August 25, 2011
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With the Congressional “super committee” set to issue recommendations in November on how to reduce the deficit by $1.2 trillion or more, the clean energy sector will be squarely in the cross-hairs.
But rather than thoughtlessly gut energy and environmental programs as some have lawmakers and presidential-hopefuls have proposed, Congress has the opportunity to cut spending for the most harmful environmental programs while maintaining support for clean energy, efficiency and other climate programs.
That’s what the Green Scissors Project set out to accomplish this year – releasing a report yesterday that outlines hundreds of billions in spending cuts over five years that “are expensive for taxpayers and harmful for the environment.”
The Green Scissors project, a small coalition of progressive and conservative groups, has been around since 1994. Each year, the group releases recommendations for environment-related spending cuts. But this year’s report is particularly relevant as super committee starts putting together its deficit-reduction plan.
It’s a mixed bag of recommendations – some good, some bad – that could provide a framework for House members as they look to balance the budget. We’ll get to our response to the recommendations below. But there was one other notable element to this year’s report.
The Green Scissors coalition added the Heartland Institute, a fiercely anti-climate action organization that has been on the front lines of pushing misinformation and pseudo-science in order to create an artificial “debate” over climate change.
Any report co-written by the Heartland Institute looking at cutting spending in the name of the environment would raise eyebrows.
Heartland’s President, Joseph Bast, recently told Climate Progress in a video interview that “we are a fossil fuel dependent economy and I don’t think that’s a bad thing.… The ecological impact of that reliance is not negative.”
So for some, it may be a giant leap of faith to trust a report sponsored by an organization that has worked so hard to spread disinformation and kill any action on addressing climate change. That was a clear mistake.
The report as a whole is apolitical and provides a preliminary framework for policymakers to consider when addressing the deficit this fall. For this, the authors should generally be commended.
The list of major cuts includes rolling back over $29 billion in various tax breaks for oil and gas companies; $56 billion in agricultural subsidies; tens of billions in spending for nuclear; $106 billion on transportation infrastructure upgrades; and tens of billions in spending on renewable energy programs, much of it in the bioenergy/agriculture sector.
But digging into the details, some of the recommendations and program accounting are concerning.
Firstly, the top-line number of “more than $380 billion in wasteful government subsidies that are damaging to the environment and harming taxpayers,” is simply not backed up by the numbers in the report. This is primarily due to the way loan guarantees are represented.
There may be very good reasons to end the nuclear loan guarantee program, but this simply will not save $22.5 billion, as outlined in the report. Loan guarantee accounting is complicated (you can read more about it here), but the critical point is that the budgetary impact of a guarantee is not the actual size of the guarantee. Instead, the impact is based on “expected losses” on the guarantee, minus any fees. These guarantees have an actual budget impact of just one percent of $22.5 billion, or $225 million.
This problem is even worse for renewable energy loan guarantees, which Green Scissors says can be cut to save $51 billion. These have the exact same accounting mistake as the nuclear section. The experience of the Section 1705 Loan Guarantee Program shows that guarantees can be effective in building substantial amounts of new renewable generation, while also creating tens of thousands of jobs across the country. Eliminating this program would save just $510 million, and would be devastating to an industry that deserves our support.