Environmental Engineering Reference
In-Depth Information
DOE's fiscal year 2009 budget requests $1.8 billion for renewable, fossil, and
nuclear energy R and D and $4.7 billion for the Office of Science. In addition,
several other federal agencies perform R and D to develop advanced energy
technologies. For example, the Department of Agriculture funds R and D on
ethanol and biodiesel production and energy crops that maximize ethanol
production. The Department of Defense is the nation's largest consumer of
transportation fuels, spending $13.6 billion on energy in fiscal year 2006. The
Department of Defense is conducting R and D—some of it in collaboration with
DOE—to develop alternative fuels to displace oil. One Air Force program has
already certified a new fuel for the B-52 bomber, a 50/50 blend of the standard
oil-based JP-8 jet fuel and a new synthetic fuel currently derived from natural gas
that may be derived from biomass in the future.
In addition to R and D funding, the federal government can attempt to tap the
vast resources of the private sector through tax incentives, such as tax credits to
companies that make certain types of energy investments. These tax
preferences—which are legally known as tax expenditures—result in forgone
revenue for the federal government. The revenue losses can be viewed as
spending channeled through the tax system. The federal government provides the
energy industry and consumers with 20 tax expenditures affecting energy supply,
totaling $6.3 billion in fiscal year 2007 and $4.9 billion in fiscal year 2008.[2]
While the tax subsidies were historically directed toward the conventional energy
sector, they have also been directed toward stimulating the deployment of
advanced energy technologies.[3] For example, the Energy Policy Act of 2005
provided a (1) 2-year extension of the production tax credit for renewable
technologies, (2) new investment tax credit of up to $1.3 billion for constructing
new clean-coal power plants, and (3) new production tax credit of 1.8 cents per
kilowatt-hour for up to 6,000 megawatts of new nuclear power capacity lasting 8
years after each qualifying nuclear reactor begins service. The Energy Policy Act
of 2005 also authorized DOE to implement a new loan guarantee program for
energy projects that decrease air pollutants or greenhouse gases, employ new or
significantly improved technologies, and have a reasonable prospect of
repayment. In February 2007, the Congress authorized DOE to guarantee loans of
up to $4 billion.[4] In December 2007, the Congress directed DOE to make loan
guarantees of up to $38.5 billion in fiscal years 2008 and 2009.[5]
Moreover, the federal government can enact standards and mandates that
could impact the nation's energy portfolio. For example, the federal government
has recently revised the renewable fuels standards to require the use of 36 billion
gallons of biofuels by 2022.[6] For electricity, the Congress has considered
renewable portfolio standards that require a percentage of electricity be generated
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