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Obama budget would increase U.S. clean-energy spending

U.S. President Barack Obama delivers remarks on the budget alongside acting Director of Office Management and Budget Jeff Zients, in the Ros
U.S. President Barack Obama delivers remarks on the budget alongside acting Director of Office Management and Budget Jeff Zients, in the Ros

By Andy Sullivan

WASHINGTON (Reuters) - President Barack Obama proposed a dramatic increase in clean-energy spending on Wednesday as he sought to expand U.S. government support for electric cars, wind power and other "green" technology despite persistent Republican criticism.

The president would pay for the expansion in part by eliminating tax breaks and subsidies for oil, gas and coal industries. Previous efforts by Obama's fellow Democrats to repeal the $4 billion worth of fossil-fuel subsidies have fallen short.

Obama's budget plan for fiscal 2014, which begins October 1, would boost clean-tech spending by 40 percent over current levels, marking one of the largest increases in a blueprint that otherwise would cut spending in a wide range of other programs, from environmental protection to retirement benefits.

The president's budget proposal stands a slim chance of becoming law in its current form.

Republicans who control the House of Representatives have criticized Obama's clean-energy initiatives as wasteful boondoggles, pointing to the high-profile bankruptcies of companies like solar-panel maker Solyndra that benefited from federal backing.

But the budget proposal signals that clean energy will remain a priority for Obama in his second term in office.

"These increases in funding are significant and a testament to the importance of clean energy and innovation to the country's economic future," the administration wrote in its budget proposal for the coming fiscal year.

Obama has transformed the Energy Department from a low-profile agency largely focused on managing the nation's nuclear stockpile into a research and development powerhouse.

The department has underwritten everything from automotive battery startups to research projects that aim to turn "biofuels" like algae into the gasoline of the 21st century, thanks to a $35 billion boost for clean-tech and energy efficiency funding in the 2009 economic stimulus measure.

The effort has not always panned out. Most recently, Fisker Automotive, a hybrid sports car maker that tapped nearly $200 million in government loans, laid off most of its employees in a last-ditch effort to stave off bankruptcy.

But the administration can point to successes as well. Since 2008, the United States has nearly doubled its energy generation from wind, solar, geothermal and other renewable energy sources. Support for energy research could lead to breakthroughs in the years to come, the administration says.

While many government agencies would see minimal increases or spending cuts under Obama's budget proposal for fiscal 2014, the Energy Department would get an increase of 8 percent over current levels, to $28.4 billion.

It would boost spending on advanced vehicles by 75 percent in the coming year to $575 million, and make vehicle research less subject to the whims of Congress by setting up a fund that would hand out $200 million each year.

In an effort to make solar and wind power as affordable as conventional energy sources, the administration would spend 29 percent more than it currently does to integrate those types of energy into the national electric grid.

The budget would increase support for biofuels by 24 percent and boost funding for physics and other forms of basic science research by 5.7 percent.

It would set up a $200 million competition to encourage state governments to boost energy efficiency, modeled on the administration's Race to the Top education program.

(Reporting by Andy Sullivan; Editing by Fred Barbash and Will Dunham)

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