In his budget request for Fiscal Year 2000, President Bill Clinton called for a dramatic 34 percent increase in funding for climate change research and tax incentives to encourage early action on climate change. The President’s proposals would increase federal spending on climate change from $3.1 billion to more than $4 billion.
If approved by Congress, the spending increase would significantly advance the administration’s objective of increasing industry and public support for its global warming policies.
The President’s climate change spending request has five components:
- Clean Air Partnership Fund;
- Climate Change Technology Initiative (CCTI) tax incentive package;
- CCTI grant program;
- U.S. Global Change Research Program; and
- miscellaneous spending on other scientific research and energy-efficiency initiatives.
These myriad spending and tax proposals would create a new special-interest constituency comprised of industry, academics, state governments, municipal governments, and even private individuals. The new global warming constituency would have a vested interested in seeing the administration succeed in its efforts to drastically reduce U.S. greenhouse gas emissions–a goal some say would severely harm the economic competitiveness of American businesses in a global economy.
Tax Incentives Offered for Good Behavior
The most significant component of the Administration’s proposal is the Climate Change Technology Initiative (CCTI). The CCTI is a two-part package consisting of $1.4 billion in grants, and a series of targeted tax incentives, worth $383 million, ostensibly designed to encourage the use of renewable energy technologies and more energy-efficient homes, cars, and appliances.
The CCTI tax incentive program is a new initiative with a potential five-year price tag of $3.6 billion. It would provide tax breaks to homeowners and business people who make investments to reduce energy consumption. For example, an individual who bought a home at least 30 percent more energy-efficient than standards set under the 1998 International Energy Conservation Code (ICC) would be eligible for a $1,000 tax credit. Homeowners and businesses alike would get tax credits worth up to $2,000 for installing rooftop solar power systems. In addition, tax credits worth up to 20 percent of the cost of the investment would be given to a business owner or homeowner who purchases electric heat pumps, natural gas water heaters, or other energy-efficient equipment.
Similar tax incentives would be offered to those purchasing hybrid cars, new vehicles that run on gas and electric power. The amount of the tax incentive would rise with fuel economy, which can reach 80 miles per gallon. An individual purchasing a car two-thirds more fuel-efficient than comparable traditional vehicles would receive a $2,000 credit, while an individual purchasing a car three times as efficient would receive a $4,000 credit.
The CCTI tax package also includes a new $300 million incentive program to encourage the development of wind power and other renewable energy sources.
The Clinton Administration’s proposal is clearly aimed at building support for its global warming policies. The tax incentives, for example, would give millions of homeowners, consumers, and businesses incentives to purchase products they wouldn’t otherwise purchase. An individual in the market for a new car, for instance, might consider the $2,000 tax credit and decide to purchase a $17,000 Toyota prius, a new hybrid vehicle, instead of a similarly priced or less expensive American automobile.
“The administration is attempting to rig the market in favor of its notion of politically correct business and consumer behavior,” noted Marlo Lewis, vice president for policy and coalitions at the Competitive Enterprise Institute.
New Funds for Energy-efficient Technology
Complementing the CCTI tax incentives would be $1.4 billion in grants to industry for development of energy-efficient technologies. That level of spending represents a $347 million increase over the $1.1 billion currently being spent on clean technology development.
The administration wants to spend $264 million on the Partnership for a new Generation of Vehicles, a government-industry effort to develop affordable cars that can get up to 80 miles per gallon, and $273 million for the Partnership for Advancing Technology in Housing, a program that would seek to improve the energy-efficiency of homes.
Billion-dollar federal grant programs tend to take on a life of their own, and the CCTI program is no exception. Indeed, it is a good example of how the administration is recruiting business community support for its climate change agenda. The plan to upgrade the energy-efficiency of such major commercial buildings as the Empire State Building and Chicago’s Sears tower, for example, could potentially benefit corporations like Honeywell, which specialize in retrofitting buildings.
“CCTI grants provide a way to co-opt companies and other interested parties into joining the global warming team,” notes Dr. Bonner Cohen, senior fellow at the Lexington Institute. “By awarding grants, the administration sees to it that the recipients have a vested interest in promoting the Clinton-Gore global warming agenda.”
Essentially, suggests Cohen and others, the administration is creating a market for its global warming policies by using grants to provide a supply of energy-efficient products and tax credits to generate demand.
Research and development support, too
Yet another element of the Clinton Administration’s proposed climate change spending package is the U.S. Global Change Research program (USGCRP), a $1.8 billion program that would provide grants to scientists researching the effects of human activities on the planet’s climate. The proposed $1.8 billion represents a 6 percent increase over Fiscal Year 1999’s $1.7 billion in funding.
Nearly $830 million of the proposed funding package would be distributed in the form of research grants to scientists, while another $958 million would go to NASA for development of climate-monitoring satellites and ground-based observation systems.
Although the research grants are ostensibly distributed without regard to a scientist’s opinion on the validity of the global warming theory, skeptics have received only a very small percentage of USGCRP funds in the past. Global warming research has become “big business” within the scientific community, and questioning the theory undermines the continued flow of research dollars. According to Dr. Patrick Michaels, a climatologist at the University of Virginia, “the prospect of getting large amounts of money guarantees that the scientific community in general will maintain that global climate change is a problem.”
Since the overwhelming majority of the USGCRP budget funds those scientists who either support the theory or are inclined not to question it, the program fails to reflect the widespread disagreement in the scientific community about global warming.
Also included in the administration’s climate change proposal is the new Clean Air partnership Fund, a $200 million program that would reward states, local governments, and private organizations that take steps to reduce greenhouse gas emissions. The Fund is significant in that it would specifically enlist the backing of states, counties, and cities for the administration’s climate change policies.
Finally, the administration’s proposal includes a miscellaneous collection of grants, worth $400 million, to promote cleaner coal-burning technologies and additional research on the impact of carbon dioxide emissions.
Thwarted in his efforts to win Senate support for the Kyoto Protocol, the international treaty mandating greenhouse gas emission reductions, President Clinton has chosen to use federal funding to circumvent the ratification process. The President appears to have calculated that he stands a better chance of achieving Kyoto’s goals with special interest politics than he does by submitting to the Constitutional requirement that the U.S. Senate ratify the treaty.
John K. Carlisle is director of the Environmental Policy Task Force at the National Center for Public Policy Research.
