Spending cuts: What does the sequester mean for energy?

Spending cuts will hit a wide range of energy programs starting Friday, unless a deal is reached to avert the sequester. What do the spending cuts mean for fossil fuels and renewables?

Kevin Lamarque/Reuters
President Obama views the bow section of the USS Illinois submarine as he visits Newport News Shipbuilding to highlight the potential impact of spending cuts in Newport News, Va. The energy sector is expected to feel the effect of the sequester, as spending cuts force agencies to furlough workers and curtail research spending.

Spending cuts scheduled to start Friday will have a variety of effects, provided Congress fails to negotiate out of the approaching sequester. America's energy sector won't be spared, as federal agencies plan to furlough workers and curtail research spending.

In short, the spending cuts would delay leasing activity on public lands for everything from oil and gas to wind and solar projects, with a significant loss of revenue in the process. It would also cut funding for training for solar jobs, home weatherization, and energy research. 

Here's a rundown of the effects:

Oil, gas and coal

Program cuts at the Department of Interior would mean a slowdown in the development of oil and gas resources on public lands, according to a White House report released Sunday.

Interior Secretary Ken Salazar made a similar argument in a letter to the US Senate Committee on Appropriations earlier this month, saying the sequester would mean approximately 300 fewer onshore oil and gas leases issued in Western states. Some of the 550 offshore oil and gas exploration plans in the Gulf of Mexico would also be jeopardized.

These delays or cancellations would have a considerable financial impact, the Department of the Interior says. State and local governments could stand to lose some $200 million in revenue generated from mineral leasing on federal lands. 

Delays in coal leasing would defer as much as $50 million to $60 million per sale, according to the department. 

Renewables

The permitting of solar and wind installations on federal lands may also decelerate.

“We have made impressive gains, approving dozens of utility-scale solar, wind and geothermal projects in the West and transitioning from planning to commercial leasing for offshore wind,” Mr. Salazar said in a keynote address Tuesday at the Offshore Wind Power USA Conference in Boston. “The potentially devastating impact of budget reductions under sequestration could slow our economy and hurt energy sector workers and businesses.”

In a letter to the Senate Committee on Appropriations, Energy Secretary Chu expressed concern "for the Department of Energy's ability in the face of such cuts to make the investments needed to grow our economy through basic scientific research and advances in clean energy technology, secure our Nation through the stewardship of our nuclear stockpile, and meet our obligations to clean up the environmental legacy of the Cold War." 

Sequestration would slow the transition to a clean-energy economy, according to the Department of Energy, and weaken efforts to obtain energy independence. Spending cuts would slow down the Energy Department's efforts to make solar cost-competitive with conventional forms of electricity, the department says. A solar industry job training program targeted at military veterans is also slated to see reduced funding, if the sequester goes through.

Energy efficiency

Spending cuts could reduce by more than a thousand the number of homes weatherized through DOE funding and could leave 1,200 weatherization professionals out of the job.

A cut to the department's Vehicle Technologies Program would delay research and development investments or shut down a Manufacturing Demonstration Facility for 6-8 months. That translates to a slowdown in the nation's production of cleaner and more efficient vehicles, the DOE says. 

Energy Star, the joint EPA-DOE energy efficiency program for household products, would feel the effect of sequestration. The updating of product specifications in more than 65 categories would slow down, the EPA says, and the department would reduce the number of energy-intensive sectors it works with to enhance energy efficiency measures.

Of course, allowing the sequester to happen may help some energy companies avoid increased taxes that could come as a result of a congressional deal. 

You've read  of  free articles. Subscribe to continue.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.