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White House budget boosts Energy Department

Proposed budget increases clean-energy research and forecasts billions of dollars from carbon regulations and repealed tax breaks on oil companies. It also scales back nuclear storage at Yucca Mountain.

The Obama administration's proposed budget will increase investments in renewable energy and fuel efficiency, while projecting billions of dollars in revenue from carbon regulations.

The budget blueprint, published on Thursday, bumps up the Department of Energy's 2009 spending by 40 percent with more basic science research and loan guarantees for energy technologies that reduce or sequester greenhouse gases.

Specifically named are smart-grid technologies to modernize the power grid and $3.4 billion in research for "low-carbon coal technologies," such as pumping carbon dioxide underground at coal power plants.

The program to store nuclear wastes at Yucca Mountain in Nevada has been scaled back until there is a new strategy for waste disposal.

Within the budget for the Environmental Protection Agency, the administration details the outlines of cap-and-trade regulations for cutting greenhouse gas emissions.

The plan calls for generating $15 billion a year starting in 2012 through an auction--essentially selling permits to emit carbon dioxide to heavy polluters. Those allowances can be bought and sold if participants go over or under the mandatory limit, or cap.

Government estimates for the amount of revenue from a carbon permit auction are about $50 billion in the initial years of operation and up to $300 billion a year by 2020, according to a report in the Energy & Environment Daily.

This market-based mechanism was developed and successfully used to reduce air pollutants that cause acid rain. Because utilities are expected to pass on costs from the permits, some revenue from the auction would be passed on to consumers, according to the budget.

Another source of funding for clean-energy programs is repealing a tax break for oil producers and new charges on oil and gas production. Those changed are expected to result in $31.5 billion over 10 years, according to reports.

The Department of Agriculture budget projects $250 million in loans for renewable energy projects in rural areas.