Government Shutdown Sinks In, Challenges Energy Industry
As the clock struck 12:01am on October 1st, last-minute attempts from several House Republicans to defund the Affordable Care Act (ACA), otherwise known as Obamacare, proved ill fated up to now. The prospect of dismantling the ACA is becoming less and less likely by the day, as President Obama definitively stated during his public address on September 30, “The Affordable Care Act is moving forward. That funding is already in place. You can’t shut it down.”
One way or another, the end result is the first formal government shutdown in nearly two decades.
The Big Picture
So what exactly will change after October 1? In the instance of a government shutdown, the government requests for every administration to break their staff into two subcategories; those who are essential (“excepted” is the formal term), and those which are non-essential (or “non-excepted”). As the Washington Post noted, government entities “… including anything related to national security, public safety, or programs written into permanent law” are deemed essential during a shutdown.
That means programs like the U.S. military, embassy staff, air traffic control, prison staff, VA hospital staff, emergency and disaster assistance agencies, the U.S. Postal Service, and the Federal Reserve are a few examples of which programs will almost remain fully operational. However, nearly every other government entity will see massive cutbacks; including national parks and museum staff, much of the Department of Homeland Security, flu vaccination programs from the Centers for Disease Control and Prevention, and passport agencies to name a few. For a more comprehensive breakdown of the shutdown on individual government agencies, click here.
The Energy Industry Takes a Tumble
The energy industry isn’t exempt from the effects of a government shutdown. The Department of Energy (DOE) reports that around 5,300 of its 13,814 employees will remain in service during the shutdown. Over 3,000 of those 5,300 will remain for separately-funded, large-scale initiatives like the protection of the country’s nuclear arsenal and the administrative forces associated with hydroelectric power generation and the safety of transmission lines. Only approximately 1,100 staff members will be retained through DOE funding after implementing its government shutdown plan.
The Environmental Protection Agency (EPA) will furlough over 15,000 of their 16,205 employees following government shutdown. Since the EPA is a regulatory entity, the majority of the work they do is not considered essential. In a speech sponsored by The Christian Science Monitor, EPA Administrator Gina McCarthy said that on October 1, the EPA “… effectively shuts down, with only a core group that are there in the event of an emergency.”
Both Fossil Fuels and Renewable Energy Suffer
No matter whether in favor of fossil fuels or a proponent of renewable energy, the entire swath of the energy sector faces a damaging impact from the government shutdown. Matthew Stepp, Senior Policy Analyst with the Information Technology and Innovation Foundation (ITIF) posted an exceptional article on The Energy Collective that lists numerous ways the government shutdown decimates the entire energy industry’s output. They include the following (the bold emphases are mine):
Impacts on Existing Fossil Fuel Energy Infrastructure
• The Interior Department has halted permits and permit reviews for onshore and offshore oil and gas leases. While existing permits would still be inspected, the shutdown is halting existing lease payments to the Treasury.
• The Bureau of Land Management has stopped development of first-of-its-kind regulatory rules for hydraulic fracturing on federal lands. It has also halted all law enforcement of existing regulations on drilling.
• The EPA has stopped work on its recently announced greenhouse gas regulations for power plants, which could create increased uncertainty in energy markets.
• The Department of Energy is slowing review of applications for exporting liquefied natural gas and may have to stop all reviews if the shutdown drags on.
• DOE run Power Administration’s, such as Bonneville and Southeastern Power, would be run under previous budget allocations until fully expended, at which point each will use a skeleton crew unless a major storm or issue arises and requires additional staff.
Impacts on the Development of Next-Generation Clean Energy
• The Bureau of Ocean Energy Management has stopped all new offshore wind demonstration project permitting.
• The Department of Energy’s leading research and technology development offices, such as the Office of Science and the Office of Energy Efficiency and Renewable Energy, are currently being run by a skeleton crew, dramatically decreasing stewardship of the National Labs and program management of nearly $5 billion in clean energy innovation projects. The NNSA – which manages the countries nuclear stockpile – would continue to be managed by 343 essential personnel.
• The shutdown will directly impact National Lab research if it prolongs. Most Labs have enough carryover funds from the existing 2013 budget to fund Lab staff for between weeks or up to a month, depending on the Lab. After those funds are exhausted, non-security-related research would need to be halted.
• ARPA-E, the Department of Energy’s high-risk, high-reward breakthrough energy technology program is completely shut down. For example, it is not able to advance or manage the recently announced 33 energy projects to advance low-carbon transportation technologies. Also completely shutting down is the Office of Electricity Delivery and Energy Reliability, which is working to advance the nations electric grid.
• Research activities at NIST and NOAA, including climate and weather research, material science, nano-science, and energy science, have been stopped.
• NASA energy and earth-systems research is halted, along with almost 98 percent of the agencies total staff.
• The Patent and Trademark Office will be able to stay open for at least a month until it also has to shutdown, which would act as a significant barrier to innovation of all kind, including energy.
• Non-essential research and procurement, at the Department of Defense, such as that largely invested in clean energy (roughly $1 billion worth), is halted which is slowing down development of next-generation batteries, microgrids, and power electronics as well as early markets for solar panels on bases. This includes DOD research contracts with external companies.
• Non-federal scientists can continue working on existing DOE, NIST, and National Science Foundation research grants, such as those working in Universities, but no new research grants will be given.
The longest amount of time for any U.S. government shutdown was 21 days in 1995-1996, so in all likelihood the current government shutdown will not continue for an extended period of time. In terms of an expert projection, NBC White House Correspondent Chuck Todd tweeted:
Feels like if there isn't a resolution today, then we're probably looking at shutdown thru the week, possibly merging w/debt ceiling 10/17
— Chuck Todd (@chucktodd) October 1, 2013
Nobody knows for certain when the shutdown will end, but it’s fair to say the sooner, the better for millions of furloughed American employees and millions more directly affected by government cutbacks.