President’s budget has no solution for climate change
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Yesterday President Obama fired the first shot in what is likely to be a series of budget skirmishes with House Republicans leading up to the November elections. Including controversial provisions such as an expiration of the Bush tax cuts for those making above $250,000 in his budget appears to be an attempt to differentiate himself from his political opponents. While Friends of the Earth strongly supports these provisions, the president’s budget is a stark reminder that President Obama remains unwilling to stake out a bold position on climate change or to present a visionary plan for energy policy.
Conspicuously absent from the president’s budget for the third year in a row is a price on carbon. Putting a price on carbon is an important step to avoiding the worst impacts of climate change and it could raise much needed revenue. Yet, President Obama is actually moving away from taking action on climate change. The president’s first budget in 2009 included more than $70 billion a year in revenue from a price on carbon, but there is no mention of one this year. The president’s deafening silence on climate change weighs on his relationship with many in the environmental community.
This year’s budget could also have been an opportunity for President Obama to put forth a 21st century energy policy, moving the country away from fossil fuels and nuclear reactors. As Robert Alvarez at the Institute for Policy Studies has shown, instead the president is proposing to spend nearly eight times more money on military nuclear programs, including nuclear weapons, than on energy efficiency and renewable energy.
While it is disappointing, enacting the president’s budget would still be better than the status quo. The positives from the budget include:
1) Ending Subsides for Fossil Fuels – The president’s budget eliminates 12 tax subsidies for fossil fuels as well as tax loopholes that primarily benefit the fossil fuels industry. These proposals have been in each of the president’s budgets. This year President Obama even added some new proposals, including a modest increase in tax rates used to fund the oil spill liability trust fund, and an end to the exemption that allows shippers of tar sands oil from Canada to avoid paying into the fund. While the subsidies targeted in the President’s budget are a good start there are many other subsidies for fossil fuels that President Obama left on the table. We continue to give a tax break to refiners that upgrade their refineries so that it can take dirty tar sands oil. Despite the president’s continued rhetoric about ending all oil and gas subsidies there are some that it seems he has decided to keep. In his first budget President Obama included a provision to end royalty free leases in the Gulf of Mexico. This proposal has not been in his budget since then. The president also continues to propose wasting millions of dollars on carbon capture and sequestration. We cannot get serious about dealing with climate change if we are still subsidizing fossil fuels.
2) Extending Incentives for Renewable Energy – Tax credits are the lifeblood of the renewable energy industry. Yet Congress has traditionally waited until the last minute to extend tax credits for renewable energy. This uncertainty has resulted in boom-bust cycles of renewable investment. Renewable energy tax credits are again set to expire at the end of 2012. Rather then ending this boom-bust cycle President Obama has called for yet another short term extension. While this will throw a lifeline to these important industries, it will not give investors the assurances they need to make long term investment decisions. President Obama needs to express a long term commitment to renewable energy with policies that will begin a rapid deployment of renewable energy and efficiency. We also need policies that will incentivize locally distributed renewable power generation.
3) Not Expanding the Slush Fund for Dirty Energy – The Department of Energy’s Title XVII loan guarantee program received a lot of attention last year because of Solyndra’s bankruptcy. What has largely been ignored is that Title XVII was designed as a slush fund for nuclear reactors and coal plants. In fact the majority of the remaining loan guarantee authority is earmarked for dirty projects – $18.5 billion is slated for nuclear reactors, $4 billion for uranium enrichment, and $8 billion for fossil fuels, while only $1.5 billion remains for renewable energy. While the president remains committed to getting these dirty projects completed, this year he is not asking for additional authority to help construct even more dirty projects.
President Obama continues to show that he does not understand the magnitude of our climate crisis. Simply nibbling around the edges with small incentives for renewable energy is not going to cut it. Not when we need to make reductions now. We are in desperate need of bold leadership on climate change and once again the President has shirked his responsibility.
Chart Credit: Robert Alvarez, Senior Adviser, Friends of the Earth