The Congressional Budget Office (CBO) has suggested cutting various energy and environmental programs that dole out grants to states and local governments and subsidize energy technology to reduce the budget deficit.
A Daily Caller News Foundation analysis of the CBO data found that cutting such energy and environmental grants and subsidies could save taxpayers $24 billion between 2015 and 2023.
The federal government spends billions of dollars every year on energy development and environmental grants. Since 1980, the Department of Energy has received about $120 billion to subsidize the development of fossil fuel, nuclear, renewable energy technologies and energy efficiency technology. Cutting these subsidies 25 percent would save $9 billion between 2015 and 2023, according to the CBO.
The DOE has often been criticized for its ability to pick the “winning” technologies to subsidize ever since the failure of Solyndra — the now bankrupt company that was given $535 million to build solar panels.
“Ideally, the government would get out of the business of funding speculative energy projects like Solyndra,” said Victor Nava, policy analyst at the libertarian Reason Foundation, in a statement. “If the government insists on continuing to fund these projects, it should shift to a system that rewards success.”
The Government Accountability Office has also hammered the DOE for its lax oversight of contractors and poor project management, which they have had little success at improving.
However, the CBO notes that reducing funding for technology development, especially in the case of renewable energy and energy efficiency, would hurt U.S. efforts to tackle global warming.
“Reducing emissions of greenhouse gases would diminish those costs, but, because those costs are not reflected in current energy prices, producers and consumers have little incentive to manufacture or purchase products that reduce energy consumption or produce energy with minimal greenhouse gas emissions,” the CBO says. “Thus, some observers argue that DOE’s energy technology development programs fill a gap left by the market by providing the resources and incentives necessary to develop new technologies to produce and conserve energy.”
Similarly, the Energy Department and the Environmental Protection Agency have both doled out billions of dollars in grants to state and local governments for energy conservation, weatherization and infrastructure for wastewater and drinking water. The CBO says that eliminating these grants would $15 billion between 2015 and 2023.
The CBO argues that cutting such funding would force local governments to pay for the programs they actually value and allocate resources more efficiently. Furthermore, it would eliminate the ability of localities to completely rely on the federal government for handouts.
“[T]he federal funding may not always provide a net increase in spending for those activities because state and local governments may reduce their own funding of such programs in response to the availability of federal funds,” the CBO says.
However, the budget authority also notes that “those grant programs support policies that the federal government considers a priority but which state and local governments lack the incentive or funding to implement as much as would be desirable from a national perspective.”
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