Energy and Environment Highlights in the President's FY 2013 Budget

The President unveiled his $3.8 trillion budget for Fiscal Year 2013 which resonated broad themes from his State of the Union speech last month before Congress. Energy and environmental issues were key highlights of the budget’s rollout, with a heavy focus on developing new clean energy, advancing research and development funding for alternative energy, as well as promoting advanced manufacturing jobs.

The Department of Energy, for example, was one of the few federal agencies that saw a significant budget increase, mainly in research and development funds. The budget summary for the agency stated, “In light of the tight discretionary spending caps, this increase in funding is significant and a testament to the importance of innovation and clean energy to the country’s economic future.” Among the familiar goals issued in the State of the Union address, the President’s Budget reiterated his support to:

  • Develop a Clean Energy Standard to require utilities to generate 80 percent of their power from low-carbon sources by 2035;
  • Put 1 million electric vehicles on the road by 2015;
  • Reduce imports of foreign oil by 33 percent by 2025; and
  • Reduce energy consumption in buildings by 20 percent by 2020

Budget documents can rarely divulge or delve into the intricate policy minutiae needed to accomplish such lofty ambitions, but critics of the President’s energy/environment policy will contend that beyond the platitudes there are few details on how these goals will be implemented. What will count as a “low-carbon fuel” to meet the Clean Energy Standard? What about the 30 states that already have renewable mandates in place, how will they comply if their definitions of “low-carbon” are different? Further, the President again uses the oil and natural gas industry’s tax policy as a main source of offsets for funding increases elsewhere to other renewable and alternative energy priorities. These attempts have failed numerous times in Congress, and there will likely be an outcry from the President’s critics that his FY 2013 budget raises $55 billion in new fees on the oil, gas, and chemical industry over the next decade while at the same time extolling the virtues of promoting jobs through hydraulic fracturing. Although many Washington observers and pundits predict that the President’s Budget will never become law, it serves as an important guide for the key policy debates in the coming year. Below are some highlights and takeaways states should note in the energy and environment arena:

Agriculture

  • $6.1 billion in new loans for electric co-ops and utilities that develop clean energy projects in rural America.
  • $1.4 billion for the Environmental Quality Incentives Program (EQIP) to help private landowners and agricultural producers implement a broad range of conservation practices.
  • $1.4 billion for water and wastewater grants and loans to meet the performance goals of the program and to ensure that funding is adequate to maintain assistance for the water and wastewater infrastructure in rural America.

Department of Energy

  • $150 for community colleges to develop advanced vehicles.
  • $45 million in R&D to help lead a multi-agency effort with EPA and USGS to “focus on understanding and reducing the environmental, health, and safety risks of natural gas and oil production from hydraulic fracturing in shale and other geologic formations.” Currently, the vast majority of hydraulic fracturing is taking place on private or state, rather than federal land.
  •  Repeals over $4 billion in “subsidies” for oil and natural gas companies for business expensing, asset depreciation, etc.
  • $6 billion for “Home Star”, a proposal that would provide funding for building and home energy-efficient appliances, building mechanical systems and insulation, and whole-home energy efficiency retrofits.
  • $195 million will be directed for state weatherization efforts to improve energy-efficiency and help low-income families save money on their utility bills.
  • The budget calls for an additional $580 million to advance clean-energy technologies such as industrial and building energy efficiency, next generation biofuels and renewable electricity generation from solar, wind, and geothermal resources. That amounts to a 13 percent increase over current levels.
  • $350 million for the Advanced Research Projects Agency-Energy (ARPA-E), a 37 percent increase from 2012. ARPA-E’s mission is to fund projects that will develop transformational technologies that reduce America’s dependence on foreign energy imports; reduce U.S. energy related emissions (including greenhouse gasses); improve energy efficiency across all sectors of the U.S. economy and ensure that the U.S. maintains its leadership in developing and deploying advanced energy technologies.
  • $10.1 million for the Northeast States Home Heating Oil Reserve program to help offset the rising costs of fuel.

Department of Interior

  • Provides $450 million for the Land Water Conservation Fund, which provides matching grants to states and local governments for the acquisition and development of public outdoor recreation areas.
  • $86 million for permitting new renewable energy efforts on public land with a goal to produce 11,000 megawatts of power by 2013.
  •  $386 million for monitoring and conducting lease sales in for offshore oil and natural gas development as well as to complete “reforms” with the transition from the old Minerals Management Service. This is an increase of $28 million from FY 2012 enacted levels.
  • Proposes changing the disbursement of Abandoned Mine Land (AML) fees to a competitive process based on a site’s level of hazard, rather than distributing fees based on historic resource production. The Administration proposes a similar regulatory structure for hard rock (silver, gold, copper, etc.) mining.
  • Terminates “unwarranted” funds for states and Tribes that no longer need funds to clean up abandoned coal mines.
  • Creates new “user fees” to process oil and drilling permits, as well as inspection operations as well as new fees for “non-producing oil and gas leases” with the stated goal of expanding offshore energy production.
  • Increases wildfire funding to $818 million, an increase of $243 million over FY 2012 

EPA

  • Increases support to states and Tribes by $93 million for air quality management and water pollution control.
  • Includes $300 million for Great Lakes and $73 million for Chesapeake Bay restoration efforts.
  • Cuts funding for cleaning up Superfund sites by $33 million.
  • Cuts State Revolving Funds by $359 for sewer and wastewater projects for aging infrastructure.

Army Corps of Engineers

  • Continues funding to restore significant ecosystems such as the California Bay-Delta, the Everglades, the Great Lakes, Chesapeake Bay, and the Gulf Coast, helping to promote their ecological sustainability and resilience.
  • $161 million for Everglades restoration, part of a $252 million overall multi-agency effort.

Pipeline and Hazardous Materials Safety Administration (DOT)

  • $177 million for Pipeline Safety, an increase of $67 million from FY 2012 levels.  The agency proposes to double the number of pipeline inspectors with 120 new inspectors, along with 30 additional program personnel.  The budget directs an additional $12 million on state pipeline safety grants, $13 million on research and development, and $8 million on a national pipeline information exchange.  The increase in PHMSA spending would come from a corresponding $67 million increase from industry user-fee collection.

 

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