The White House is asking Congress to repeal oil, natural gas and coal subsidies to pay for clean energy initiatives

This article is more than 9 years old

This article is more than 9 years old

President Barack Obama proposed on Monday to boost funds for clean energy research and deployment in his 2012 budget by slashing subsidies for fossil fuels such as oil, gas and coal.

The budget provides the Department of Energy with $29.5bn (£18.4bn) for the fiscal year 2012, up 4.2% from the proposed 2011 budget, and up 12% from the enacted 2010 budget. Some $8bn would support research in clean energy like wind, solar and advanced batteries.

"Whomever leads in the global, clean energy economy will also take the lead in creating high-paying, highly skilled jobs for its people," the administration said in the budget.

The budget would also provide $853m to support new nuclear energy technologies, such as small modular reactors.

The White House asked for $36bn in federal loan guarantees to help finance the building of nuclear power plants, as it did last year. The loan programme already has $18bn in authority.

To help pay for the clean energy initiatives, the White House is asking Congress to repeal $3.6bn in oil, natural gas and coal subsidies, a move that would total $46.2bn over a decade. In addition, the budget cuts funding for oil and gas research and for hydrogen fuels programmes.

But many Republicans oppose cutting subsidies for fossil fuels, saying it would hurt industries that provide jobs while the economy is still fragile.

"Given the broad difference in priorities between House Republicans and the White House on energy issues, we believe that few of the proposed cuts and expansions ... will become law," Whitney Stanco, an energy policy analyst at MF Global, said in a research note.

Republicans, who now have control of the House of Representatives, have also proposed to cut funding for the Environmental Protection Agency's (EPA) programme to regulate greenhouse gases, saying Congress should be the one to decide whether to fight climate change, not the administration.

Republicans may try to force a government shutdown if the Obama administration does not agree to its spending cuts. But analysts said a delay in EPA climate regulations led by Congress was more likely than shutting down the government over an environmental rule.

The Obama budget cuts the 2012 EPA budget by about $1.3bn or about 13% with reductions in a clean diesel programme and in Great Lakes restoration projects.

Stanco said the budget's funding for electric vehicles could be likeliest to make it into law as it could be paired with funding for natural gas vehicles. The budget proposes $588m for vehicle technologies, an increase of 88% from current levels.

The budget would double the number of energy innovation hubs to six to bring scientists to work on topics like rare earth elements, energy storage and batteries and development of smart grid technologies designed to make electricity transmission efficient.