2012 federal budgetThe U.S. House of Representatives passed a budget resolution this weekend that would fund the government through the end of fiscal year while reshaping national energy and climate policy. The sweeping bill sets the stage for a contentious budget fight and raises the specter of the first government shutdown in decades, as Senate Democrats prepare to take up their own budget proposal and the White House works to defend budget priorities that would expand a number of strategic investments in clean energy technologies.

In a 325-189 vote recorded at 4:40 AM in the pre-dawn hours of Saturday morning, the House approved H.R. 1, a Continuing Resolution to fund the government after current stop-gap funding authority expires on March 4th.

If it becomes law, H.R. 1 would cut billions of dollars from federal energy and environmental programs and establish restrictions blocking the use of federal funds to enact new regulations on everything from climate destabilizing greenhouse gases to the impact of mountaintop removal coal mining on streams and drinking water and the safe disposal of toxic waste ash from coal combustion.

The bill, which sets government funding levels for the remainder of Fiscal Year 2011 (running through the end of September), was approved after a prolonged debate during which 162 amendments were proposed, including successful efforts to reduce federal support for ethanol.

In this exclusive post for the Energy Collective, I'll summarize the key impacts of the House-passed Continuing Resolution for national energy and climate policy, organized by key topic below…

Big Cuts to Energy Technology and Innovation Budgets

advanced solar thermal powerH.R. 1 cuts more than $1 billion from the budget of the Department of Energy through the end of FY2011. While only a portion of DOE's activities support clean energy technology and innovation programs, an analysis by the Breakthrough Institute (where I am employed) estimates that the budget resolution would cut at least 17% from the budgets of the core DOE agencies most-engaged in energy innovation activities.

  • The Advanced Research Projects Agency-Energy (ARPA-E) would be perhaps hardest hit by the budget cuts. The relatively young agency, first funded in 2009 to invest in both the riskiest and most transformative early-stage energy innovation projects, would lose a full 75% of its budget under H.R. 1, compared to 2010 funding levels provided primarily by the federal stimulus bill. H.R. 1 provides $50 million for ARPA-E in FY2011, compared to roughly $200 per year under the American Recovery and Re-investment Act and an annual funding level of $300 million authorized under the America COMPETES Act passed in December. Notable though, a proposal to entirely eliminate funding for the agency was struck down on a bipartisan vote, 170-262.
  • The Office of Energy Efficiency and Renewable Energy (EERE), which was responsible for roughly 34% of the DOE's energy innovation investments in 2010, would lose 35% of its FY10 budget. EERE funds research into renewable energy, advanced vehicles, and efficient building technologies and appliances.
  • The Office of Science, which funds critical early-stage energy innovation research, would see a 20% decline in its budget. Office of Science devoted one-fifth of its 2010 budget to energy innovation funding, while supporting additional fundamental physical science research.
  • The Office of Nuclear Energy, which devoted 41% of its funds to energy innovation projects in 2010, would lose 23% of its budget.
  • Meanwhile, the Office of Fossil Energy would see an 11% reduction in its budget, 43% of which was devoted to energy innovation efforts in FY2010.
  • The budget would also cut funding for several of the DOE's loan guarantee programs, which aim to fill the gap left by the private sector in financing the development and deployment of innovative renewable energy and energy efficiency technologies. For instance, the budget of the DOE's Advanced Technology Vehicles Manufacturing Loan Program would drop 50%, or by $10 million.
  • Finally the Continuing Resolution rescinds all unobligated Recovery Act funds, effectively stripping away financing for 20 DOE loan guarantee applications that are currently in review, but have not yet been finalized. Furthermore, an additional six innovative energy projects have received conditional loan guarantee commitments from the DOE and secured developer financing, but, because the Office of Management and Budget will not consider loan guarantee funding to be obligated until loans have closed, these projects, too, will be cancelled if H.R. 1 becomes law.

For more on the fight over energy innovation budgets, see Breakthrough Institute analysis here and here.

EPA Blocked From Advancing Regulations to Curb Climate Change

power plants pollutionH.R. 1 would block the Environmental Protection Agency from advancing new regulations to restrict the climate destabilizing greenhouse gases emitted by power plants and other major industrial emitters, a key priority for the Obama Administration.

The bill prohibits the use of federal funds to promulgate the new climate regulations, including new greenhouse gas emissions standards the agency has been developing for power plants and oil refineries, which are collectively responsible for roughly 40 percent of U.S. greenhouse gas emissions.

In addition to blocking new EPA regulations, the House approved (233-187) an amendment to block the National Oceanic and Atmospheric Administration from funding a planned "Climate Service" that the agency hopes will "provide a reliable and authoritative source for climate data, information, and decision support services."

A separate amendment (passed 244-179) also cut all funding for U.S. State Department participation in ongoing international climate talks hosted by the United Nations.

For more on the fight over EPA climate regulations, see earlier Energy Collective coverage here and here.

Other Anti-EPA Amendments Win Out on Coal Mining, Waste 

mountain top removal coal miningSeveral amendments were approved blocking the EPA from implementing new regulations to limit the impact of mountaintop removal coal mining on streams, watersheds and drinking water, as wells as new rules for the safe disposal of toxic waste ash from coal combustion at power plants.

An amendment sponsored by West Virginia Republican Rep. David McKinley passed (239-183) stopping EPA from developing or issuing standards that list coal ash as a hazardous waste requiring careful disposal. Nineteen Democrats joined the GOP in voting "yes" on the amendment, while 18 Republicans crossed over to vote "no." 

Currently, billions of tons of coal ash, which contains toxic heavy metals, are produced annually as a byproduct of coal-fired power plants. This coal waste is stored in slurry ponds and landfills at sites across the country and current regulations do not require disposal in landfills designed to contain hazardous waste and keep contaminants from leaching into groundwater. 

The EPA has been considering new waste disposal rules for coal ash since a disastrous breach of a coal slurry pond at a Tennessee Valley Authority coal plant spilled billions of gallons of sludge that contaminated 400 acres of land and spilled into major tributaries of the Tennessee River in December 2009. The EPA has proposed a set of options for new rules but has so far not signaled when it might take decisive action on coal ash disposal rules.

Three other amendments passed that aim to reverse the Obama Administration's efforts to better protect Appalachian waterways and drinking water from the impacts of mountaintop removal coal mining, a mining technique that blasts the top of mountains away to access coal seems beneath, dumping the resulting debris into neighboring valleys, often burying and contaminating headwaters streams and downstream sources of drinking water.

Rep. Morgan Griffith (R-Va.) succeeded, 235-185, in passing an amendment to stop EPA from using its funding to implement or enforce new guidance for the review of water pollution impacts from proposed coal-mining projects, including mountaintop removal projects.

Lawmakers also voted 239-186 in favor of Rep. Bill Johnson's (R-Ohio) amendment blocking Office of Surface Mining Reclamation and Enforcement regulators from finishing work on rules aimed at protecting streams from coal mining waste, including the valley fills used to dispose of mountaintop removal mining waste. Those rules and an official impact statement will likely be ready later this year, according to the director of the regulatory agency.

Finally, West Virginia's Rep. McKinley won another amendment to stop EPA from administering or enforcing Clean Water Act regulations governing so-called 'dredge-and-fill' permits needed by mountaintop-removal operations such as the Spruce No. 1 coal mine, a West Virginia project that had its water quality permit revoked by EPA last month (more on that here).

These measures are a sharp rebuke of Administration efforts to clean up the many public health and environmental impacts of coal mining and combustion, and the White House is unlikely to accept a bill containing such measures. A “Statement of Administrative Position” released by the White House expressed clear opposition to the sections of H.R. 1 restricting EPA's ability to protect the public and the environment, calling the Clean Water Act language “irresponsible and reckless.” These components of the bill are likely to be just one among many hotly contested as the budget debate advances into the Senate.

More on the pro-coal votes from Energy Collective contributor Appalachian Voices here.

Measures Restrict Further Support for Ethanol

corn fieldsIn votes that broke down (unsurprisingly) along regional lines (see maps below), two amendments secured passage aimed at restricting further federal support for ethanol.

Representative Jeff Flake (R-Ariz.) secured a bipartisan, 262-158 vote in support of his amendment to prevent federal funds from being used to support ethanol storage facilities or blender pumps used to prepare fuel with a higher ethanol content. In a vote that broke down according to regional allegiances more than party affiliation, 78 Democrats joined Rep. Flake in voting Yea, while the Nays included 53 Republicans.

A second ethanol amendment, offered by Rep. John Sullivan (R-Okla.), passed with even greater support, 285-136, blocking EPA from using its funds to implement the agency's recent decision to increase the amount of ethanol allowed in gasoline from 10 percent to 15 percent by volume. EPA issued a rule in October allowing so-called 'E15' ethanol-gasoline blends to be used in vehicles made after 2007, and in January, a follow-up ruling extended that rule to vehicles made between 2001 and 2006 as well.

Seventy-nine Democrats voted in favor of blocking the E15 rule, while 31 members of the GOP later joined more than 90 Democrats in a failed attempt to bring down the proposal.

Vote breakdown for amendment blocking E15 rules. Yes votes in blue, No votes in red.

Vote breakdown for Sullivan Amendment barring EPA from using funds to implement E15 ethanol blend rules. Yes votes in blue, no votes in red. Source

Ethanol industry geography

Geographic location of U.S. ethanol industry. Corn growing regions in shaded blocks. Dots represent existing and planned ethanol refinery facilities. Source

Left untouched by the House-passed legislation are current tax incentives for corn ethanol, which were temporarily extended through the end of the year in the tax package passed by the lame duck Congress in December. That includes the Volumetric Ethanol Excise Tax Credit which provides a $0.45 subsidy for every gallon of ethanol blended into gasoline and costs taxpayers roughly $6 billion per year. Debate will no doubt continue over this ongoing subsidy as Congress revisits tax policy later this year. 

For more on the geography of support for ethanol in Congress, see this post from Energy Collective contributor Michael Giberson.