Winning the Future on Clean Energy

A global race is underway to develop and manufacture clean energy technologies, and we are competing with other countries that are playing to win. America has the most dynamic economy in the world, but we can’t expect to win the future by standing still. The President is committed to building a new clean energy economy here at home – because the nation that harnesses the power of clean, renewable energy will be the nation that leads the 21st century. A clean energy economy supports job growth, environmental protection, and fiscal health. To help drive this transition, the President has laid out a series of ambitious proposals for the Nation. The 2012 Budget supports clear progress toward achieving these targets, and builds on the historic steps that the Administration has already taken through the Recovery Act—which included over $90 billion in clean energy investments. The Budget also reflects a strategy designed to ensure we are overcoming challenges, taking steps to achieve our broader climate and energy objectives, and building the momentum necessary to transition to a clean energy economy.
 Double the share of clean energy electricity in 25 years  Put 1 million electric vehicles on the road by 2015  Establish the United States as the leader in clean energy innovation

The President’s FY2012 Budget is a reflection of today’s realities. The funding priorities set out in the Budget reflect the need for shared sacrifice and tough choices, with reductions to programs that, absent the fiscal situation, we would not cut. But budgeting is an exercise in setting priorities, and the few areas of increase in this year’s Budget focus on items that directly address the priorities of innovation, education, and rebuilding our infrastructure. Key to these is the focus on clean energy technology: Doubling the share of electricity generated from clean energy sources by 2035. The President proposes a new Clean Energy Standard, whereby 80 percent – double the current level of 40 percent – of electricity will come from clean energy sources by 2035. This Clean Energy Standard will help create a market to unleash innovation across a range of energy sources, from renewable sources to nuclear power, clean coal, and natural gas. In addition, it will be coupled with new efforts to promote energy efficiency that saves money for American families and businesses – including a new initiative to catalyze private sector investment and upgrade commercial buildings such as offices, stores, schools and other municipal buildings, universities, and hospitals. It will also build on the U.S. Department of the Interior’s efforts to site more renewable energy projects on public lands than ever before. Putting 1 million electric vehicles on U.S. roads by 2015. In 2008, the President set an ambitious goal of putting 1 million electric vehicles on the road by 2015. To reach that goal, the Budget proposes a new effort to support electric vehicle manufacturing and adoption in the U.S. through improved consumer rebates, investments in R&D, and a $200 million competitive program to encourage communities that invest in electric vehicle infrastructure. This builds on our ongoing efforts to reduce dependence on foreign oil through aggressive steps including strong fuel economy standards for cars and trucks and significant investments in biofuels.

Committing to Efficiency through a “Better Buildings Initiative”. Last year, commercial buildings consumed roughly 20 percent of all energy in the U.S. economy. Improving energy efficiency in our buildings can create jobs, save money, reduce our dependence on oil, and make our air cleaner. The President’s Better Buildings Initiative will make commercial buildings 20 percent more energy efficient over the next decade by catalyzing private sector investment through a
series of incentives to upgrade offices, stores, schools and other municipal buildings, universities, hospitals, and other commercial buildings. This initiative builds on our investments through the American Recovery and Reinvestment Act (ARRA), and our continued commitment to passing “HOMESTAR” legislation to encourage American families to make energy saving upgrades in their homes.

The Clean Energy Strategy in the Budget. The 2012 Budget focuses on research and development as the first step in a broader approach that employs all the tools of government to pull in the same direction for this key priority. This strategy is designed to create the conditions needed to transition to a clean energy economy and mobilize private-sector investment clean energy technologies. The budget includes increased funding for clean energy basic research at key basic physical science agencies, such as the National Science Foundation and the Department of Energy’s Office of Science. Building on the knowledge of basic science, the Budget also provides significant increases in applied energy research and development—with costs and knowledge shared with industry—to drive innovation. The Budget seeks to reinforce the new approaches to energy research by adding three new energy innovation hubs and calling for enough funds for ARPA-E to more than double its portfolio of cutting edge energy research. The Budget focuses on those areas with the lowest costs and greatest potential for improvement. In addition, this broader strategy uses targeted incentives to promote deployment of these technologies into the marketplace, including:      “Race to the Green” incentives to promote voluntary and experimental regulatory reform and other investments at the local level  Limited tax incentives to encourage o clean energy manufacturing and o clean energy projects.

Loan guarantees Reverse auctions Consumer tax rebates First of a kind engineering and licensing support for small modular reactors

To help pay for these programs and align policies toward new clean energy technologies, the Budget proposes to repeal over $4 billion per year in inefficient fossil fuel subsidies, and the Administration will continue to work in a bipartisan fashion to put in place market-based incentives to promote US leadership in the clean energy marketplace. The 2012 Budget. Overall, the Budget includes $8.7 billion in Federal investments in clean energy technology1 programs across the government. These programs focus mainly on the first
Clean energy technologies are energy generation technologies that are renewable or alternative to traditional fossil fuels and technologies or practices that help improve energy efficiency or reduce energy consumption. 2

components of the strategy – research and development to improve the technologies of today and create the technologies of tomorrow. However, this investment also includes on-theground actions that focus on accelerating the diffusion of clean energy technologies in the marketplace. Funding for Clean Energy Technology Programs
FY 2012 Budget
($ in millions) 

2010*                134                  803                    34                  555               4,146                      6                    50                  149                  228                  373                  100   6,577

2012                130                  534                    63                  548               6,340                      6                     ‐                    134                  282                  577                    93   8,707

Environmental Protection Agency  Department of Agriculture  Department of Commerce ‐ NIST  Department of Defense  Department of Energy   Tennessee Valley Authority  Department of Housing and Urban Development  Department of Transportation  National Aeronautics and Space Administration  National Science Foundation  Nuclear Regulatory Commission  Total

FY 2010 data excludes earmarks

Beyond the $8.7 billion, the Budget also supports a variety of other efforts that use different mechanisms to drive increased deployment, including loan guarantees, tax credits, and other incentives. Examples of these deployment efforts include:  Up to $36 billion in additional loan guarantee authority for nuclear power plants and $200 million of new budget authority to support up to $2 billion of loans for innovative renewable energy and energy efficiency projects;  $5 billion in Section 48C tax credits for renewable energy manufacturing facilities;  Extension of the Section 1603 tax credit for renewable energy deployment; and  Accelerated permitting of new solar, wind, and geothermal electricity generation capacity on Federal lands through the Department of the Interior. Energy Efficiency Since improving our energy productivity is often the lowest cost means of increasing our competitiveness, improving the environment, and reducing dependence on fossil fuels, the Budget targets improvements in all major areas of energy use: buildings, vehicles, and industrial energy use.  Department of Energy: More than doubles energy efficiency investments, focused on R&D, with initiatives that increase funding for electric vehicle, battery and energy storage R&D (including a new Batteries and Energy Storage Energy Innovation Hub), industrial technology R&D (including a new Critical Materials Energy Innovation Hub)


and building technology R&D. The Administration is also calling for passage in of the $6 billion Homestar program to promote household energy efficiency.  Department of Defense: Includes a wide range of clean energy programs, with a focus on increased war fighting capability by saving energy and simplifying logistics. DOD investments include projects to reduce carbon-based energy use, including development of more efficient turbine engines, alternative energy sources and storage technologies that could reduce the need for local generators, and lightweight materials for use in vehicles.  Environmental Protection Agency: Increases Energy Star funding by $3 million to $56 million, enhancing compliance and verification of Energy Star products and strengthening residential and commercial buildings programs. Renewable Energy Renewable energy is domestically produced energy such as solar, wind and geothermal that uses technology to capture natural energy flows. Research efforts over the last few decades have lowered the cost of many of these technologies to a point where they are poised to enter the market. These key investments will insure US leadership in these industries.  Department of Energy: More than a 70 percent increase in renewable energy R&D investments, including support for a $1 a Watt initiative to make solar energy cost competitive; increased funding for 24-hour geothermal renewable energy; and increased funding for wind energy R&D.  National Science Foundation: $577 million for grants to universities for long-term core research activities and more targeted cross-agency initiatives in sustainability, advanced manufacturing, nanotechnology, information technology, and biotechnology.  National Institute of Standards and Technology: $16 million for research and development in solar energy generation, specifically to develop measurement tools that would enable development of advanced solar cell technologies. The NIST budget also provides $22 million for research and standards development to support interoperable and secure Smart Grid devices. Nuclear Energy Nuclear Energy is a well developed source of electricity generation without greenhouse gas emissions. As such, it will be an important part of the future energy mix in order to achieve our climate and clean energy goals.  Department of Energy: $741 million for Federal efforts to research and develop nuclear energy technologies, including generation, safety, waste storage and management, and security technologies. With 104 operating reactors in the U.S. today, nuclear provides about 20% of U.S. electricity. Safely extending the life of these reactors and deploying new technologies that have cost, security, and other benefits can contribute to reaching our domestic climate and clean energy goals. Carbon Capture and Storage Finding a way to continue to use coal, one of the most abundant domestic fossil fuels, in a way that does not endanger the climate, is a key goal of these clean energy investments. Carbon capture and storage technology could also be adapted for use in natural gas applications.  Department of Energy: Supports clean coal R&D with $453 million for a fossil energy R&D portfolio focused on carbon capture and storage technologies. The Budget focuses

resources on activities that have potential benefits for both the existing fleet and new power plants ̶ specifically, post-combustion capture R&D and geologic carbon storage R&D. Other Clean Energy Activities Beyond the funding outlined above, there are a variety of efforts all pulling in the direction of promoting US leadership in the clean energy future.  Department of Agriculture: $6.5 billion in financial assistance to electric cooperatives, research institutes, and small businesses to promote the expansion of renewable energy and biofuels. Of this amount, $6 billion will be targeted to decrease the Nation’s reliance on fossil fuels and promote renewable and clean energy at electric generation, transmission, and distribution sites in rural communities. The President’s Budget proposes a program level of approximately $400 million to support biofuels.  Department of the Interior: $73 million (a +$14 million increase) for renewable energy development activities. A primary emphasis of this funding is to facilitate the review and permitting of new solar, wind, and geothermal electricity generation capacity on Federal lands, with the goal of permitting at least 9,000 megawatts of new solar, wind, and geothermal electricity generation capacity on Department of the Interior-managed lands by the end of calendar year 2011.  Environmental Protection Agency: Supports greenhouse gas permit programs to drive clean energy and energy efficiency with $25 million in new funding for states and $5 million for EPA technical assistance.  Environmental Protection Agency: $6 million in new funding for EPA to develop and implement mobile source standards that push new clean, low carbon, efficient vehicles that save consumers money.  Environmental Protection Agency: $7.5 million to develop New Source Performance Standards to promote the use of already existing, proven cost-effective technologies that will help increase the efficiency of new and existing facilities.  Housing and Urban Development: Building on the findings of the Recovery through Retrofit (RTR) report, the Federal Housing Administration (FHA) at HUD has a announced a new FHA PowerSaver loan guarantee program that will offer homeowners up to $25,000 to make energy-efficient improvements of their choice, including the installation of insulation, duct sealing, doors and windows, HVAC systems, water heaters, solar panels, and geothermal systems. For this Pilot Program, HUD will deploy up to $25 million appropriated in 2010 for a single family Energy Efficient Mortgage Innovation Fund pilot program. HUD will utilize those funds primarily to provide incentive payments with grant funds to participating lenders to support approved activities, with remaining funds available to support evaluation of the program. Leading by Example. To complement all these efforts, the government is leading by example, making cost-effective investments in renewable energy, water and energy efficiency and reducing petroleum use in its own buildings, facilities, and vehicles in order to reduce its carbon footprint and its greenhouse gas (GHG) emissions. More than 50 federal agencies developed annual Sustainability Plans to manage and track progress in reducing Federal GHG direct emissions by 28% and indirect emissions by 13% by 2020. Examples include:


 The Budget proposes granting NASA new authority to partner with local utilities in constructing clean energy power plants on NASA property to service both NASA Centers and their surrounding communities.  GSA is doubling its annual investment in its energy and water conservation measures program from $20 million to $40 million in the Budget to help it meet a 30% reduction in building energy intensity by 2015 and has established policy to make all new building construction achieve LEED Gold certification.