February 14, 2011

This Weekend’s News: Energy in President Obama’s FY 2012 Budget

President Obama will propose his fiscal year 2012 budget
today with a number of proposed budget cuts to domestic spending programs,
including, as The New York Times
reported yesterday, forestry
programs, funding for state water treatment facilities and an initiative to
restore the environmental health of the Great Lakes

Given the attention that the
president gave to energy in his State of the Union address
, including
hinting at reorganizing the Department of Energy (DOE), as well as new programs
in support of clean energy technology, it is not surprising to see a lot of
mention of energy and the president’s new budget proposal in the news this

In one headline on Saturday from The Washington Post it was reported that the
Department of Energy will see 600 million dollars in cuts
, part of the
president’s plan outlined in his State of the Union address to reorganize some federal
agencies in an effort to reduce wasteful spending and expenses.

In the same story, The
Washington Post
reported on Energy Secretary Steve Chu’s note about the
budget cuts that he posted
to the department’s blog
on Friday. “According to Chu's note,” the Post reported:

budget to be unveiled next week will propose cutting spending on department
management by nearly 13 percent
, slashing the office of fossil fuel budget
by 45 percent by zeroing out four programs, and cutting a hydrogen technology
program by 41 percent. It will shrink the department's vehicle fleet by 35
percent in the next three years and eliminate funding for two relatively small
projects at two national laboratories. 

As the Post reported, “Chu said $418 million in
savings would come from the office of fossil fuels, including an end to the
Fuels Program, the Fuel Cells Program, the Oil and Gas Research and Development
Program, and the Unconventional Fossil Technology Program.”

“His note
also reiterated that President Obama's State of the Union address call to end
tax breaks for oil and natural gas activities would save about $3.6 billion in
fiscal 2012 and $46.2 billion over 10 years.”

But beyond budget
cuts, the president’s proposal would bulk up DOE’s clean energy technology
programs. According to The National
, “The budget will also include more than $8
billion for research, development and deployment investments in clean energy
technology programs
, as Obama previewed in his address.”

The New York Times also reported that the administration will push
for money to help develop small modular nuclear reactors.  “The
[Energy] department is hoping for $500 million over five years, half of the
estimated cost to complete two designs and secure the Nuclear Regulatory
Commission’s approval
,” the Times reported.
The push for small nuclear reactors is in part an effort to help the department
meet its federal target for reducing greenhouse gas emissions; “Like other
federal agencies, the department is required by an executive order to reduce
its carbon footprint by 28 percent by 2020,” the Times acknowledged.

According to
the Times, despite the steep costs of
nuclear energy, DOE is hoping that its proposal would help generate support and
interest from public utilities: “The Energy Department’s notion is that if the
government provides half the money up front and signs a contract to buy power
from the reactor, a utility will be persuaded to order one. That contract,
because it guarantees revenue for the utility company, would make it easier for
the utility to receive financing.”

The Times report discusses the possibility
of nuclear reactors on military bases, as well as exporting the finished technology
to developing countries that still use coal-fired power plants – an effort to
help curb global greenhouse gas emissions no less. Yet the report also
acknowledges some market and reliability issues, as well as security concerns:

reactors present some advantages and some drawbacks, said David Lochbaum, a
nuclear expert at the Union of Concerned Scientists, which generally opposes
nuclear power.


Mr. Lochbaum
said that reactors of 1,000 or 1,500 megawatts, the output of traditional
reactors, are so big that it has been difficult to match them to anticipated
demand. “Either you build it early, and like ‘Field of Dreams,’ you hope the
customers come, or you’re short by 1,000 or 1,500 megawatts and you hope nobody
notices while you’re building your plant,” he said.


But since
the attacks of Sept. 11, 2001, he said, all plants have had to bolster security
and keep control room operators and maintenance staff on duty, increasing
overhead costs to produce a relatively small amount of energy. And the cost to
build small reactors is uncertain.

You will see
more commentary from the Natural Security Blog on the budget just as soon as we
see it. And you can expect other CNAS experts to weigh in on non-Natural
Security related aspects of the budget as well, including my officemate Travis
Sharp who will publish a policy brief on the budget later this morning. Stay
tuned for more.

This Week’s Events

In addition to our normal Natural Security events list, we
are including some budget events that might be of interest:

Today at 10:30 AM, the Office of Management and Budget will release
its annual federal budget request to Congress, which you can find posted on the Office
of Management and Budget website
. Then at 12:15 PM, Jacob Lew, director,
Office of Management and Budget, will hold a news conference on the president's
fiscal year 2012 budget at the Eisenhower Executive Office Building and will be webcast live on the White House
. Also today, starting at 1:00 PM, head over to SAIS for The Rise of Asian National Oil Companies on Global Oil Markets.

Then from 1:30 PM to 2:00 PM, Energy Secretary Steven Chu will present the Energy Department

And from 2:00 PM to 3:10 PM, Defense Secretary Robert Gates and other Defense
Department officials will give a briefing on the Defense Department's fiscal
year 2012 budget. Budget documents will be available at 1:30 PM on the Defense Department’s budget website and Defense Department’s press website. You
can watch a live webcast on the
Defense Department website
, as well.

On Tuesday at 10 AM, the Atlantic Council will host an event on Pakistan After the Floods.

Then on Wednesday at 8:30 AM, the Alliance to Save Energy
will celebrate energy efficiency with an event, Great Energy Efficiency Day 2011. At
10:00 AM, the House
Armed Services Committee will hold a hearing on the Defense Department budget
with Secretary of Defense Robert Gates and Chairman Admiral Michael Mullen. You
can watch a live webcast on the
committee website
.And at 12:30 PM, SAIS will host a meeting to discuss The Natural Gas Revolution: United
States and Global Impacts
. At 2 PM, head over to the Environmental and
Energy Study Institute for an event on Fuel
Cell and Hydrogen Energy Development

Finally, on Thursday at
9:30 AM, the Senate Armed
Services Committee will hold its hearing on the Defense Department budget
with Secretary of Defense Robert Gates and ADM Michael Mullen Again, you can watch a live webcast on
the committee website
and audio
webcast on CapitolHearings.org