Saturday, February 7, 2009

Obama's Stimulus Package: What's in it for the Environment?

Obama and his team have put together a $780-900 billion stimulus package to jump start the U.S.'s recession-ridden economy. Last week, the House passed an $819 billion version, and the Senate is getting ready to consider a $780 billion version. In these packages, around $100 billion have been allotted to "green stimulus." But, what is that? To understand what is in the bill, I've compiled some of the funding areas that currently appear in the stimulus package. The reader should keep in mind that the exact amounts are fluctuating, and will continue to do so until a final version of the bill is passed.

One set of funding priorities is upgrading public buildings to become more energy-efficient and also providing tax credits to those who buy energy-efficient products.
  • $4.3 billion has been allotted to tax breaks for residential energy-efficiency improvements such as for high efficiency water heaters, windows, air conditioners, and insulation. The items that qualify for the tax credit must be 15-20% more efficient than the current standard model. Obama's plan offers a tax credit on 30% of the purchase price of the equipment with $1500 being the maximum credit. This is primarily aimed at helping homeowners of any socioeconomic status. Associated Press
  • $300 million would got to states so that they can sponsor utility rebates for the purchase of energy-efficient appliances and tax breaks for installing solar panels and power water heaters. Associated Press This is similar to what is offered by the previous bullet point.
  • $6.2 billion is for weatherizing homes of low-income families. Business Week
  • $6.9 billion would go to state and local aid to retrofit municipal buildings to become more energy efficient. Green Tech
  • $8 billion is for reducing energy consumption in federal and military buildings. Red Green and Blue
While the primary goal of the stimulus package is to create jobs, the first three bullet points are intended to help the homeowners as well. Providing tax credits for the purchase of energy-efficient appliances and materials is a great idea because with a poor economy, citizens tend to care much more about how much things cost rather than the environmental impact of what they are buying. By implementing this tax credit, higher energy efficiency products are put at the same price point as standard products. This financially justifies buying the higher efficiency version of an appliance or material. A tax credit such as this could prevent a slump in efforts that consumers are making toward being more energy conservative.

Several government agencies are getting funds for climate change and energy research.  Discover lists these.
  • $10 billion for the National Institute of Health (NIH)
  • $40 billion for the Department of Energy (DOE)
  • $3 billion for the National Science Foundation (NSF)
  • $1 billion for NASA
  • $1 billion for the National Oceanic and Atmospheric Administration (NOAA)
A large portion of the money given to these government agencies would go toward basic research. One stipulation with the stimulus money is that the agency must spend it within 120 days. This means that the National Science Foundation would be doling out a 50% increase in its budget in four months. Discover

Another portion of the stimulus bill calls for energy-efficient infrastructure upgrades.
  • $4.5 billion for mart grid technology Renewable Energy World
  • Extension of the current renewable energy investment tax credit for three more years. This includes wind, geothermal, hydropower, and biomass production facilities. Renewable Energy World
  • Replacing the federal vehicle fleet to run on cleaner, more efficient fuel sources. CBS
In the end, if we are really going to spend $800 billion on something to help the economy, I think including green technology in the stimulus bill is very smart. After the stimulus plan is over, homeowners and the governments will still be saving on their energy bills and we will still have more knowledge of climate change and energy from research and development. It wouldn't just be money spent in the short term it would be an long-term investment in our environment.


Chris Smith said...

I appreciate you identifying some of the major "green" components of the stimuls bill. I expected much of this money to be spent on promoting new forms of energy and reducing energy demand, but the amount of funds going to climate change and energy research was a pleasant surprise. However, my fear is that by allocating huge sums of money towards climate change research that this does not delay actual policy action addressing climate change (the 120 day stipulation for using this funds appears to prevent this from occuring). Policymakers in the US for too long have dragged their feet by claiming that the "science is unclear" and this may give them the opportunity to continue making that claim. However, I do think that such research is very much necessary and I hope much of the research goes towards not only the science behind climate change, but also the policy for addressing climate change, including analysis of efforts that will mitigate as well as help us adapt to climate changes. It appears that the stipulation that the money for such research will have to be spent within 120 days intends to expediate such research in hopes that this information can contribute to future carbon legislation. This could be very interesting to follow...

David Wogan said...

Speaking of smart grids, I just came across an article in ArsTechnica about th $4.5B for smart grids. It's pretty good.