Budget Analysis: FY2011 Budget Deal Cuts Energy Innovation Investments

This article is being cross posted with the Breakthrough Institute and is authored by Breakthrough Policy Associate Sara Mansur.  The original article can be found here.

A budget compromise to fund the government through the remainder of Fiscal Year 2011 would reduce federal energy innovation investments by 10 percent relative to 2010 funding levels. At the same time, the Continuing Resolution would make across the board cuts to each of the major non-defense research agencies.

The House Appropriations Committee released the text of the legislation this week after an agreement reached over the weekend between Congressional Republicans and Democrats and the President that avoided a looming government shutdown. While final passage of the bill must still be secured in the House and Senate, the negotiated compromise is expected to find passage shortly.

The 2011 budget resolution would cut $325 million in federal energy innovation spending and over $1 billion from major non-defense research agencies over 2010 levels (see Figures 1 and 2 below). Cuts to agency operating budgets will be even more severe when combined with the expiration of temporary American Recovery and Reinvestment Act funds that have been flowing to energy innovation and non-defense research programs during 2009 and 2010.

While ultimately keeping budgets at a higher level than those proposed by HR 1, the House GOP’s 2011 budget proposal released in February, the negotiated Continuing Resolution would cut the budgets of most of the major non-defense research agencies by at least 1 percent of FY2010 levels, and, in the case of the National Institutes of Standards and Technology (NIST), by as much as 13 percent.

The final budget figures for key innovation agencies reflect the overall direction proposed by Republicans – including some degree of cuts to all major innovation agencies – and a repudiation of the increased investments in key research activities planned by President Obama. Energy innovation programs are funded in the CR at levels 14% below President Obama’s FY2011 budget request and 30% below President Obama’s 2012 budget requests, while funding for the major non-defense research agencies are 5% (and more than $3.3 billion) below levels proposed by the Administration for FY12.

The budget for the National Institute of Standards and Technology (NIST), which supports advanced manufacturing and technology research, sees the largest departures from President Obama’s FY2011 requests. The CR funds this agency at almost 19 percent below the Administration’s 2011 requests.

Overall, the Continuing Resolution would cut about $1.05 billion from the combined budgets of these non-defense research agencies, while President Obama’s FY11 budget requests had aimed to increase these budgets by about $2 billion.

(For exact numbers, see Chart 3 at the end of this post)

The following chart demonstrates where the CR falls on the continuum between the GOP’s HR 1 proposed budget, released in February, and the White House’s 2011 budget requests, released one year ago in preparation for this Fiscal Year. Arguably, the President’s 2012 budget requests align more closely to his current political priorities than his 2011 budget requests, as the President’s FY12 budget requests were released in February amidst the current budget debate and just days after the release of the House GOP’s HR1. The following chart thus also demonstrates where the CR falls on the continuum between the GOP’s HR 1 proposed budget and the White House’s 2012 budget requests. A “score” of 0 percent indicates that the CR exactly matches the GOP’s proposal, while a score of 100 percent indicates that the CR exactly matches funding levels espoused by the Obama administration.

The energy innovation budgets of key federal energy innovation offices would also receive across-the-board cuts through this final Continuing Resolution. Overall, the plan would cut $325 million in energy innovation investments from these key DOE offices, relative to FY10 levels. In contrast, President Obama’s FY11 budget requests had aimed to increase these budgets by $116 million and by $754 million in FY12, relative to FY10 levels. The combined energy innovation budgets of these offices in the CR are 11 percent below FY10 levels, 14 percent below the White House’s 2011 budget request, and 29 percent below the Administration’s FY12 budget request.

(For exact numbers see Chart 4 at the end of this post.)

The largest of these cuts would come from the Office of Energy Efficiency and Renewable Energy, which is engaged in the research, development, demonstration and deployment of renewable energy and energy efficiency technologies, and whose energy innovation budget would be decreased by approximately $179 million, or 17 percent. In addition, the Office of Nuclear Energy’s energy innovation investments would decrease by $49 million and Fossil Energy R&D would decrease by $48 million, relative to FY10 levels.

The following chart demonstrates where the energy innovation budgets proposed by the CR falls on the continuum between the GOP’s HR 1 proposed energy innovation budgets the White House’s 2011 and 2012 budget requests. Again, a “score” of 0 percent indicates that the CR exactly matches the GOP’s proposal, while a score of 100 percent indicates that the CR exactly matches funding levels espoused by the Obama administration.

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(For methodology used to calculate portion of total budgets devoted to energy innovation, see previous post.)

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About the author

Matthew Stepp is a Senior Analyst with the Information Technology and Innovation Foundation (ITIF) specializing in climate change and clean energy policy. His research interests include clean energy technology development, climate science policy development, transportation policy, and the role innovation has in economic growth.
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