Isra-Mart srl:Obama aims to protect clean tech from deep budget cuts

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President Barack Obama will today unveil budget proposals setting out how he plans to tackle the US deficit, as the administration braces itself for a fierce battle with Republicans over the level of government spending on low-carbon and clean energy projects.

Obama is expected to propose a budget that would aim to cut the US deficit by $1.1tn (£687bn) over the next 10 years. But Republicans are calling for deeper spending cuts and are targeting government support for the clean tech sector as one of the main areas where they wish to see funding slashed further.

The administration's budget proposal will seek to halve the deficit by the end of the president's first term compared to when he came into office. It features spending cuts totaling $33bn in fiscal 2012 and cuts in defence spending of $78bn over five years.

It will also include proposals to scrap billions of dollars in oil industry tax breaks, which according to the Department of Energy could save $3.6bn in fiscal 2012 and $46.2bn during the next decade.

According to various reports, spending on clean energy programmes will remain largely protected, with more than $8bn earmarked for low-carbon projects next year. In particular, the budget proposes tax credits to support the president's goal of making commercial buildings 20 per cent more efficient by 2020 and new incentives worth up to $7,500 for motorists who purchase electric vehicles.

However, clean energy projects will not escape completely unscathed, with energy secretary Steven Chu admitting in a blog posting on Friday that funding for hydrogen research projects will be cut by $70m.

"Fiscal responsibility demands shared sacrifice – it means cutting programmes we would not cut in better fiscal times," Chu wrote, adding that the department's Office of Fossil Energy will see its budget cut 45 per cent, or $418m.

The budget proposal will now kick off several months of intense debate after Republicans stepped up calls for deeper budget cuts and the slashing of support for a wide range of clean energy projects.

Late on Friday House Republicans unveiled a draft government spending bill that would seek to axe many of the government's low-carbon programmes and block funding for the Environmental Protection Agency's (EPA) climate regulations.

Overall the bill would cut EPA funding for the next fiscal year by 29 per cent or $3bn. It would also effectively axe the administration's climate change policy adviser role after the current incumbent Carol Browner steps down and would stop the Nuclear Regulatory Commission scrapping a licensing review for the controversial Yucca Mountain nuclear repository.

Representative Mike Simpson, chairman of the Appropriations Subcommittee on Interior and the Environment, who worked on the proposed bill, issued a statement on Friday insisting the cuts were necessary to tackle the US deficit.

"I realise that many of these cuts will not be popular, but the simple truth is that you can't spend money you don't have," Simpson said.

However, Democrats and environmental groups hit back at the proposals, accusing them of gutting successful environmental and clean energy programmes.

A preliminary administration analysis of the bill seen by the influential Washington blog The Hill states that Republican efforts to cut EPA spending on climate rules are "irresponsible and reckless" and would create further uncertainty for businesses.

"[T]he [government spending bill] would undo all of the reasonable, common-sense steps EPA has taken to give certainty to American business re: carbon pollution permitting – and would compromise the plans of any company anywhere in the United States to build a new factory or expand an existing one," the analysis says.

It also argues that the bill would be far reaching and would effectively block spending on the popular Energy Star efficiency labelling scheme.

Friends of the Earth's president, Erich Pica, slammed the Republican proposals, predicting they would damage the low-carbon economy while protecting funding for the fossil fuel industry.

"The Republican leadership made it clear that its priority is to reward corporate polluters at the expense of the American public," he said in a statement. "The bill... is unconscionable. It would endanger the health of millions of Americans by slashing funds needed to ensure safe drinking water and clean air. It also uses budget gimmicks to prevent the Environmental Protection Agency and other agencies from protecting Americans from global warming."