FUNDING FOR COAL R&D GETS 25% CUT IN DOE FY14 REQUEST

Tamar Hallerman
GHG Monitor
4/10/13

The Obama Administration slashed the Department of Energy’s coal research budget in its Fiscal Year 2014 request to Congress today, proposing $276.63 million for the program, a 25 percent decrease from currently enacted levels. The proposal is notable mainly in the lopsided nature of its cuts. While it trims less than 7 percent of its carbon capture and storage research budget—it is requesting a cumulative $173.1 million for the program, compared to its current budget of $185.44 million—the White House proposal cuts the funding levels for the Office of Fossil Energy’s Advanced Energy Systems and Cross-Cutting Research programs by more than half, 52 percent and 59 percent, respectively. “In terms of our clean coal R&D program, we are continuing to work very, very hard,” Deputy Secretary of Energy Daniel Poneman said during a budget presentation to stakeholders this afternoon, adding that the White House had to make “tough choices” in its budget request.

The Administration’s request for Fossil Energy R&D is also notable in the fact that it appears to flip the funding levels for the Department’s Carbon Capture and Carbon Storage research programs. Whereas the latter program typically comprises the lion’s share of CCS funding—netting $116.2 million last year for research into geological storage technologies, CO2 monitoring and the regional carbon sequestration partnerships, compared to carbon capture’s $69.32 million budget—this year’s request calls for a complete flip. For FY2014, the White House is requesting $61.10 for its carbon sequestration research and $112 million for carbon capture. A detailed justification of programmatic-level funding—as is customarily released alongside the Administration’s budget request—was not made available as of press time. Deputy Secretary of Energy Dan Poneman said the information was delayed because of the sequester and that the information would be released within the “next week or so.”

Request Includes $25 Million Prize

As expected, the budget request does include a one-time $25 million inducement prize for the first entity to integrate large-scale carbon capture and storage technology into a natural gas combined cycle plant. The White House had briefly announced the prize last month ahead of the President’s visit to Argonne National Lab. While some CCS stakeholders have praised the idea of a prize in order to bring public visibility to the technology, many have noted that the award money is not high enough to warrant significant investments in CCS by the private sector.

During a press conference this afternoon, Poneman said that despite the proposed budget cuts, the Department’s ‘clean coal’ portfolio remains a priority for the Obama Administration. “Coal still comprises a very, very important part of electric power generation in this country. It varies month-to-month on gas prices, but it has ranged in the last year or so anywhere from between a third and a half of our overall power. Therefore, our clean coal investments are critically important, that’s why we’ve got something like $6 billion deployed in a variety of [clean coal] projects,” he said, touting DOE’s approval of phase II of operations for the FutureGen 2.0 project in Illinois.

Obama Requests Increase for Overall DOE Budget

The Obama Administration’s vision for DOE continues to bet heavily on renewable energy and energy efficiency efforts—as it has in previous years—and also includes a newer focus this year on advanced vehicles and next-generation biofuels development. The FY2014 budget requests $28.4 billion in discretionary funding for the Department, an 8 percent increase above 2012 funding levels. “In light of the current discretionary caps, these increases in funding are significant and a testament to the importance of clean energy and innovation to the country’s economic future, and the importance of nuclear security to the nation’s safety,” a White House fact sheet said.

In addition to boosting funding for renewables, advanced vehicle development and biofuels and biorefineries, the FY2014 budget factors in an additional $2 billion over 10 years for the energy security trust pushed by the President in recent months. During his State of the Union address and in several subsequent speeches, Obama has called for Congress to create the fund, which would funnel royalties from oil and gas development on federal lands into a research fund for alternative fuels. The FY2014 request also boosts funding for DOE’s Office of Science by 5.7 percent above current funding levels to more than $5 billion. It also ups the budget for the Department’s Advanced Research Projects Agency-Energy (ARPA-E) program to $379 million, more than $100 million above the program’s current funding level.

White House Calls for Elimination of Oil, Gas Tax Breaks

The budget request also recycles the President’s frequent call to eliminate federal tax breaks for fossil fuel production that total $4 billion annually for the oil, gas and coal industries. A White House fact said the tax breaks are “unwarranted and unnecessary” and that they “impede” investment in clean energy sources and undermine efforts to address climate change. “As we continue to pursue clean energy technologies that will support future economic growth, we should not devote scarce resources to subsidizing the use of fossil fuels produced by some of the largest, most profitable companies in the world,” the fact sheet said. Oil industry stakeholders have long argued that the government would earn more tax revenue via royalties if it keeps the tax breaks in place.