(Bloomberg) — The Obama administration is proposing a $4
billion fund to reward states that exceed cuts in greenhouse-gas
emissions, and wants steeper royalty rates for oil, gas and coal
extraction on public land.
In measures likely to be greeted skeptically by the
Republican majority in Congress, President Barack Obama’s 2016
budget calls making permanent tax breaks for wind and solar,
investing in Appalachian communities facing a steep drop in
coal-industry employment and offering $2 billion of tax credits
for coal plants that capture and bury their carbon emissions.
“The United States is undergoing a rapid energy
transformation, particularly in the power sector,” the White
House said in a fact sheet on its energy spending. But that is
also hurting “workers and communities who have relied on the
coal industry as a source of good jobs and economic prosperity,
particularly in Appalachia.”
Obama has stepped up efforts to combat climate change since
his 2012 re-election, with the Environmental Protection Agency
moving ahead with the first caps on carbon emissions from power
plants. Those rules, set to be finalized this year, have drawn
the ire of Republicans such as Senate Majority Leader Mitch McConnell, who say one of their top priorities is blocking those
McConnell says he worries about the pain those climate
policies inflict on coal-dependent communities in his home state
of Kentucky and elsewhere in Appalachia. Obama sought to address
those concerns, too, proposing a fund to pay miners put out of
work as coal demand slumps, and to help shore up pension
benefits. He would also funnel $1 billion over five years to
help refurbish abandoned coal-mining sites.
The plan is a “hopeful sign that brings with it much
opportunity for coalfield communities,” Justin Maxson,
president of Mountain Association for Community Economic
Development in Kentucky, said in an e-mail. It “is a major
boost to regional economic transition initiatives already taking
Obama separately called for $239 million for the EPA’s
climate plans, including $25 million to help states write plans
to meet the standards. In addition, the administration proposed
a $4 billion fund to induce states to move more quickly or cut
more steeply than required under the EPA plan.
The Treasury budget also proposes to make permanent an
investment tax credit for solar, wind and fuel cells, and to
establish a new $2 billion tax credit for power plants that
capture their carbon dioxide, with a bonus $50 credit for every
metric ton of carbon dioxide permanently stored underground.
“What’s important here is that the administration is
recognizing what both people from industry and environmental
groups have recognized: that it’s time to establish an incentive
for carbon-capture technology,” said Kurt Waltzer, managing
director for the Clean Air Task Force.
The budget would also increase spending on carbon capture
and storage technology programs run by the Energy Department.
The agency is requesting more than $116.6 million for its
programs, an increase of 32.5 percent from this year’s level. A
carbon storage program would get almost $109 million under the
budget request, an increase of about 9 percent.
Coal research programs in general, though, would be cut
about 7.7 percent, to about $369 million from $400 million.
Obama also proposed $1.29 billion in aid to developing
nations to help them fight climate change. That includes an
additional $500 million for the Green Climate Fund, to meet a $3
billion pledge he made last year. That fund is seen as one key
to getting a global agreement, being brokered by a United
Nations group, in Paris this year to cut greenhouse gases.
Republican lawmakers had already expressed skepticism toward
approving the funds before it was put in the budget.
The Interior Department said it would renew a plea to
Congress to raise royalty rates on oil and gas leases on public
lands. The change would raise $2.5 billion over the next 10
years, according to the budget.
To contact the reporter on this story:
Mark Drajem in Washington at
To contact the editors responsible for this story:
Jon Morgan at
Steve Geimann, Romaine Bostick