HOW SEQUESTRATION STALLS NEW ENERGY INNOVATION

Energy Funding Outlook Looks Bleak as Obama Begins Second Term; Cuts and a decade of stagnation loom ahead for renewed clean energy funding.

Kevin Bullis, February 1, 2013 (MIT Technology Review)

“As a result of impending mandatory spending cuts known as sequestration…federal support for clean energy, which received a $90 billion jolt from the stimulus package four years ago, is likely to decrease…Under sequestration, across-the-board cuts would go into effect in March, and be followed by a decade-long funding cap…The mandatory cuts could be avoided by Congress, but key congressional staffers say that looks unlikely.

“The American Association for the Advancement of Science (AAAS) has analyzed the impact of the cuts on R&D. Originally, the cuts would have lowered defense-related R&D by 9.1 percent and non-defense R&D, such as at the DOE, by 7.6 percent. As a result of the tax deal, the cuts are lowered for fiscal year 2013 to 7.6 percent for defense and 5.1 percent for non-defense R&D, but the full cuts would go into place next year. After that, spending is supposed to stay flat for a decade.”

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“If the across-the-board cuts happen, they will affect all parts of federal energy R&D, including programs at national labs and federally funded research at companies and universities…[It’s] not clear how much flexibility agencies will have to move money around to protect high-priority programs…[because the] law calls for across-the-board cuts. Of course, Congress has the power to change the law if it wants to.

“Avoiding sequestration would require a focused effort on the part of the Obama administration, and would likely require finding alternative ways to achieve similar overall cost reductions. One way to protect R&D might be to siphon money away from some subsidy programs…For example, current subsidies for wind currently go mostly to established technologies. Shifting that to funding for next generation offshore wind turbines could have a bigger impact on clean energy innovation…”

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