SPECIAL UPDATE: The President's FY 2004 Budget Request: Department of Energy

(Posted 2-25-03)

This update was originally sent out as an e-mail message to AGI's member societies.

IN A NUTSHELL: The Department of Energy (DOE) funds a number of different geoscience-related programs. Similar to last year's request, the most dramatic cuts in the president's request for fiscal year (FY) 2004 involve fossil energy research and development (R&D) in oil and natural gas. The cuts to natural gas R&D are less than last year but still would represent a 40% cut from FY 2002 appropriations. Cuts to oil R&D would effectively eliminate all upstream exploration and production research, cutting that account to $2 million, down from $33 million in FY 2002. Overall, the president has requested $15 million for oil R&D, down 58% from last year's request and down 73% from FY 2002. Elsewhere in the department, funding for basic geoscience research within the Office of Science is essentially flat and geothermal funding is down 4% from last year's request. Funding for cleanup of the nuclear weapons complex is up 5%, and the request for Yucca Mountain is similar to last year but a big increase over what was actually appropriated in FY 2002.

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The total Department of Energy request for FY 2004 is $23.4 billion, an increase of nearly 6% from last year's request. The department is responsible for a wide array of missions, most not related to energy. The two largest parts of the budget are the National Nuclear Security Administration ($8.8 billion), which oversees the development and management of the nation's nuclear weapons stockpile, and environmental cleanup of former nuclear weapons production facilities ($7.8 billion). Scientific research at the DOE national laboratories and universities would receive $3.3 billion, and $2.5 billion -- a little over 10% of the total -- goes to energy-supply programs.

Fossil Energy

DOE's Office of Fossil Energy (FE) requested a total of $747 million, a decrease of nearly 7% from last year's request and down 12% from the fiscal year (FY) 2002 appropriation. Within that total, Research and Development (R&D) programs would receive $519 million, an increase of 8% from last year's request but down 10% from the previous year's allocation. More than 60% of the R&D funding goes to the president's $320 million Coal Research Initiative (CRI), which is predominately directed at downstream technology. CRI does include $62 million for carbon sequestration R&D, which marks a 40% increase from the FY 2003 request and close to double the previous allocation.

Funding for oil and natural gas R&D combined make up only 8% of the total Fossil Energy R&D budget, a percentage that continues to drop with each new request. Funding for Natural Gas Technologies totals $27 million, an 18% increase from last year's request but a 40% cut from the FY 2002 appropriation. Nearly a quarter of this request goes towards research in hydrogen from natural gas as part of President Bush's FreecomCAR initiative. Also funded through the natural gas account is $3 million for joint research with industry into the potential of gas hydrates as a future energy resource. The funding for hydrates is down 22% from last year and down 63% from two years ago. The budget proposes to consolidate a number of programs under the Natural Gas Exploration and Production account into a new Sustainable Supply account while cutting 10% from last year's requested level. According to budget documents, this consolidation is in part due to a federal government-wide assessment of programs that encourages management to "phase out programs and activities that are neither productive nor integral to the program's mission and goals."

Simply put, the Oil Technology R&D account is gutted in the president's request. As with natural gas, programs within the Oil Exploration and Production account have been consolidated but with much more dramatic cuts. The total Oil Technology request is $15 million, a 58% cut from last year's request and 73% less than the allocation for FY 2002. Funding for the Oil Exploration and Production account was slashed to a total of $2 million, down 88% from last year's request of $16 million and down 94% from the FY 2002 allocation of $33 million.

The oil and natural gas R&D programs are some of the first to be subjected to a new White House Office of Management and Budget (OMB) assessment of R&D programs based on relevance, quality and performance. Steep budget cuts reflect OMB's assessment that the programs have been ineffective, a conclusion that contrasts with a recent National Research Council report on the same programs that found significant returns on the federal investment. The deep cuts have produced concern on Capitol Hill. At a February 13th House Science Committee hearing on overall R&D funding in the FY 2004 budget, Committee Ranking Member Ralph Hall (D-TX) said, "I remain concerned that funding for oil and gas development programs continues to be cut while domestic production continues to decline at an ever increasing rate and industry research programs have been largely closed out. If the federal government doesn't step into the breach, then how can we expect to minimize our dependence on foreign oil in the next 10 years?"

Also within the overall FE funding is $16.5 million for the Naval Petroleum & Oil Shale Reserves (NPR). The request zeros out funding for the Rocky Mountain Oilfield Testing Center, a research facility for new recovery and remediation technologies located at the Teapot Dome field in Wyoming. The request states that it "does not have a uniquely federal mission and is more appropriately carried out by the private sector."

Office of Science

Total funding for the DOE Office of Science would come to $3.3 billion in the president's request, a small increase from last year's request and essentially flat compared with the FY 2003 allocation. Within the Office of Science, the Basic Energy Sciences programs would receive $1 billion, again flat funding. The Chemical Sciences, Geosciences, and Biological Energy Sciences account is slated to receive $209 million, a slight increase from last year's request and more than allocated in FY 2002. Within that amount, the geoscience funding for university and national lab research is essentially flat. Also within the Office of Science, the Biological and Environmental Research program would receive nearly $500 million, a small increase from last year's request but a decrease of close to 10% from the funding level two years ago.

Nuclear Waste Disposal

Last year's decision by the President and Congress to accept the Yucca Mountain site as the nation's permanent disposal site for high-level nuclear waste, means that the project has moved into its second phase. After more than 20 years and $4 billion in site characterization, funding for Yucca Mountain will now be focused primarily on activities to support the submission of a license application to the U.S. Nuclear Regulatory Commission. The budget request includes $591 million for licensing and program management activities, basically flat from last year's request but an increase of nearly 58% from the allocation two years ago. Within this amount, there is a sizable jump in funding for activities related to waste acceptance, storage, and transportation in anticipation of the repository accepting waste by 2010.

Environmental Management

The Office of Environmental Management (EM) is responsible for managing the cleanup of the environmental legacy of the nation's nuclear weapons program -- everything from research to testing to production. EM has been under pressure from DOE and Congress to reform its management to result in quicker, more cost effective cleanup of sites. To respond to this request, the EM budget for FY 2004 is outlined in five new appropriations accounts. The total EM request comes to $7.2 billion, a 5% increase from the comparable FY 2003 budget request. The budget request states that this level of funding should provide the resources for EM to work towards its goal to complete cleanup of 89 of the 114 sites by the end of 2006.

Geothermal

Geothermal technology funded under the DOE Office of Energy Efficiency and Renewable Energy (EERE) is marked for a decrease of nearly 4% from last year's request, to total $25 million. Again, research related to hydrogen has won out over the established programs within this account. In total, EERE has requested $444 million, an increase of 9% from last year's request (nearly all of which is slated for hydrogen technology).


Special update prepared by Margaret A. Baker and David Applegate, AGI Government Affairs Program

Sources: Department of Energy budget documents and White House Office of Management and Budget.

Please send any comments or requests for information to the AGI Government Affairs Program.

Posted February 25, 2003


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