What You Need to Know About Obama’s Budget: Energy

President Obama unveiled his proposed budget Monday, which calls for boosting funding to the Department of Energy by nearly 12 percent. The spending plan, which still has to be approved by Congress, focuses on research and deployment of technologies he’s championed repeatedly: renewable energy, electric cars, biofuel, energy efficiency and nuclear.

The $29.5 billion proposed budget includes $550 million for the ARPA-E program, which funds early-stage clean energy projects. The budget also contains $3.2 billion for renewable energy and energy efficiency programs; $5.4 billion for the Office of Science, which oversees research at national labs; $300 million in credit subsidies (fees borrowers have to pay to get the government to back their loans) to provide $3 to 4 billion in loan guarantees for renewable energy and energy efficiency projects; and the authority to provide $36 billion in loan guarantees for nuclear.

Obama and his Energy Secretary, Steven Chu, have outlined some clean energy goals they want to achieve, though some of the timelines they have set will go beyond Obama’s current term and even the second term, if he’s re-elected. One goal is to cut the cost of solar electricity by about 75 percent to roughly $0.06 per kilowatt-hour, or $1 per watt. At $0.06 per kilowatt-hour, solar electricity will be cost competitive against power from fossil fuel sources without needing government subsidies.

The DOE recently came up with the SunShot initiative to demonstrate its focus on reducing solar electricity costs. SunShot more or less incorporates existing programs, while also adding an emphasis on developing projects. (The DOE has historically focused on developing new materials and more efficiency solar cells.) The DOE estimates SunShot will make use of $425 million of the proposed budgets for various divisions within the DOE, such as the Office of Science and ARPA-E.

The DOE also is asking for $588 million to support its work on electric cars and, specifically, to achieve Obama’s goal of putting 1 million electric cars — from pure EVs to plug-in hybrids — on the road by 2015. The $588 million is part of the $3.2 billion budget for renewable energy/energy efficiency mentioned above. Last week, the DOE issued a report outlining the billions of dollars it has invested so far to achieve that plug-in car goal.

The DOE also had a plan to create an innovation hub for battery research, but also added on two new plans to build energy hubs around smart grid and materials. In the budget proposal, the DOE is asking for $146 million to add the three hubs and to support three existing ones (green buildings, biofuel and nuclear).

Energy conservation and efficiency is also a key goal for the administration. Earlier this month, the White House outlined a Better Buildings Initiative it said would save commercial building owners, schools and city governments $40 billion in energy costs per year. The initiative calls for a mix of tax breaks, grants and loan guarantees. The DOE budget proposal now includes a $100 million loan guarantee program for the initiative. The DOE also asks for $320 million to install energy efficiency technologies at low-income homes.

The government wants to promote nuclear power in a big way, and the DOE wants to be able to offer $36 billion in loan guarantees which, combined with its existing ability to provide $18.5 billion in loan guarantees for nuclear, would be able to fund six to eight nuclear power projects. The DOE is also proposing to spend $64 million for offshore wind, $50 million for geothermal, and $97 million for small nuclear reactors.

Mindful of intent by Republicans to advocate deep spending cuts, Chu has highlighted some of the cuts he plans to make. The hydrogen program would see a 41 percent budget cut, or nearly $70 million. The fossil energy program would see its budget slashed by 45 percent, or $418 million. The DOE also plans to shutter parts of certain national labs and cut administrative costs by nearly 13 percent, or close to $48 million, across the board. Chu outlined the cuts in his blog post last Friday.

Aside from asking for more money for the DOE, Obama also wants to cut tax subsidies for oil, coal and gas industries. He’s asking Congress to make a $3.6 billion cut in those subsidies. During his State of the Union address, the president highlighted his intent to end oil subsidies. He’s unlikely to get his wish, however. A Democratic leader in the Senate, Jeff Bingaman from New Mexico, already called the idea unrealistic.

Republicans in the House of Representatives haven’t unveiled their own fiscal 2012 spending plan, but they have proposed a budget for rest of this fiscal year that would slash funding to the Environmental Protection Agency, a high-speed rail plan, and renewable energy and energy efficiency programs. What Republicans seek to cut for this current budget year reflects areas they will target for the next fiscal year.