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Breaking Down the Energy Budget

Posted By Nicolas Loris On February 27, 2009 @ 4:38 pm In Energy | Comments Disabled

Looking at the energy sections of the budget blueprint released Thursday, two themes come to mind.

Theme #1 Let’s give The Department of Energy (DOE) and Environmental Protection Agency (EPA) more money.

DOE’s budget for the fiscal year 2009 is just shy of $34 billion, up dramatically from $24.1 billion for 2008. Part of this is due to some of the $39 billion provided to the DOE in the 2009 stimulus bill signed by President Obama, but that $39 billion will be spent over the next several years. The EPA’s budget has typically been around $7.5 billion for the past few years and it looks like it will remain that way in 2009 with a budget of $7.8 billion. But the budget jumps to $10.5 billion in 2010. This could be a sign that EPA is preparing to take on the monumental task of CO2 regulator.

Highlights of the DOE’s budget [1]include for the following:

Advances the development of Low-Carbon Fuel. Many Members of Congress who are pushing for a bill to reduce carbon dioxide are hedging their bets that carbon capture & sequestration will be commercially available in the near future. Despite government funding, it seems that CCS is still years away, paving the way for environmental activists to claim clean coal is a pipedream.
Spending on the so-called Smart Grid: There are a lot of questions surrounding investing more government money, on top of the $11 billion for high-tech electricity infrastructure passed in the stimulus bill. Does a smart grid only make sense if we invest heavily in renewables? If it’s a good idea, why isn’t the private sector investing in it? Are there regulatory hurdles that are keeping the private sector from investing in a smart grid?

And highlights of the EPA’s budget [2]:

Begins a Comprehensive Approach to Transform Our Energy Supply and Slow Global Warming: By this, The EPA is hoping Congress pass a cap-and-trade bill that would reduce carbon emissions 14 percent below 2005 levels by 2020, and approximately 83 percent below 2005 levels by 2050. Heritage Senior Policy Analyst Ben Lieberman emphasizes that a cap-and-trade program [3]is nothing more than a regressive tax that will raise prices on energy and cost Americans jobs – all for little, if any, environmental gain.

Strengthens Superfund: The 2010 Budget proposes to reinstate excise taxes that expired in 1995 and will collect over $1 billion to clean up the Nation’s most toxic, contaminated sites within the Superfund program. CEI’s Jonathan Tolman responds [4]: “Environmentalists like to tout that the Superfund taxes are an example of the “polluter pays” principle. However, the reality of the superfund program is that is supposed to clean up abandoned hazardous waste sites and companies paying the petroleum and chemical feedstock taxes now may have had nothing to do with an industrial site abandoned 20 years ago.”

Theme #2 Punishing Successful Energy Sources to Subsidize Unsuccessful Ones.

Mandating a cap-and-trade program. In an ideal world for the EPA, in a 100 percent auction program for a carbon emission credits under a cap-and-trade program, $150 billion would allocated for clean energy investments. The idea that the government could invest in renewables through tax breaks, incentives and subsidies with hopes they could eventually compete in the market is, in reality, a very tired idea. Penalizing successful sources of energy to subsidize unsuccessful ones will only increase the costs to the successful sources, meaning the costs will eventually be passed down to the consumer through higher electricity bills and higher gas prices.

All but killing Yucca Mountain. The Department of Energy will limit its activities to answering Nuclear Regulatory Commission inquiries regarding the NRC review of the Yucca Mountain construction permit. Given all of the progress that the last administration made on the Yucca Mountain issue and that the law obliges the federal government to open the Yucca Mountain waste repository, it is unfortunate that this administration, who said that it would respect science in its decision making, would make such an unscientific and politically motivated decision. That said, Yucca Mountain will never be opened if it does not have a construction and operating license, so that fact that the budget does at least respect the NRC’s authority to carry out its mission to finish its Yucca review of the permit application should be commended.

Following these two themes, a third theme could very well be more economic pain to come for the energy consumer for years to come.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2009/02/27/breaking-down-the-energy-budget/

URLs in this post:

[1] DOE’s budget : http://www.whitehouse.gov/omb/assets/fy2010_new_era/Department_of_Energy.pdf

[2] EPA’s budget: http://www.whitehouse.gov/omb/assets/fy2010_new_era/Environmental_Protection_Agency1.pdf

[3] Ben Lieberman emphasizes that a cap-and-trade program : http://www.heritage.org/Research/Economy/wm1723.cfm

[4] Jonathan Tolman responds: http://www.openmarket.org/2009/02/27/obama%e2%80%99s-corporate-environmental-income-tax/

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