Obama Proposes $4 Billion for States Beating Climate Goals

(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


Appalachia Fund

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.

Clean Energy

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

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