Budget Analysis By Issue: Energy and Environment

Making good on a promise made during last week's State of the Union address, President Obama has included new money for what he describes as clean energy development. That includes authorization for the Department of Energy to guarantee loans for new nuclear power plants. This money is not a direct payment but will be available to back up investments in what many regard as a financially risky enterprise. The spending comes as DOE appoints a commission to study how to dispose of high-level nuclear waste. Last year the administration decided to end efforts to bury it at Yucca Mountain in Nevada.

The budget also extends credit subsidies for renewable energy and energy efficiency projects. Spending on renewable energy projects will also rise for solar, biofuels and energy efficient buildings.

Getting the axe are subsidies for fossil-fuel projects backed by DOE. However, DOE would receive a record $545 million to back research in "clean coal," such as ways to capture carbon dioxide from coal-fired power plants and sequester it underground instead of allowing it to rise into the atmosphere. Also up for new money are efforts to modernize the national electricity grid.

Analysis: Unlike last year's budget, this one does not calculate income from a cap and trade climate regime in which revenues would be generated by auctioning the right to emit carbon dioxide to industries. The decision apparently reflects doubts about the future of cap and trade legislation now in Congress.

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