The 2015 Budget: Impacts on Energy Efficiency & Renewable Energy

Friday, March 28, 2014——The Environmental and Energy Study Institute (EESI) – in partnership with the House Renewable Energy and Energy Efficiency Caucus – held a briefing on the energy efficiency and renewable energy implications of the fiscal year (FY) 2015 budget proposal released by President Obama on March 4. The $3.9 trillion budget proposal reflects the Administration's "all of the above" energy strategy as well as its focus on climate change, following the unveiling of the President's Climate Action Plan in June 2013.

Speakers from the Department of Energy (DOE) and the Congressional Research Service (CRS) gave an overview of the budget requests for various clean energy programs, explained budget priorities, and provided context on how these priorities and trends compared to prior years.

The proposed 2015 budget increases the Department of Energy’s (DOE) funding by 2.6 percent over 2014 enacted levels, but reduces the Environmental Protection Agency's (EPA) by 3.8 percent.

The President's budget includes a $1 billion Climate Fund and a $56 billion infrastructure package that the Administration says would be used to "help our communities prepare for the effects of climate change." Related initiatives seek to make the electricity grid more resilient, not only to disasters but to attacks as well. Also of note is a requested increase of 26 percent over 2014 appropriations for the Department of Transportation. The increase is intended to go some ways to address the $86 billion maintenance backlog and help fund more energy efficient modes of transportation.

The President’s budget also calls for the elimination of fossil fuel subsidies, while proposing to make tax credits for renewable energy production permanent.

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Highlights

 

• The FY2015 total budget request for the U.S. Department of Energy (DOE) is $29.116 billion, up 3 percent ($716 million) from FY2014.
• Jason Walsh, Senior Advisor, Department of Energy, Office of Energy Efficiency and Renewable Energy (EERE), began by listing some of EERE's recent accomplishments, including its SuperTruck program (which exceeded its goal to develop trucks that are 50 percent more efficient than current models), its successful push to reduce battery costs, two new wind turbine testing facilities, and the finalization of new efficiency standards for more than 30 household and commercial products.
• An independent audit found that between 1976 and 2008, the third of EERE's portfolio that could be evaluated had a return on investment of 24 to 1 ($388 billion versus $15 million).
• Walsh stressed that the United States trailed China’s investments in clean energy in 2013.
• According to Walsh, EERE's budget request for FY2015 is $2.317 billion, a 22 percent increase from FY2014 appropriations (as enacted). Within the proposed EERE budget, manufacturing and vehicle technology programs would see the largest increases, while program management and strategic programs would see small decreases.
• Appropriations within EERE are grouped into four major themes:
  1. Sustainable transportation, with $705 million (a 15 percent increase from FY2014) for vehicle, bioenergy, and hydrogen and fuel cell technologies.
  2. Renewable electricity, with $521 million (a 16 percent increase from FY2014) for solar, wind, water, and geothermal technologies.
  3. Energy savings, with $858 million (a 39 percent increase from FY2014) for advanced manufacturing, building technologies, weatherization and intergovernmental activities, and the Federal Energy Management Program (FEMP).
  4. Corporate support programs, with $238 million (a 3 percent increase from FY2014).
• The DOE’s largest budget increase is for the Advanced Manufacturing Research and Development Facilities program, which supports the creation of at least one new Clean Energy Manufacturing Innovation Institute, and supports two existing institutes. This program maintains investment in the Critical Materials Hub and Manufacturing Demonstration Facility.
• The DOE’s Vehicle Technologies program is placing more emphasis on lightweight vehicles made from carbon fiber composites. Special emphasis is given to the EV Everywhere Grand Challenge which is designed to accelerate the development of advanced batteries and advanced technologies for vehicle charging from the electric grid.
• The DOE’s Solar Energy Technologies program is focusing on innovations in manufacturing to reduce manufacturing costs and improve the competitiveness of U.S. industries on the global market. The program will also tackle the soft costs (permitting, installation, maintenance) of solar installations.
• The DOE has introduced a new initiative, HydroNEXT, as part of its Water Power Technologies program. HydroNEXT aims to double the current contribution of hydropower in the United States by increasing generation at existing water resource structures and by improving the performance of existing technologies.
• Fred Sissine, Specialist in Energy Policy, Congressional Research Service, noted that the Department of Energy's main goals are to reduce oil imports 50 percent by 2020 and to lead the world in clean energy technologies. To accomplish these goals, the DOE aims to:
  • Double renewable energy production by 2020.
  • Double energy productivity by 2030.
  • Make non-residential buildings 20 percent more efficient by 2020.
  • Ensure clean energy constitutes 80 percent of power generation by 2035.
  • Cut greenhouse gases 17 percent below 2005 level by 2020.
• Transitioning to a clean energy economy is deemed important for three main reasons:
  1. Improving international competitiveness and creating jobs in new industries
  2. Reducing carbon emissions to mitigate climate change
  3. Reducing oil imports
• Sissine proceeded to highlight the key funding differences between the FY2015 proposed budget and the enacted FY2014 appropriations in three key areas:
  1. Sustainable transportation spending would be up $90 million / 15 percent, including a 24 percent increase for vehicles.
  2. Renewable electricity generation would be up $72 million / 16 percent, with the largest increase for wind (up 40 percent) and geothermal (up 34 percent).
  3. Energy efficiency would be up $241 million / 39 percent, with the largest increase for manufacturing (up 60 percent).
• Sissine focused first on the Manufacturing Program, which would receive the largest budget increase, relative to 2014. Its goal is to make manufacturing more efficient through the use of advanced materials and processes. Advanced Manufacturing R&D Facilities would receive an extra 134 percent in funding (up $109 million). These facilities bring together government, industry, and academia, and are meant to be financially sustainable within five to seven years. A new Clean Energy Manufacturing Innovation Institute would study nanomaterials for energy, next generation electric machines, bio-manufacturing, and smart manufacturing.
• The vehicles program seeks to make plug-in electric vehicles as affordable and convenient as gasoline-powered ones by 2022, in part by cutting battery production costs by 88 percent. The EV Grand Challenge initiative would, therefore, receive an additional $69 million (up 24 percent).
• The buildings program's goal is for new buildings to use 50 percent less energy by 2030. R&D on sensors, controls, grid integration, and new air conditioning technologies would increase by 41 percent.
• In the renewable energy budget request, the wind program seeks to cut the costs of wind power, and to increase installed windfarm capacity from 60 gigawatts (GW) in 2012 to 300 GW by 2030. The solar program seeks to reduce the energy cost of utility-scale photovoltaic plants to 6 cents/kilowatt-hour, a 75 percent drop, by 2020. And, the bioenergy program seeks to make drop-in biofuels at $3 per gallon of gasoline equivalent a reality by 2017 (the demonstration and deployment of pilot- and demonstration-scale biorefinery projects would receive an extra 62 percent in funding). This is part of a collaboration with the Departments of Defense and Agriculture.
• In conclusion, Sissine noted that between 1948 and 2012, nuclear power represented the lion's share of Department of Energy spending (at 49 percent). Fossil fuels received 25 percent of the budget over those 64 years, followed by renewables (12 percent), efficiency (10 percent) and electricity (4 percent). The proposed 2015 budget would allocate 25 percent to efficiency, 25 percent to renewables, 22 percent to nuclear, 12 percent to fossil fuels and 11 percent to fusion.
• Scott Sklar, President, The Stella Group and Chair, Sustainable Energy Coalition Steering Committee, noted that Bloomberg New Energy Finance estimated renewable energy investments to have been worth $254 billion worldwide in 2013. In the United States, total investments in clean energy reached $44.2 billion in 2012, and renewables represented the largest single source of new capacity growth.
• Solar energy jobs alone are expected to increase by 15.6 percent in 2014, after a 19.9 percent increase in 2013.
• Sklar emphasized that energy efficiency remains the most cost-effective energy source, on a levelized cost basis. Wind energy is now competitive with natural gas.
• Sklar proceeded to suggest ways in which the Department of Energy could improve its programs. In particular, he encouraged it to collaborate more with industry, as is the case in the advanced manufacturing program, which he held up as a model. He said laboratories should be more willing to share information and collaborate with other researchers. Sklar insisted that DOE needs to better integrate small businesses in its programs, as most innovation stems from small companies. Finally, he called on DOE to better blend technology solutions, and not to divide them into specialized silos.

 

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