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FY2012 Federal Budget Proposal Includes Renewable Energy Funds for Interior and Agriculture Depts

Two of the main public-lands management agencies -- the Departments of Agriculture and Interior -- have included renewable energy projects in their proposed FY2012 budgets. The question is whether Congress can pass a budget that enables these agencies to continue their work toward energy independence and creating clean-energy jobs.


The U.S. Department of the Interior encompasses most notably the Bureau of Land Management, National Parks Service, and the Minerals Management Service that came into the limelight last year. DOI is actively promoting renewable energy on public lands.

In December 2010, DOI and the Department of Energy jointly announced a comprehensive environmental analysis that identifies proposed "solar energy zones" on public lands in six western states. These are lands in Arizona, California, Colorado, Nevada, New Mexico, and Utah that are most suitable for environmentally sound, utility-scale solar energy production.

President Obama unveiled on February 14 a $12.2 billion fiscal year 2012 budget request for DOI. While roughly the same as the previous year, the budget requests $72.9 million for renewable energy programs in 2012, an increase of $13.9 million above the 2010 enacted budget level (which became the 2011 budget by way of a continuing resolution). Under this proposed budget, DOI's goal is to increase approved capacity for renewable energy production on federal lands by at least 10,000 megawatts by the end of 2012, while ensuring full environmental review.

The proposed 2012 budget continues DOI's "New Energy Frontier" strategy that is intended to create jobs, reduce U.S. dependence on fossil fuels and oil imports, and lessen carbon impacts. Supporting renewable energy development is a major component of this strategy, and has been since 2009, when Interior Secretary Ken Salazar began implementing a comprehensive energy plan, making renewable energy a DOI priority.


Although President Obama's FY 2012 proposed budget for the U.S. Department of Agriculture decreased to $23.9 billion from the $27 billion level in FY 2010, the budget still invests $6.5 billion to support renewable and clean energy. In particular, the Agriculture and Food Research Initiative is getting an increase of $8.2 million for a research initiative to develop high-quality, cost-effective feedstocks for biofuel production. And the Rural Business-Cooperative Services, which operates a renewable energy loan and grant program for the purchase of renewable energy systems and energy efficiency improvements, will see a combination of mandatory funding and grants for programs at about $57 million above the 2011 total.

The proposed USDA budget provides $6.1 billion for loans for electric programs, with $4 billion used for generation, transmission, and distribution of renewable energy. This sum is down from the estimated FY 2011 funding, but still provides Rural Utilities Services with extensive resources that can be used to purchase or construct peaking units in conjunction with an electric generating plant that produces electricity from solar, wind, or other intermittent source of energy. The loans also can support applicants seeking to switch from fossil fuels to renewable technologies.

The Agricultural Research Service would see an increase in allocations totaling $58.7 million to conduct research and maintain laboratories to tackle critical issues, including improving the efficiency and reducing the cost for the conversion of agricultural products into bio-based products and biofuels.

Other tax proposals of interest

The proposed federal budget also includes a number of tax proposals that could have a direct impact on the financing of private-sector renewable energy projects. Some of the more significant proposals include extension of the grant in lieu of tax credits, an additional allotment of qualified advanced energy manufacturing project credits, replacement of the deduction for energy-efficient commercial buildings with a tax credit, and an extension of the new markets tax credit.

Thanks to DOE's EERE and Stoel Rives for providing information and data for this article.