Big Bird, You’re Fired! And all of you enviros, too! Trump thumps, dumps in new budget

Good-bye ARPA-E, DOE, Loan Guarantee program, Energy Star, OPIC, USTDA, NEA, and the Advanced Technology Vehicle Manufacturing Program. Even Big Bird gets the guillotine.

In Washington, the White House released its budget requests for 2018, a high-level, 62-page overview of President Trump’s strategy for “Making America Great Again”.

Departmental impact

In order of percentage impact, the departments are as follows.

Defense: Up $52B or 8 percent
Homeland Security: Up $2.8B or 7 percent
Veterans Affairs: Up $4.4B or 6 percent
NASA: Down $0.2B or 1 percent
Treasury: Down $0.5B or 4 percent
Justice: Down $1.1B or 4 percent
Small Business Administration: Down $43M or 5 percent
Energy: Down $5.6B or 6 percent
Interior: Down $1.5B or 12 percent
Education: Down $9B or 13 percent
Housing & Urban Development: Down $6.2B or 13 percent
Transportation: Down $2.4B or 13 percent
Commerce: Down $1.5B or 16 percent
Health & Human Services: Down $15.1B or 18 percent
Agriculture: Down $4.7B or 21 percent
Labor: Down $2.5B or 21 percent
State: Down $10.1B or 28 percent
EPA: Down $2.6B or 31 percent

Well-known programs slated for 100% funding cuts include:

the Chemical Safety Board
the Corporation for Public Broadcasting
the Delta Regional Authority
the Inter-American Foundation
the U.S. Trade and Development Agency
the Legal Services Corporation
the National Endowment for the Arts
the National Endowment for the Humanities
the Overseas Private Investment Corporation
the Woodrow Wilson International Center for Scholars
discretionary activities of the Rural Business and Cooperative Service
Energy Star
Advanced Research Projects Agency-Energy,
the Title 17 Innovative Technology Loan Guarantee Program
the Advanced Technology Vehicle Manufacturing Program

Highlight Impacts for Selected Departments

Department of Agriculture (USDA)

The Administration says: “The President’s 2018 Budget requests $17.9 billion for USDA, a $4.7 billion or 21 percent decrease from the 2017 annualized continuing resolution (CR) level (excluding funding for P.L. 480 Title II food aid which is reflected in the Department of State and USAID budget).”

• Reduces funding for lower priority activities in the National Forest System.
• Continues to support farmer-focused research and extension partnerships at land-grant universities and provides about $350 million for USDA’s agship competitive research program.
• Reduces funding for USDA’s statistical capabilities, while maintaining core Departmental analytical functions, such as the funding necessary to complete the Census of Agriculture.
• Eliminates the duplicative Water and Wastewater loan and grant program.
• Reduces staffing in USDA’s Service Center Agencies to…reflect reduced Rural Development workload, and encourage private sector conservation planning.
• Eliminates discretionary activities of the Rural Business and Cooperative Service, a savings of $95 million from the 2017 annualized CR level.

The Department of Energy

The Administration says: “The Budget for DOE…reflects an increased reliance on the private sector to fund later-stage research, development, and commercialization of energy technologies and focuses resources toward early-stage research and development. It emphasizes energy technologies best positioned to enable American energy independence and domestic job-growth in the near to mid-term.”

The President’s 2018 Budget requests $28.0 billion for DOE, a $1.7 billion or 5.6 percent decrease from the 2017 annualized CR level.

• Provides $120 million to restart licensing activities for the Yucca Mountain nuclear waste repository and initiate a robust interim storage program.
Eliminates the Advanced Research Projects Agency-Energy, the Title 17 Innovative Technology Loan Guarantee Program, and the Advanced Technology Vehicle Manufacturing Program.
• Ensures the Office of Science continues to invest in the highest priority basic science and energy research and development as well as operation and maintenance of existing scientific facilities for the community.
• Focuses funding for the Office of Energy Efficiency and Renewable Energy, the Office of Nuclear Energy, the Office of Electricity Delivery and Energy Reliability, and the Fossil Energy Research and Development program on limited, early-stage applied energy research and development activities where the Federal role is stronger.

EPA

The Administration says: “The budget for EPA reflects…President’s priority to ease the burden of unnecessary Federal regulations that impose significant costs for workers and consumers  EPA would primarily support States and Tribes in their important role protecting air, land, and water in the 21st Century.”

The President’s 2018 Budget requests $5.7 billion for the Environmental Protection Agency, a savings of $2.6 billion, or 31 percent, from the 2017 annualized CR level.

The President’s 2018 Budget:

• Discontinues funding for the Clean Power Plan, international climate change programs, climate change research and partnership programs, and related efforts—saving over $100 million for the American taxpayer compared to 2017 annualized CR levels. Consistent with the President’s America First Energy Plan, the Budget reorients EPA’s air program to protect the air we breathe without unduly burdening the American economy.
• Avoids duplication by concentrating EPA’s enforcement of environmental protection violations on programs that are not delegated to States, while providing oversight to maintain consistency and assistance across State, local, and tribal programs.
• Eliminates more than 50 EPA programs, saving an additional $347 million compared to the 2017 annualized CR level. Lower priority and poorly performing programs and grants are not funded…examples of eliminations in addition to those previously mentioned include: Energy Star; Targeted Airshed Grants; the Endocrine Disruptor Screening Program; and infrastructure assistance to Alaska Native Villages and the Mexico Border.

Department of Transportation

The Administration says: “The Budget request reflects a streamlined DOT that is focused on performing vital Federal safety oversight functions and investing in nationally and regionally significant transportation infrastructure projects.”

The President’s 2018 Budget requests $16.2 billion for DOT’s discretionary budget, a $2.4 billion or 13 percent decrease from the 2017 annualized CR level.

Digest analysis and comment

6 points to absorb for now.

1. It’s a budget request, not an appropriation. All of this has to go through the sausage-making process in the House and Senate.

2. It’s in many ways a War Budget. Not so much a war on big government — as much as a War Budget in the form of sharply increased defense-related and security-related spending. Overall, this is a shift in government priority, not a shift towards smaller government. Overall discretionary spending (excluding contingency funds) is reduced by $1 billion, out of a $4 trillion US budget. The cut is symbolic — while the shift towards Defense and Homeland Security is real.

3. The focus is shifting away from the expensive, risky, Murky Middle of “bringing technologies from the lab to ready-for-commercialization”. The budget emphasizes the late-stage groovy of deployment (“energy technologies best positioned to enable American energy independence and domestic job-growth in the near to mid-term”) and the early-stage groovy ‘fun with big toys” of basic R&D (shifting spending “toward early-stage research and development”).

If you’ve wondered how the government will foster technologies that are near-term and mid-term while retreating away from commercialization activities in favor of basic R&D, you’ve raised a good question. If you say to yourself that “the commercialization program was built because private industry, in the past, has repeatedly not picked up the slack”, you’ve raised a good point.

4. There’s a lot of “we’re still going to do it” combined with “someone else is going to pay for it” in Trumpenomics. The Mexican Wall is a prime example — “they’ll pay, you’ll see” goes the refrain. So we see quite a bit of emphasis on energy independence and advanced fleet, but corporations will pay for everything beyond early-stage R&D. And we see a lot of “the States and Tribes’ll do it” on protecting the environment. Consider it a shift in the Glorious Burden, not a big change in what the goals and priorities are.

5. EPA enforcement or responsiveness on anything is likely to be greatly affected.

6. A lot of Goodbye. In the sector of the advanced bioeconomy, think Energy Star, ARPA-E, the DOE Loan Guarantee program, and the Advanced Technology Vehicle Manufacturing Program.

What does it mean?

1. Big companies rock. Those that have the financial resources to absorb a bigger commercialization effort will face less competition, that’s for sure — from entities that have relied on loan guarantees.

2. For the advanced bioeconomy, as we have pointed out before, the Obama Administration was so profoundly shifted towards the power sector and electric cars that the cuts will be felt by fuels and chemicals perhaps less than any other sector in clean tech. The Loan Guarantee and ARPA-E programs were massively tilted towards power and electrics — far exceeding the share of market held by the power sector — and that goes for the Advanced vehicle program, too.

3. I wouldn’t bet on a gigantic appetite for continuing the $7500 tax credit for buying an electric vehicle, under this Administration. That’s tax policy rather than budget, but tax reform is on the table this year in DC too, and if the Administration is willing to gut everything else related the deployment of electrics, they’re unlikely to be in love with a market-distorting and huge tax credit.

Which might, in the end, put more emphasis back onto renewable fuels as an affordable, low-cost, pro-American, environmentally-friendly technology set. Not to mention that renewable chemicals got so little love that they literally had almost nothing to lose.

The Bottom Line

Bad news for many, but look on the bright side: perversely, could be great times for renewable fuels and chems — it’s a bit of a playing field leveler for the liquid cleantech sector that’s been the Cinderella under Obama (and I mean the early scenes when Cinderella is progressively reduced from daughter to wretch).

And for those looking for real estate in DC, prices should be dropping soon.