Obama's 2011 Budget: What Did, & Didn't, Make the Cut for Greentech

The Obama administration released its proposed budget for the 2011 fiscal year this morning, and within the more than $3.8 trillion plan are several programs that could help shift the playing field for greentech startups and energy companies. To start, there’s direct support for the renewable energy, carbon capture and smart grid industries, through loan guarantees, research and development project funding and other programs. Glaringly absent is the $646 billion in revenues that last year’s budget assumed would come from a program for limiting and trading carbon allowances, signaling dwindling confidence that the Senate will pass a bill with a cap and trade system this year.

The administration has also proposed to take a nearly $39 billion bite out of tax breaks for the fossil fuel industry that some advocates of renewable energy sources like solar and wind argue have blocked the gateway to grid parity and fair competition. The bulk of those cuts — $36.5 billion worth through 2020 (a small fraction of the sector’s projected revenue) — are targeted at the oil and natural gas industry ), while Obama proposes cutting tax breaks for the coal industry worth some $2.3 billion in that time frame.

The portion of Obama’s budget dedicated to the Department of Energy includes $300 million for the highly competitive grant program known as ARPA-E (Advanced Research Projects Agency-Energy), which supports very early stage, moonshot technologies that might be too risky for other investors  and can open new doors for cleantech startups. Last fall, the agency awarded its first round of grants, totaling $151 million, for 37 projects — out of a pool of 3,600 applicants.

The budget proposal for the DOE, which on Friday announced a new commission on nuclear energy, also includes significant support for nuclear power plants and research: a whopping $36 billion in new loan guarantee authority for two new nuclear power facilities (tripling the amount currently available for these guarantees) and $793 million for “a new cross-cutting research program to address technology needs for all aspects of nuclear energy production.

Meanwhile, a proposed boost for renewable energy and efficiency projects would support up to $3 billion to $5 billion in guarantees. It’s a lesser amount than the nuclear loan guarantee program, but those dollars could support more projects due to the high costs associated with nuclear development (the first award under the DOE loan guarantee program last year, for thin-film solar startup Solyndra, clocks in at $535 million).

Makers of green energy equipment could also benefit under a proposed $5 billion expansion of a tax credit first created as part the stimulus package, which covers up to 30 percent of the costs for new, expanded or retooled greentech equipment factories. That likely comes as welcome news for the companies behind several hundred projects that didn’t make the cut for $2.3 billion in credits awarded last month under the oversubscribed program. For smart grid technologies, the administration proposes allocating $144 million for R&D as well as demo projects.

In a major shift from the administration’s 2010 budget proposal today’s proposal does not include revenue from a cap and trade system for limiting greenhouse gas emissions. Whereas last year’s proposal assumed $646 billion or more would roll into federal coffers between 2012 and 2019, this year the President says he expects a cap and trade system will be “deficit-neutral,” neither boosting nor shrinking the government’s revenue.

Over at the Environmental Protection Agency, today’s budget proposal includes a $4 million increase over the 2010 allotment for implementing greenhouse gas reporting mandates, bringing the 2011 amount to $21 million. The agency is also aiming for a major $43 million uptick over 2010 in funding for”regulatory initiatives to control greenhouse gas emissions.” That brings the 2011 total to $56 million, with the largest chunk proposed to help states set up permitting programs for large carbon emitters.