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  • Less Is More for Energy In Bush's Budget

    Energy and environmental issues do not get much attention at budget time. Compared to the massive outlays for other programs and the overall 3.1 trillion dollar budget, the Department of Energy’s proposed 25 billion dollars, the Department of the Interior’s 11 billion, and the Environmental Protection Agency’s 8 billion are downright modest. The real problem for businesses and consumers are the costs of federal energy and environmental laws and regulations, which are probably 10 times more than the direct outlays from taxpayers to run the agencies. It is also worth noting that federally-directed research into alternative energy has never been Washington’s forte.  In fact, the 30 plus year history of such research has yielded few worthwhile breakthroughs to justify the expenditures. This is why the annual budget-time complaints of “not enough for solar research” or the like should be taken with a grain of salt. This is clearly one area where more money does not mean more progress.

    If there is a role for the federal government it is in conducting basic research related to climate change.  Such research is a much better approach than proposed legislation like S. 2192, America’s Climate Security Act of 2007, that cracks down on fossil energy use. Rather then ratcheting down carbon dioxide emissions from existing energy technologies – which would be very expensive – it is better to find new technologies that will allow energy to be used with fewer or no carbon dioxide emissions.    Thus, the proposed outlays for research into ways of using coal with lower emissions and efforts to share carbon-friendly technologies globally are the most defensible energy expenditures in this budget.

    One good idea in the budget are provisions supporting increased domestic energy production, including opening a portion of Alaska’s Arctic National Wildlife Refuge (ANWR) believed to contain 10 billion barrels of oil.  Though unlikely to survive the upcoming fight with Congress over ANWR, the administration has done the right thing by keeping the debate alive over positive and truly pro-energy steps the government should be taking.

    On the nuclear energy front, the budget funds an assortment of programs. While some are necessary, as a whole they continue to perpetuate government dependence by the nuclear industry. Some of these programs, such as funding for Yucca Mountain at $495 million, are critical to the nation and should be fully supported by Congress. Whether spent fuel is placed at interim storage, is recycled, or left on site, the nation still will need a facility in which to place its radioactive waste.

    Other programs that should enjoy Congressional support are the Advanced Fuel Cycle Initiative ($302 million) and Generation IV Nuclear Energy Systems Initiative ($70 million). AFCI is helping to accelerate the development of recycling technologies that minimize waste volume while maximizing energy resources. The Gen IV program is providing basic research into the next generation of nuclear reactors. Ultimately, however, if a nuclear renaissance is really going to take place, the federal government must decrease its role, limit its involvement to legitimate oversight, and allow the private sector to get to the business providing power for the American people. 

    Posted in Energy [slideshow_deploy]

    One Response to Less Is More for Energy In Bush's Budget

    1. Cash, California says:

      Conn,

      Interesting article and a good point about DOE´s shortcomings as a research institution.

      I had one thought on your last sentence which suggests the federal govt should lessen its role in nuclear. In April I was at MIT´s Energy Conference and they had a panel from various aspects of the nuclear industry (utility, regulatory, finance). One of their key messages was that the lack of financing was a major, if not largest, hurdle to development. Keep in mind this was prior to the cost of capital having shot up worldwide in the past few months.

      And they also pointed out that compared to the EU, American utilities are much smaller and cannot reasonably be expected to fully fund a nuclear projects because a single plant would make up such a significant part of their balance sheet. They also pointed to the 2005 Energy Act which has a $500M loan guarantee from the Federal government for nuclear projects, and although they acknowledged this as the right direction, it didn´t move the needle much on a $8-9B project.

      Video link is here:
      http://techtv.mit.edu/collections/mitenergyconfer

      So my question is, if indeed the private sector is expected to fully fund these enormous projects, especially now when the cost of capital is so high, how do you see them accomplishing this?

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