Washington (Platts)--4Feb2008

The Bush administration Monday unveiled its fiscal 2009 budget request
Monday, asking Congress for the largest increase in the Department of Energy's
budget in five years.

The White House requested $25 billion for DOE, an increase of 4.7% over
the current level.

President Bush, in a letter to Congress, said his budget will fund
initiatives that "reduce our dependence on oil" and help Americans who are
concerned about "rising energy bills."

The budget would provide $641 million to research and develop
technologies to capture and sequester carbon dioxide emissions from coal-fired
power plants.

But the budget also reflects the administration's recent decision to pull
out of the so-called FutureGen project, which DOE scuttled because of soaring
costs to the federal government. The budget would require private companies to
pick up more of the tab for CCS projects, requiring them to bear at least 50%
of the cost in each stage of a project.

The budget also would provide $1.3 billion for energy efficiency and
renewable energy projects, such as hydrogen, biomass, wind and solar. That
would be a cut of almost $500 million over the current level, in part because
Congress increased this year's spending level through member-requested
initiatives known as "earmarks."

In his State of the Union address last week, Bush vowed to veto any 2009
spending bills that do not reduce earmarks by 50%. He also instructed DOE and
other federal agencies to disregard earmarks that lawmakers insert in
descriptive reports accompanying appropriations bills.

Bush also reiterated a proposal he made last year to double the size of
the Strategic Petroleum Reserve. He requested $343 million for SPR, up from
the $201 that Congress appropriated last year.

But Bush's budget was not received favorably by congressional Democrats,
who said it would increase the country's debt and cut critical programs.

Senate Energy and Natural Resources Committee Chairman Jeff Bingaman, a
New Mexico Democrat, said he is generally pleased with the budget. But
Bingaman faulted the White House for proposing to end funding for DOE's
weatherization program, saying he would "work vigorously to reverse this
decision."

"Far from proposing a plan to fix the budget, the Bush Administration
proposes policies that worsen it," said Representative John Spratt, a South
Carolina Democrat who chairs the House Budget Committee. Spratt said Bush's
budget "leaves the consequences for the next administration and future
generations to correct."

--Brian Hansen, brian_hansen@platts.com
--Jean Chemnick, jean_chemnick@platts.com