Spending Freeze Threatens Goal Of Clean Energy Economy

Bill Scher

The White House is trying to show it can still invest in its top priorities while also instituting a freeze on the overall level of non-defense discretionary spending. For example, the Energy Department budget for the next fiscal year is still getting a seven percent increase to help ramp up the clean energy economy.

But are such budget increases sufficient for us to real bring about such a dramatic transformation in how we power our economy?

In other words, is it even possible to move to a clean energy economy with a spending freeze in effect, no matter how flexible?

Consider that the Apollo Alliance previously concluded we need to invest $50 billion a year for 10 years in clean energy and energy-efficiency to be able to achieve sustainable energy independence.

The two-year Recovery Act investments were in the ballpark of that goal: $34 billion for energy efficiency, $8 billion for renewable energy, $11 billion for a smart electric grid, $8 billion for high-speed rail, $4.5 billion for clean energy research and development and $1 for green job training.

But most of the stimulus money will disappear. What we’re left with is certainly better than the completely disinterested Bush budgets, but a far cry from what the scale of challenge requires.

For example, the key items in the FY11 energy budget and transportation budget are:

* “$500 million to support $3 to $5 billion of loan guarantees for energy efficiency and renewable energy projects.”

* $5 billion for the Advanced Energy Manufacturing Tax Credit, which was created by the Recovery Act

* “1.8 billion for research in basic energy sciences”

* “$300 million for the Advanced Research Projects Agency-Energy, to accelerate game-changing energy technologies”

* $1 billion for high-speed rail, down from the $8 billion in seed money from the Recovery Act

All that is good, but it’s not getting you close to $50 billion a year.

Maybe you can bump up these levels a bit and still stay within the bounds of a freeze, but with a overall cap on discretionary spending in place, you are tying your hands to a debilitating degree.

Is all hope for a clean energy economy then lost?

Not necessarily.

Against all seeming odds, there is still oxygen for a bipartisan climate protection and clean energy jobs bill.

Billions in revenue can be gained by putting a price on greenhouse has pollution through a carbon cap — the President estimated $80 billion a year in last year’s budget proposal and that was seen as a conservative prediction. Some of that revenue would be dedicated to creating jobs generating clean energy and energy efficiencies. Furthermore, the Congressional Budget Office concluded both the House version and pending Senate versions of climate legislation would cut the deficit.

Technically, a strict freeze of spending levels would not allow our government to invest billions more in clean energy, even if the overall program would reduce the deficit. Raised spending levels would be more than paid for, but it would still be a raise in spending levels.

However, one can only assume that if Congress is able to send a climate bill to the President’s desk that dramatically invests in creating green jobs while cutting the deficit, they’ll have enough common sense to make an exception.

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