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Published on August 4th, 2011 | by Silvio Marcacci


Massive Energy and Environment Fallout Expected from U.S. Debt Deal

August 4th, 2011 by  

President Obama signs the debt deal into law

When President Obama signed into law a compromise plan to increase the $14.3 trillion U.S. debt ceiling this week, he authorized nearly $2.5 trillion in cuts over the next decade. This massive budget reduction means numerous government agencies and funding programs are the chopping block, but what will it mean for energy and environment funding?

energyNOW! interviewed National Journal reporter Coral Davenport to discuss the new reality of environmental and energy-related cuts. Click on the video below for the full interview.

The first round of cuts requires a $917 billion reduction in government spending, and while there are no guarantees on which agencies will be cut, energy and environmental programs will likely be the first to have their funding reduced, especially on issues that have been controversial this year.

“What lawmakers on the hill are already saying, it’s very clear, environmental regulations, climate change programs, the kinds of things that have already been hot political targets are clearly going to be subject to the biggest cuts,” said Davenport.

The second round of $1.5 trillion reduction in spending, to be decided by Congress this Fall, may result in the repeal of billions in oil and gas tax incentives. With gas prices at extreme highs and oil companies taking in record profits, taxpayers are furious, and the incentives will be among the hottest items going into the debate.

A congressional “super-committee,” equally comprised of Democrats and Republicans, will negotiate these cuts — which incentives and funding programs are reduced will be decided by the members that are appointed to the committee.

“If the Democrats in the committee are of the ilk that have long been crusading for rolling back these oil and tax breaks, they will push as hard as they possibly can,” said Davenport. Regardless, they will likely experience strong resistance from Republicans and oil industry lobbyists, as well as the current reluctance to increase taxes.

Davenport also said the clear losers of the debt deal are environmental protection and regulation advocates, as well as progressives allied with President Obama who have lobbied for increased environmental protection. The huge decreases in funding mean efforts to promote clean energy and expand environmental regulation will likely come to a halt. This leaves the fossil fuel industry as the winners, because they may be able to avoid increased regulation and standards.

Although there will be severe cuts to resources for federal enforcement of environmental regulations, the debt deal does not remove the legal authority of the federal agencies to enforce these regulations. This means environmental advocates may shift toward regulatory enforcement efforts through the court system.

“Under the law these regulations still have to be enacted, even if these agencies don’t have money,” said Davenport. “We’re definitely going to see these fights, but they’re probably going to be in different arenas.”

Additionally, decreased funding for infrastructure development or replacement means energy delivery could be severely impacted. President Obama’s agenda included creating a smart grid and improving efficiencies for energy delivery systems, but the money will now most likely not exist to fund investment. As a result, the aging U.S. electricity grid will be strained to its limits.

“We’ve seen in recent years blackouts (and) power shortages as a result of failings in the grid,” said Davenport. “We may see an increase of those going forward if the government doesn’t have the resources to keep that infrastructure up.”

Photo courtesy of The White House

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About the Author

Silvio is Principal at Marcacci Communications, a full-service clean energy and climate policy public relations company based in Oakland, CA.

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