05' Budget Cuts Renewable Energy Funding

05' Budget Cuts Renewable Energy Funding

The Bush Administration is waving goodbye to approx. $29 million in funding for renewable energy and energy efficiency in next year's proposed budget.

Image: White House Press Room

"These budget cuts not only run counter to the preferences of the great majority of the American people, but also betray their future in the world's energy, environment and business communities."

- Sustainable Energy Coalition

Washington D.C. - February 3, 2004 [SolarAccess.com] The White House released their budget request for next year (FY'05) and it doesn't look pretty for renewable energy and energy efficiency, according to industry groups analyzing the request.

According to analysis by the Sustainable Energy Coalition (SEC), a coalition of over 70 national and state business, consumer, environmental, and energy policy organizations, the Bush Administration has proposed cuts totaling $29 million in the U.S. Department of Energy's energy efficiency and renewable energy (EE/RE) programs -- reducing funding levels to $1,252 million in FY'05 from $1,281 million in FY'04. While the agency's overall EE/RE budget is reduced by 2.3%, significant increases in funding for weatherization (up $63 million) and hydrogen (up $13 million) mask far deeper cuts in a number of core programs. These include solar (cut $3 million), biomass/biofuels (cut $15 million), vehicle efficiency technologies (cut $23 million), distributed energy resources (cut $9 million), industrial efficiency technologies (cut $44 million), and the Federal Energy Management Program (cut $5 million).

Funding levels for other programs such as geothermal, wind, and hydropower remained essentially flat notwithstanding cost increases due to inflation.

The winners by comparison appear to be hydrogen (up by $288 million), "clean" coal, and weatherization, according to the Solar Energy Industries Association (SEIA).

While hydrogen may one day play a major part in a clean energy cycle, many critics consider the Bush Administration's support for it as a "bait and switch" technique allowing the president to appear supportive of clean energy, while hydrogen would be created almost exclusively through traditional fuels like the increasingly price-volatile natural gas, "clean" coal and even nuclear power. The same critics, which include many in the renewable energy industries, along with experts in environmental policy groups would rather see more direct support of renewable energy and energy efficiency.

While SEIA acknowledged the cuts to the renewable energy sector, the group stressed there is still time for the figures to be amended upward.

"These numbers are not final, of course; the Administration's budget request is just that, a request," said SEIA in a released statement. "It has yet to go through the Congressional appropriations process, and we will be working very hard with the other renewable energy technologies to move these numbers up in that arena.

Cuts in funding for sustainable energy programs were not limited to the Energy Department, according to the SEC's analysis. For example, at the U.S. Department of Agriculture, the White House is proposing only $10.8 million for the Sec.906 Renewable Energy & Energy Efficiency Grant & Loan Program although the mandatory funding level is $23 million. Similarly, the White House is proposing to provide only $15.5 million of the mandatory $40 million for USDA's "Value-Added" grants program which provides funding for new uses - including renewable energy - for agricultural products.

As a result of this meager support for their industries, the SEC vowed to work to reverse the reductions in the White House's FY'05 budget request for renewable energy and energy efficiency programs.

"The American people have repeatedly reported their preference for energy efficiency and renewable energy technologies over status quo fossil and nuclear industries," said the group in a released statement. "There is solid rationale behind their preferences."

SEC said investments in energy efficiency and renewable energy programs offer a cost-effective way to:

- create new basic domestic industries and high-tech manufacturing and operations jobs,
- reduce energy imports,
- improve national, homeland, and energy security,
- improve electrical grid reliability - particularly on the heels of last August's blackout,
- provide environmental and health benefits by curtailing the production of greenhouse gases and other pollutants from fossil fuels, and
- retain world leadership in advancing sustainable energy technologies which is rapidly shifting from the United States to other nations in Europe and Asia.

"Renewable energy is experiencing booming growth, and, on a percentage basis, is the fastest growing source of energy worldwide," the SEC said. "However, lukewarm domestic support for incentives and research means that market share, technical expertise and thousands of new jobs in this sector are increasingly moving overseas."

Furthermore, reducing reliance on natural gas and other fossil fuels is a serious economic imperative, said the group, citing the recent dispatches from the Conference Board, the Chicago Fed, and Alan Greenspan that call volatility and escalation in fuel costs a major uncertainty as well as a drag on economic growth. With natural gas prices at alarming levels as supplies diminish, there exists a greater need than ever to increase investments in energy efficiency which offer the best available near-term solution, said the SEC.

"These budget cuts not only run counter to the preferences of the great majority of the American people, but also betray their future in the world's energy, environment and business communities," said the SEC. "Thus, while cutting back on federal support for these technologies may offer the illusion of near-term savings and thus be penny-wise, the strategy in fact is both short-sighted and pound-foolish."

The group said they recognize the pressures on the federal budget caused by the large budget deficit, the war in Iraq, and the weak economy. Accordingly, since its founding in 1992, the coalition has urged that limited energy research and development funds not be invested in
polluting energy technologies. Instead they should be focused on accelerating research and more widespread utilization of the portfolio of proven clean energy technologies that have the greatest potential to reduce energy imports, address looming natural gas supply shortages and price increases, and reduce harmful emissions polluting the air and water and changing the earth's climate.

"In his State of the Union address, President Bush expressly noted the need to "promote conservation and make America less dependent on foreign sources of energy" - sentiments he noted in last year's address as well," the SEC said. "Proponents of the energy bill now stalled in Congress continuously highlight its renewable energy and energy efficiency provisions including substantial increases in budget authorization levels for these programs. It is time for the U.S. Congress and the White House to put their words into action."

In October 2003, the Sustainable Energy Coalition called upon the U.S. Congress and the White House to move towards doubling the level of federal support for sustainable energy programs over a five-year period and provided specific budget recommendations beginning with FY'05. Consequently, towards that end, the Sustainable Energy Coalition announced its intention to mount an intensive campaign that will work with the Congress to restore and increase funding in the cross-section of energy efficiency and renewable energy programs that have been targeted for budget cuts by the White House.

For Further Information:

• 2005 (FY'05) White House budget request (.pdf)

• Sustainable Energy Coalition (SEC)

• Solar Energy Industries Association (SEIA)

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