Last week President Trump unveiled his budget blueprint, which detailed savage cuts to most areas of discretionary spending while boosting defense outlays by a whopping $54 billion. Nearly all government agencies were major losers under the President’s budget, except for those dealing with defense and border security.
The Department of Energy would see a 5.6 percent cut, or a reduction of $1.7 billion. But digging into those numbers, certain areas of DOE were winners while others were losers. Areas of DOE dealing with clean energy, smart grid technologies, and electric vehicles are either entirely eliminated or suffer steep cuts. Meanwhile, DOE’s nuclear weapons programs, where the bulk of the agency’s funding is allocated, would see an 11 percent increase. The blueprint also includes $120 million to restart the licensing for the Yucca Mountain nuclear waste storage facility in Nevada, which has been on ice for years.
One item that stood out was the elimination of funding for a much-heralded energy R&D unit within the DOE that is crucial for long-term energy innovation. Known as the Advanced Research Projects Agency-Energy (ARPA-E), the agency is modeled after the highly-respected DARPA, a section of the Pentagon that has been responsible for military tech innovation since its inception in the 1950s in response to the launching of Sputnik.
ARPA-E funds high-risk, high-reward technologies that would not otherwise receive funding from the private sector because of the risk. The agency is relatively young, created a decade ago and funded with an initial $400 million as part of the 2009 stimulus package. ARPA-E has funded several hundred projects with its relatively paltry budget, everything from energy storage to biofuels, promising new renewable energy technologies, carbon capture and much more. The funded projects have, in turn, attracted an additional $1.8 billion in private sector financing, and 56 projects have moved forward to form new companies. Related: Wall Street Bullish On Oil Prices Despite Saudi Warnings
One example is 1366 Technologies, a company that pioneered a new solar wafer that can be produced at half of the cost of prevailing technology and with one-third less energy. But the company is now in limbo. It has plans to build a manufacturing facility in upstate New York but has been banking on a loan guarantee from the Energy Department – a program that is slated for elimination in President Trump’s budget.
ARPA-E itself would be entirely eliminated under the President’s budget as well. “The Budget for DOE demonstrates the Administration’s commitment to reasserting the proper role of what has become a sprawling Federal Government and reducing deficit spending,” the President’s budget proposal says.
While the DOE would suffer some pretty painful cuts, the EPA would fare much worse, seeing funding slashed by $2.6 billion, or a staggering reduction of 31 percent over current levels. Not much of a surprise there, given the President’s clear antipathy to federal environmental regulation. The Clean Power Plan, put in place by the Obama administration, which put a cap on carbon emissions from power plants, would be eliminated.
The Department of Interior, which manages federal lands, would see a 12 percent cut as well. The budget request says that funding should be reduced in order for the agency to focus on managing national parks, and not acquire new public lands. Unsurprisingly, the President wants a funding increase for energy development on federal lands. Good news for oil and gas drillers. Related: Can NYC Reach Its Renewable Energy Storage Goals?
The State Department also sees steep spending cuts, losing about $10 billion, or 28 percent. The focus of the cuts were, again, on the agency’s climate programs. “We’re not spending money on that anymore,” Office of Management and Budget Director Mick Mulvaney told reporters when unveiling the budget last week, referring to financing climate research and climate change programs. “We consider that to be a waste of your money.”
But the budget is only a proposal and will inevitably be rewritten and revised by Congress. The blueprint was panned, unsurprisingly, by Democrats, but notably, even some Republicans balked at the President’s cuts to non-defense programs. "I don't think it's particularly realistic to finance an increase in defense funding on the backs of non-defense discretionary programs," Republican Rep. Charlie Dent (PA) told E&E News in an interview. "As a member of the Appropriations Committee, I know that many of our members are deeply concerned about that."
However, the budget blueprint is the clearest indication yet of the President’s priorities, which can be summed up pretty succinctly: Trump wants to ramp up military spending while drastically shrinking the size of government elsewhere. Clean energy companies will face setbacks from much less R&D support, while oil and gas companies are optimistic about the gutting of environmental regulation.
By Nick Cunningham of Oilprice.com
More Top Reads From Oilprice.com:
- China’s Crude Oil Production Falls 8% Year Over Year
- China, Saudi Arabia Ink $65-Billion Worth Of Preliminary Deals
- Has OPEC Underestimated U.S. Shale Once Again?