Clean energy development and deployment was one of the central themes of President Barack Obama’s State of the Union address. The President urged Americans “to out-innovate, out-educate, and out-build the rest of the world” and stressed that, with respect to clean energy, “this is our generation’s Sputnik moment.” President Obama emphasized two clean energy-related goals for the United States in his address: (a) to become the first country to have a million electric vehicles on the road by 2015 and (b) to have 80 percent of the country’s electricity be generated from clean energy sources.
Following the State of the Union address, the U.S. Department of Energy (DOE) submitted to Congress (PDF) the President’s Fiscal Year 2012 budget request of $29.5 billion, a $3.1 billion (11.8 percent) increase from the DOE’s FY 2010 budget. Included in the proposed budget are (a) an additional $200 million to pay the credit subsidy costs for loan guarantees for innovative energy efficiency and renewable energy projects under Section 1703 of Title XVII of the Energy Policy Act of 2005 (PDF), which the DOE estimates should support an additional $1 billion to $2 billion in loan guarantees, (b) up to $36 billion in additional loan guarantee authority for nuclear power projects, and (c) $650 million (including $100 million from the Wireless Innovation and Infrastructure Initiative) for the Advanced Research Projects Agency – Energy (ARPA-E), to support early-stage clean energy research projects.
In stark contrast, Republicans in the House recently introduced, and the House passed on February 19, 2011, a Continuing Resolution (H.R. 1) (PDF), which, among other things, proposes over $100 billion in cuts from the President’s FY 2011 budget request. Among other budget cuts, the Continuing Resolution (a) reduces by $25 billion the total principal amount for DOE loan guarantee commitments available for projects, other than nuclear projects, under the Omnibus Appropriations Act of 2009 (PDF) (which made a total principal amount of up to $47 billion available) (Section 1425), (b) rescinds all unobligated balances (as of February 11, 2011) of discretionary appropriations under Division A of the American Recovery and Reinvestment Act of 2009 (PDF), including funds to pay credit subsidy costs for loan guarantees under Section 1705 of the Energy Policy Act of 2005 for renewable energy and electric transmission projects (for more information on Section 1705 loan guarantees, see Latham’s Client Alerts on this topic) (Section 3001), and (c) reduces from $250 million to $50 million the budget for ARPA-E (Section 1417).
On February 13, 2011, Rhone Resch, President and CEO of the Solar Energy Industries Association, in an open letter to Speaker of the House John Boehner asked that the Continuing Resolution’s provisions affecting the DOE loan guarantee program be stricken, stating that:
To date, DOE has committed over $25 billion in loan guarantees for 22 clean energy projects with total project costs of over $40 billion… Six of these projects have received only conditional loan commitments. Since OMB will likely not consider loan guarantee funding to be obligated until the loans have closed, these projects may be killed by H.R. 1 even though the developers have committed millions of dollars in reliance on the U.S. government’s promise of support.