Obama budget cuts $3.6 bln in oil, gas subsidies

Fri Feb 11, 2011 5:00pm EST

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* Funding for hydrogen research would be cut by 41 percent

* Fossil energy research programs reduced by 45 percent

* Program to help poor pay heating, cooling bills slashed

By Tom Doggett

WASHINGTON, Feb 11 (Reuters) - The White House will ask Congress to repeal $3.6 billion in oil, natural gas and coal industry subsidies as part of its proposed government budget for the 2012 spending year that will be released on Monday.

Phasing out the fossil fuel subsidies, which would total $46.2 billion over a decade, will help the U.S. "transition to a 21st century energy economy," Energy Secretary Steven Chu said in a posting on his blog at the department's website on Friday.

The White House sought similar deep cuts in fossil fuel tax breaks and spending last year, but Congress voted against it.

The proposed Energy Department's budget will also:

* Provide $8 billion for for research, development and deployment investments in clean energy. The clean energy program would be paid for, in part, by cutting fossil fuel subsidies.

* Reduce funding for hydrogen research by more than 41 percent, or almost $70 million, in order to focus on technologies deployable at large scale in the near term.

* Reduce the budget for the Office of Fossil Energy by 45 percent, or $418 million, by zeroing out the Fuels Program, the Fuel Cells Program, the Oil and Gas Research and Development Program, and the Unconventional Fossil Technology Program.

* Close research facilities at two national laboratories, saving $45 million.

The White House will also seek to cut in half to about $2.6 billion a program that helps poor families and the elderly pay their winter heating and summer cooling bills. That program, which is not part of the Energy Department, would go back to its 2008 budget level.

The American Gas Association said such a budget cut would hurt more than 3.2 million households and almost 9 million people who can't afford their heating bills this winter. "That is unacceptable," the group said. (Reporting by Tom Doggett; Editing by Marguerita Choy)

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