The House Energy and Power Subcommittee heard testimony from Secretary Moniz on the DOE FY 2016 budget request, which outlined $1+B in renewable energy program funding increases but a decrease to fossil energy research and development.

On February 11, 2015, the House Energy and Power Subcommittee held a hearing on the Department of Energy’s (DOE) FY 2016 Budget request to examine DOE’s funding priorities, major changes, energy-related rulemakings, priority science and research, loans and grants, and management reforms. The President’s Budget (PB) proposed $29.9B for DOE for FY 2016, requesting an overall 9.2 percent increase, $2.52B above the FY 2015 enacted level. The largest non-defense budget request increases are for the Offices of Energy Efficiency and Renewable Energy ($809M) and Science ($272M) (Table 1).

Republican Senators Say Budget Request Does Not Support All-of-the-Above Strategy
Senate Energy and Natural Resources Committee Chairman Lisa Murkowski (R-AK) noted that the DOE budget proposal falls short on fossil energy investment and ignores a true “all of the above” energy policy. She pointed out that the proposal includes significant increases for efficiency, vehicle, and renewable technologies, but virtually all funding for fossil energy would be directed to carbon capture, methane, or some other environmental consideration. Oil shale, and other unconventional resources have been ignored. There is no funding for methane hydrate production research, which is important for the future of Alaska. Murkowski questioned Secretary Moniz regarding Alaska-specific issues, particularly DOE’s strategy for the Arctic. Secretary Moniz outlined efforts, such as a 10-year plan for renewables and a National Petroleum Council Study on research and development needs related to the Arctic’s hydrocarbon production.

Energy and Power Subcommittee Chairman Ed Whitfield (R-KY) stated that the DOE budget request is growing while its role in setting the nation’s energy policy is shrinking. Whitfield said that DOE has relinquished the lead to EPA by providing justification for EPA’s efforts to handicap coal and other fossil fuels to address climate change. Though low natural gas prices play a part, EPA’s proposed new power plant regulations would effectively ban construction of coal-fired power plants by requiring the use of CCS technology that has not yet been demonstrated as commercially viable. While EPA is ratcheting up the regulatory demands on coal-fired electric generation, DOE is cutting back on the fossil energy research and development program that could help this sector find ways to comply. Whitfield pointed out that DOE had put an end to the FutureGen program, even though EPA’s regulatory agenda continues to require new power plants to install CCS.

Whitfield also said that DOE’s $2.7B budget request for EERE is out of proportion to the potential benefits and the realities of the nation’s energy needs, citing cost and reliability concerns as well as renewables intermittency. He stressed that wind and solar will remain intermittent and minor contributors relative to base load sources such as coal, nuclear, and natural gas, and that proposed spending levels should better reflect the reality of the current and future energy mix. Whitfield posited that as long as the administration’s energy measures remain, DOE research efforts should be directed towards assisting industry in meeting the requirements.

Chairman Fred Upton (R-MI) remains focused on areas of agreement to move beyond the decades-old energy scarcity policies to maximize the benefits of North American energy. Upton stated that the nation’s growing energy abundance has contributed to significant job growth in energy-producing states like Texas and North Dakota and in manufacturing states like Michigan; modernizing North America’s energy infrastructure is vital to safely and responsibly maximize growing oil and gas production and potentially support an average of 432,000 jobs per year through 2035. Upton pointed to recent bipartisan pipeline safety legislation as an important milestone and called for similar compromise on electric grid resilience efforts – ranging from advanced grid technologies to protecting against weather events or physical and cyber security threats – to meet future challenges. He also underscored that geopolitical benefits should be a part of policy decision-making to diminish the political influence of energy exporters like Russia and Iran, and help U.S. allies that would benefit from U.S. energy exports.

Funding Increases Channeled to Renewable Energy and Modernization of the Electric Grid
The DOE $2.7B budget request for its Office of Energy Efficiency and Renewable Energy (EERE) is more than all of the other applied science budgets combined. The largest funding increases are to advanced manufacturing ($204M), vehicle technologies ($164M), and solar energy ($104M).

The EERE budget request amounts to a total increase of $809M across three sectors:

• Sustainable Transportation ($793M total) — The majority of this funding supports research and development for advanced vehicle technology, specifically vehicle electrification and grid infrastructure. Funds also support biofuels, and hydrogen and fuel cell technologies
• Renewable Power ($645M total) — More than half the funding goes to advancing solar energy through the DOE SunShot Initiative. The budget would also fund wind, water, and geothermal energy technologies
• Energy Efficiency ($1,030M total) — The majority of federal energy efficiency funding supports advanced manufacturing, building technologies, and weatherization.

In its ongoing effort to reduce U.S. dependence on oil through clean energy technology development, the funding request targets continued growth in various renewable and efficient energies, with an emphasis on domestic manufacturing. The increased budget request is backed by an EERE Office of Strategic Programs study showing that of $15B in investments across solar, geothermal, wind, vehicles, and advanced manufacturing programs have yielded estimated economic benefit of $388B.

Electricity Deliverability and Energy Reliability
The highest percentage-based DOE budget increase request is for the Electricity Deliverability and Energy Reliability program. The program’s 83.4 percent budget increase is largely due to the introduction of two new programs:

• Transformer Resilience and Advanced Components ($10M) — Addresses unique challenges to grid components and expands the study of geomagnetic disturbance impacts on transformers.
• State Energy Reliability and Assurance Grants ($63M) — Includes $27.5M in grants to state localities, tribes, and regions for long-term energy transmission, distribution, and storage planning. $37.5M in grants would be provided to increase system resilience through assurance planning and exercises.

The DOE has stressed that states are instrumental in developing various aspects of the evolution of the electric power system, and that they can achieve increased reliability, resiliency, efficiency and environmental planning with federal support. Once developed, these processes must be integrated across the nation and, if funded, the DOE can facilitate this coordination. The budget request would aim to align with the Administration’s all-of-the-above energy strategy, with an additional focus on efforts to modernize the electric grid.

Budget for Advanced Research Projects Agency-Energy would Fund Basic Science and Demonstration Technologies
The President provided less to ARPA-E than other programs. The office funds high-potential, high-impact projects that are often too early for private sector or other DOE program funding. According to the DOE, the increase in ARPA-E funding by $45M would enable support for additional early-stage innovative programs and exploitation of technological opportunities developed in previous ARPA-E programs. In FY 2016, ARPA-E expects to release funding opportunity announcements (FOA) for seven to ten focused programs each funded at approximately $10 – $40M. The new FOAs are the vast majority of the budget increase request:

• The proposal increases funding for ARPA-E projects by $43.75M to support the increased number of focused programs expected to be released in FY 2016. ARPA-E will not release a large, open funding opportunity announcement; the ARPA-E design makes it impossible to predict the specific technologies that will garner future investment, however general technology program funding includes transportation fuels and feedstock, energy materials and processes, dispatchable energy, and sensors, information, and integration.
• The proposal increases funding for program direction by $1.25M to support the additional staff required to develop new programs, manage a larger number of projects, and increase in travel is commensurate with increased projects and FTEs

About $12.9M of FY 2016 funding is also likely to be used to supplement ongoing ARPA-E projects for which a small amount of additional funding could catalyze a substantial technological development and potentially lead to future external support that would help advance the technology towards the market.

Common Ground
As the Committee plans to advance its comprehensive energy package, Upton expressed the intent to work with Senate counterparts and the DOE. Upton also noted that DOE’s upcoming release of the Quadrennial Energy Review (QER) would help inform and complement the Committee’s legislative efforts. Energy Secretary Moniz indicated a willingness to work together on the plan. A January 2014 Presidential Memorandum established the QER Task Force to review existing energy policies in the context of current economic, environmental, and security conditions; provide recommendations for additional executive and legislative actions; and establish research and development priorities. The first QER report is expected in Q1 2015 and will focus on the variety of challenges facing the nation’s energy transmission, storage and distribution system. DOE’s Office of Energy Policy and Systems Analysis (EPSA) serves as the coordinating office for the QER, and DOE’s FY 2015 budget requested a 100 percent ($19.3M) increase for EPSA over FY 2014 enacted levels.

Upton also questioned Secretary Moniz about DOE’s efforts to engage other nations to use U.S. resources as a force for global good. Secretary Moniz stated that DOE has worked with Ukraine to help prepare winter contingency plans and that the Ukraine government has sought additional collaboration for training, managing emergency response, and energy modeling, among others. He also explained a positive trilateral energy ministerial with Mexico and Canada on energy data integration, noting the potential for more collaborative possibilities.

Insight to Industry
Republican energy committee members remain supportive of fossil energy program funding, which currently amounts to approximately $791M.

The DOE budget request aims to continue domestic clean energy technology advancement, with an increased focus on electric grid design and resilience. Despite the continued federal investments in non-fossil energy technologies, the $1+B budget increase requests will not likely pass at the outlined levels. The total enacted energy program budget increase from 2014 to 2015 was less than $5M.

Originally published by EnerKnol.

EnerKnol provides U.S. energy policy research and data services to support investment decisions across all sectors of the energy industry. Headquartered in New York City, EnerKnol is proud to be a NYC ACRE company.