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Clean Tech Budget Showdown

House GOP 2011 Spending Bill Would Make Us More Dependent on Foreign Oil

SOURCE: AP/Charlie Riedel

Sunflower Electric Cooperative's coal-fired power plant rises behind a 30-day-supply of coal in Holcomb, Kansas. The 2011 House spending bill would halt the Environmental Protection Agency from protecting us harmful pollutants from coal-fired power plants, and it fails to invest in oil reduction and clean energy technologies.

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View clean energy investments in the House, Senate, and Obama budgets for FY2011 and FY2012 (.xls)

The Republican House and the Democratic Senate have developed spending plans for the rest of fiscal year 2011. Both are focused on belt tightening. But they reflect each party’s version of “necessary” and reveal deep-seated differences in values on energy policy.

The House-passed version of H.R.1, for instance, earns the dubious honor of increasing our dependence on foreign oil while prices are rising. Meanwhile, the Senate version would maintain most investments in oil reduction and clean energy technologies that will generate jobs.

The House and Senate must now reconcile their differences before March 18, when the latest funding for the federal government expires. Hopefully the Senate will insist on its oil independence and clean energy investments and reject the House’s efforts to allow more air pollution.

Let’s take a closer look at what the two bills would do, starting with the chart below. It lays out which energy programs the budgets would invest in and cut. It compares the two proposals to President Barack Obama’s budget for FY2012.

The House bill goes nowhere fast

Every president over the last 40 years advocated ending or reducing our reliance on foreign oil. But the House-passed continuing resolution would actually grow our dependence on these volatile sources of oil while making it easier for speculators to drive up oil prices as they did in 2008. The bill does so by slashing investments in the technologies that would reduce foreign oil use, including bus and subway systems, and assistance for U.S. factories to make cars with improved fuel economy.

The GOP bill would also cut the Commodity Futures Trading Commission, or CFTC, by one-third. This would cripple the commission’s ability to police oil trades and prevent market manipulation. Evidence indicates that speculation played a significant role in driving oil prices to the record of $147 per barrel in 2008.

Emerging signs indicate that speculators are again driving up oil prices this year. Reuters reports that:

Large speculators and funds increased net-long positions, or wagers on higher prices, by 2 percent in the seven days ended March 8 to 311,632 futures and options, the most in records dating back to June 2006, according to the Commodity Futures Trading Commission’s weekly Commitments of Traders report. The total has jumped 68 percent since Feb. 15.

The House budget would also decimate deployment of energy efficiency and renewable energy technologies, including wind or solar power. It cuts these clean tech investments in half from FY 2010 levels (from 2.4 billion to 1.2 billion). Meanwhile, our competitor China invests $12 billion per month in clean tech.

Another devastating blow to future energy innovation is the House cuts to investments in clean tech R&D. The GOP spending bill shaves nearly a third from FY 2010 levels. As it stands, the United States already spends more on potato chips than on clean energy research and development. The House bill’s energy provisions would make this nation into a clean energy consumer instead of the inventor, manufacturer, and exporter of these 21st century technologies.

Scientific advancement and knowledge suffered a substantial hit from the heavy-handed cuts that lowered budgets for the DOE’s Office of Science and NASA’s Earth Science by more than $1 billion and $300 million, respectively. The House spending bill reflects the belief that ignoring climate problems will make them go away.

The House proposal also would worsen public health in two major ways. First, the 2011 spending bill would halt the Environmental Protection Agency from protecting children, seniors, and other vulnerable populations from mercury, arsenic, dioxin, carbon dioxide, and other harmful pollutants from dirty coal-fired power plants. The National Academy of Sciences estimates that burning coal costs the U.S. economy $60 billion annually due to premature deaths, health care costs, and lost productivity.

“The CR is a reckless assault on our health and the environmental laws,” said Rep. Henry A. Waxman (D-CA) during a speech at the Center for American Progress Action Fund on March 7.

Second, the House GOP bill would slice $130 million from already cash-strapped state programs to enforce air pollution safeguards that protect public health.

The Senate bill avoids retreat

The Senate Democratic spending bill for FY 2011 cuts some clean energy programs but invests in many others. For instance, it would continue to invest in oil use reduction efforts, including Amtrak and the Washington, D.C. Metro. These alternatives reduce vehicle miles traveled and save oil.

According to the National Association of Railroad Passengers:

Amtrak is 30.2 percent more energy efficient than cars, and 19.9 percent more efficient than air travel…public transportation saves the United States 4.2 billion gallons of gasoline every year—more than three times the annual amount imported from Kuwait.

Senate Democrats would help foster a stable oil market in their budget alternative by increasing spending for the CFTC, which oversees the oil and other commodity markets. Politico reports that in recent weeks “the usual law of supply and demand has been trumped by market speculation that has already driven U.S. crude oil prices above $100 a barrel.”

What’s more, the Senate version of H.R. 1 adds $61 million to FY 2010 investments of $1.2 billion in research, development, and innovation of clean technologies. Such programs are essential to grow the American clean tech innovation sector and create jobs. It further provides $200 million to the Advanced Research Projects Agency Energy, or ARPA-E, that was established under President George W. Bush to support research on high-risk, high-reward advanced energy technologies.

The Senate alternative also cut more than $300 million in energy efficiency and renewable energy without resorting to the draconian cuts the House version makes. This will allow the preservation of vital programs such as the EPA Energy Star, which informs consumers about energy-efficient products and practices. It helped consumers save nearly $17 billion on their utility bills in 2009.

The Senate Appropriations Committee bill rejected the House bill’s antipublic health riders that deny funding to EPA programs that will reduce mercury, arsenic, dioxin, and carbon dioxide pollution from coal-fired power plants. These provisions were “purely political, meant to score points or placate supporters.” Their proposal restores EPA’s ability to protect public health by establishing safeguards for toxic and carbon dioxide pollution. It also furnishes $2.8 billion for state and local air quality enforcement.

Both the House and Senate H.R. 1 reduce funding for clean coal technology programs by $18 million. Regrettably, they would also slash the budget for the National Institute of Standards and Technology, or NIST, by more than $100 million. This undermines clean energy innovation by drastically reducing funds for two of NIST’s programs: 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.

How to improve the bills

Overall, Senate Democrats retained funding for a number of important clean energy programs and environmental health protections while House Republicans demonstrated a dedication to keeping the United States dependent on dangerous foreign oil.

If the GOP really wants to make deep cuts in the deficit that won’t hurt our clean energy innovation or oil reduction efforts it should eliminate the $4 billion annual cost of tax loopholes for Big Oil companies. The five largest companies don’t need these handouts. They made nearly $1 trillion in profits over the past decade.

The House must also require oil producers to pay fair royalties to taxpayers from oil produced from public lands or waters. This is at least $1.5 billion per year.

The Senate rejected both continuing resolution proposals on March 9. The leadership of both bodies must negotiate an agreement by March 18 or the federal government’s funding expires. Many observers believe that there will be another extension of this deadline, and then the negotiations will begin in earnest

We hope that House Republicans will see the light and restore these relatively small investments in reducing oil use, policing oil markets, and manufacturing innovative new clean energy technologies. For its part, the Senate—and President Obama—must insist on a “clean” spending bill for the remainder of the year that is devoid of riders designed to allow more mercury, arsenic, carbon dioxide, and other pollutions.

View clean energy investments in the House, Senate, and Obama budgets for FY2011 and FY2012 (.xls)

Sources for table:

U.S. Senate Appropriations Committee, "Committee Releases Highlights of 7 Month CR," March 4, 2011, available at http://appropriations.senate.gov/news.cfm?method=news.view&id=7e62b4eb-ed09-4dd4-86f0-411534783127.

House Republican Appropriations Committee Budget Proposal, February 11, 2011, available at http://www.gpo.gov/fdsys/pkg/BILLS-112hr1eh/pdf/BILLS-112hr1eh.pdf.

Department of Commerce Office of Budget, "FY2011 Budget-in-Brief," available at http://www.osec.doc.gov/bmi/budget/FY2011BIB.html.

Department of Energy, "FY 2011 Budget Request to Congress," available at http://www.cfo.doe.gov/budget/11budget/.

Department of Interior, "The Department of Interior Fiscal Year 2011 Interior Budget in Brief," available at http://www.doi.gov/budget/2011/11Hilites/toc.html.

Department of Labor, "FY 2011 Detailed Budget Documentation," available at http://www.dol.gov/dol/budget/index-2011.htm.

Department of Transportation, "Fiscal Year 2011 Budget Highlights," available at http://www.dot.gov/budget/2011/2011budgethighlights.pdf.

Environmental Protection Agency, "FY 2011 EPA Budget in Brief," available at http://www.epa.gov/budget/2011/2011bib.pdf.

Department of Housing and Urban Development, "Investing in People and Places: FY2011 Budget," available at http://portal.hud.gov/hudportal/documents/huddoc?id=DOC_4220.pdf.

U.S. Geological Survey, "FY 2011 Budget and Related Information," available at http://www.usgs.gov/budget/2011/2011index.asp.

Daniel J. Weiss is a Senior Fellow and Director of Climate Strategy at the Center for American Progress. Valeri Vasquez, Special Assistant for Energy Policy at the Center, contributed to this analysis. Thanks to Junayd Mahmood, CAP energy intern.

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