail in its report card and gave the rail system a “C-.” It concluded that new investments in rail systems could:
Alleviate growing freight and passenger congestion experienced by other modes of transportation. In addition, rail is a fuel efficient alternative for moving freight long distances.
Anticipated growth over the coming decades … will tax a rail system that is already reaching capacity in some critical bottlenecks. A substantial investment in rail infrastructure will maximize efficiencies and ultimately reap broad benefits.
Yet the proposed House spending bill would cut existing rail by slicing one-tenth of Amtrak’s budget. It would also zero out funds for high-speed rail, even though our global competitors in China and the European Union have invested heavily in high-speed passenger rail to move people quickly between cities, cut air pollution from air and car travel, and free up regular rail corridors for freight rail.
Energy efficiency: Waste not, watt not
Thrift used to be a conservative value but apparently that is no longer so. The proposed House GOP budget would decimate investments in energy efficiency, cutting funding for these vital programs by more than one-third. This is penny wise but pound foolish since investments in efficiency actually lower electricity bills and ultimately save more money than they cost.
The budget would also eliminate funds for EPA’s “Energy Star” program that informs consumers about energy-efficient products and practices. In 2009 it helped consumers save nearly $17 billion on their utility bills.
Renewable energy: Out of the running?
The United States used to lead the pack in the invention and manufacturing of clean energy technologies such as pioneering breakthroughs in PVC solar. Over the past decade we were lapped by other nations due to their pro-renewable investment and energy policies. The United States ranks 11th among the G-20 nations in “clean energy investment intensity,” or clean energy investments per unit of gross domestic product. President Obama is determined to gain ground so we can compete with China, Germany, and other nations. To accomplish this goal, we invested billions of dollars in clean tech under the American Recovery and Reinvestment Act.
The GOP budget would dramatically disinvest in the solar, wind, wave, geothermal, and other renewable technologies that enabled the United States to get back in the clean energy race. It would cut funds for clean tech by nearly $800 million. Meanwhile, Commerce Secretary Gary Locke reports that China invests almost $12 billion monthly into its renewable-energy sector: “They’re doing this because they really want to be the world’s supplier of clean energy and they recognize this will support millions of jobs.”
EPA: Taking the health cops off the beat
The Environmental Protection Agency is the federal watchdog to protect Americans from air, water, and land pollution that threatens public health and the environment. In addition to designing such public health safeguards, it cooperates with states to enforce these laws. They are defenders of public health from cancer-causing and other hazardous pollutants spewed from industrial facilities.
The proposed House budget would devastate EPA’s ability to protect our health. It would remove public health cops from the beat while making it harder to adopt new protections too. It would also cut funds for states that help them enforce these health protections. The result of these huge cuts will be more violations, more pollution, and more illnesses. These cuts could spark massive environmental law breaking.
LIHEAP: Stay warm by shivering
The Low Income Home Energy Assistance Program, or LIHEAP, is a lifeline for seniors and others who cannot afford high electricity bills. By providing this assistance, people in the dawn, dusk, or shadows of life do not have to choose between eating, taking medicine, or staying warm.
The House GOP budget would cut money for the LIHEAP emergency fund by $200 million, or one-third of current funding. This could force low-income families to make the horrible choices described above. House Speaker John Boehner (R-OH) made it clear that the GOP will proceed with steep cuts in this vital assistance. This is shameful for the richest nation in the world.
President Obama may also propose deep cuts in LIHEAP, which would be a shameful act in the midst of the worst economy in 80 years. Hopefully, he will positively respond to Sen. John Kerry’s (D-MA) letter beseeching the president to fund this vital service.
In the middle of a brutal, even historic, New England winter, home heating assistance is more critical than ever to the health and welfare of millions of Americans, especially senior citizens. … I request that the administration preserve LIHEAP funding at least to the Fiscal Year 2010 funding at $5.1 billion when it submits its FY12 budget proposal to Congress.
President Obama reminded Congress during his State of the Union that the United States faces a real innovation challenge from China, Germany, and other nations, much as it did in 1957 as the Soviet Union rocketed ahead of us in space exploration.
When the Soviets beat us into space with the launch of a satellite called Sputnik, we had no idea how we would beat them to the moon. The science wasn’t even there yet. NASA didn’t exist. But after investing in better research and education, we didn’t just surpass the Soviets; we unleashed a wave of innovation that created new industries and millions of new jobs.
This is our generation’s Sputnik moment. Two years ago, I said that we needed to reach a level of research and development we haven’t seen since the height of the Space Race. And in a few weeks, I will be sending a budget to Congress that helps us meet that goal. We’ll invest in biomedical research, information technology, and especially clean energy technology—an investment that will strengthen our security, protect our planet, and create countless new jobs for our people.
Instead of proposing a budget that invests in future clean-tech jobs, the proposed House Republican budget turns back the clock to the Bush administration era when there was relatively little investment in clean tech and other countries began to lap us. The proposed House GOP spending bill for the remainder of 2011 would strangle clean-tech innovation, competitiveness, and economic growth.
Their proposed disinvestments in energy efficiency and renewable technologies and their disruption of business assistance and job-training programs would wave the white flag of surrender in the international race to lead the clean-tech industry in the 21st century. Americans should know that House Republican leaders want to force our best innovators, business people, and investors into an endless pit stop while we watch another nation cross the finish line first.
Daniel J. Weiss is a Senior Fellow and Director of Climate Strategy at the Center for American Progress. Kate Gordon is Vice President for Energy Policy at the Center for American Progress. Michael Linden, Associate Director for Tax and Budget Policy at the Center, contributed to this analysis.
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