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‘Green Scissors’ Report Slashes Dirty Spending, But, Oddly, Cuts Some Green, Too.

By Stephen Lacey on August 25, 2011 at 12:36 pm

"‘Green Scissors’ Report Slashes Dirty Spending, But, Oddly, Cuts Some Green, Too."

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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.

The loan guarantee program has been instrumental in helping build out large-scale renewable energy projects and manufacturing – leveraging billions in private capital and helping the industry scale further. The renewable energy loan guarantees are the exact opposite of a “wasteful program” that is “damaging to the environment.”

Finally, it’s unfortunate that the Green Scissors report includes any mention of the Advanced Research Projects Agency – Energy, or ARPA-E. This highly successful program provides early-stage funding for companies working on the most advanced energy technologies, including advanced biofuels, energy storage, and renewable electricity generation. While the authors are careful to note that they don’t actually want to eliminate this program, that nuance has been lost in some media coverage of the report. This program deserves our support to help continue basic research on innovative new technologies.

On the positive side, the authors don’t touch the production and investment tax credits for renewable energy – two tax credits that provide foundational support for the industry. Also important is the call for repealing certain tax credits for the mature fossil fuel industries – credits that do nothing but add to the stunningly large profits of companies.

In all, this report is a good start. Nothing about upcoming cuts will be easy – but this report shows there is a way to do them thoughtfully and fairly.

And if Fox News reporters hate it, the authors must have done something right for the environment:

Center for American Progress Policy Analyst Richard Caperton contributed to this report.

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4 Responses to ‘Green Scissors’ Report Slashes Dirty Spending, But, Oddly, Cuts Some Green, Too.

  1. David B. Benson says:

    The various loan guarantees (including nuclear) are a good idea. This reduces a form of soveriegnty risk for investors.

  2. catman306 says:

    I think the lesson of Fukushima is that nuclear power is not such a good idea and no new plants need to be built and the older ones need to be phased out.

    So there should be no loan guarantees for nuclear power plants.

  3. Mike Roddy says:

    I had a good experience with Green Scissors in 1998, and can’t imagine how they got mixed up with Heartland. Corporate fronts have been very clever at penetrating green groups over the years, including Audubon and WWF. Green Scissors needs to do some due diligence here.