Hearing of the Senate Committee on Energy and Natural Resources - Statement of Secretary Steven Chu on FY 2012 Budget

Statement

Chairman Bingaman, Ranking Member Murkowski, and Members of the Committee, thank you for the opportunity to appear before you today to discuss the President's Fiscal Year 2012 budget request for the Department of Energy.

In his State of the Union address, President Obama laid out a plan for the United States to win the future by out-innovating, out-educating and out-building the rest of the world, while at the same time addressing the deficit. The President's budget request invests in much-needed programs while cutting back where we can afford to.

Many countries are moving aggressively to develop and deploy the clean energy technologies that the world will demand in the coming years and decades. As the President said, this is our generation's "Sputnik moment."

We must rev up the great American innovation machine to win the clean energy race and secure our future prosperity. To that end, President Obama has called for increased investments in clean energy research, development and deployment. In addition, he has proposed a bold but achievable goal of generating 80 percent of America's electricity from clean sources by 2035.

A Clean Energy Standard will provide a clear, long-term signal to industry to
bring capital off the sidelines and into the clean energy sector. It will grow the domestic market for clean sources of energy -- creating jobs, driving innovation and enhancing national security. And by drawing on a wide range of energy sources including renewables, nuclear, clean coal and natural gas, it will give utilities the flexibility they need to meet our clean energy goal while protecting consumers in every region of the country.

The Department of Energy's FY 12 budget request of $29.5 billion supports these goals and strengthens the nation's economy and security by investing in the following priorities:

* Supporting groundbreaking basic science, research and innovation to solve our energy challenges and ensure that the United States remains at the forefront of science and technology;

* Leading in the development and deployment of clean and efficient energy
technologies to reduce our dependence on oil, accelerate the transition to a clean energy economy and promote economic competitiveness; and

* Strengthening national security by reducing nuclear dangers, maintaining a safe, secure and effective nuclear deterrent and cleaning up our Cold War nuclear legacy.

While we are investing in areas that are critical to our future, we are also rooting out programs that aren't needed and making hard choices to tighten our belt. Additionally, we are improving our management and operations so we function more efficiently and effectively.

Leading in the Global Clean Energy Economy

As the President said in his State of the Union address, investing in clean energy will strengthen our security, protect our planet, and create countless new jobs here at home. The Department's budget request invests $3.2 billion in energy efficiency and renewable energy programs.

Through programs to make homes and buildings more energy efficient, including a new "Better Buildings Initiative" to make commercial buildings 20 percent more efficient over the next decade, we will save money for families and businesses by saving energy. That is money that can be re-invested back into the economy. In addition, the budget supports the research, development and deployment of renewable sources of energy like wind, solar and geothermal. It supports the modernization of the electric grid and the advancement of carbon capture and sequestration technologies. And it helps reduce our dependence on oil by developing the next generation of biofuels and accelerating electric vehicle research and deployment to support the President's goal of putting one million electric vehicles on the road by 2015. This includes a $200 million competitive program to encourage communities to invest in electric vehicle infrastructure.

We're also focused on moving clean energy technologies from the lab to the
marketplace. Over the past two years, the Department's loan programs have supported more than $26 billion in loans, loan guarantees, and conditional commitments to guarantee loans for 23 clean energy and enhanced automotive fuel efficiency projects across the country, which the companies estimate will create or save more than 58,000 jobs. Building on this success, we are requesting new credit subsidy that will support approximately $1 billion to $2 billion in loan guarantees for innovative renewable energy and energy efficiency technologies. These deployment efforts build on the substantial investment made in the clean energy sector by the Recovery Act, and are supplemented by tax incentives that have also played an important role in bringing clean energy projects to market, such as the 48C manufacturing tax credits and the 1603 cash grants in lieu of investment tax credits, which the 2012 budget also expands. We are also requesting $100
million in credit subsidy for a new "Better Buildings Pilot Loan Guarantee Initiative for Universities, Schools, and Hospitals," which will guarantee up to $2 billion in loans to support energy efficient retrofits.

Nuclear energy also has an important role to play in our energy portfolio. To
jumpstart the domestic nuclear industry, the budget requests up to $36 billion in loan guarantee authority. It also invests in the research and development of advanced nuclear technologies, including small modular reactors.

Supporting Groundbreaking Science

To spur innovation, the President's budget request invests in basic and applied research and keeps us on the path to doubling funding for key science agencies, including the Department's Office of Science. As Norm Augustine, former Chairman of Lockheed Martin and former Under Secretary of the Army, has said, under-funding R&D in a time of austerity is like removing the engine of an aircraft to reduce its weight.

That is why the budget request increases support for the Department's comprehensive research strategy to accelerate energy breakthroughs.

Through $5.4 billion for the Office of Science, we're expanding our investment in basic energy sciences, advanced scientific computing and biological and environmental sciences -- all key areas for our future economic competitiveness.

The budget invests $550 million in the Advanced Research Projects Agency-
Energy, also known as ARPA-E. The Administration also seeks an additional $100 million for ARPA-E from the Wireless Innovation Fund to support wireless clean energy technologies. This investment will allow ARPA-E to continue the promising early-stage research projects that aim to deliver game-changing clean energy technologies. ARPAE's projects are generating excitement both in the Department and in the private sector. For example, through a combined total of $24 million from ARPA-E, six companies have been able to advance their research efforts and show the potential viability of their cutting-edge technologies. This extremely valuable early support enabled those companies to achieve R&D milestones that, in turn, have attracted more than $100 million in private sector funds to the projects. This is precisely the innovation leverage that is needed to win the future.

Another key piece of our research effort is the Energy Innovation Hubs. Through the Hubs, we are bringing together our nation's top scientists and engineers to achieve similar game-changing energy goals, but where a concentrated effort over a longer time horizon is needed to establish innovation leadership. The Department has established three Energy Innovation Hubs in the areas of energy efficient buildings, modeling and
simulation for nuclear reactors and fuels from sunlight. The budget requests $146 million to support the three existing Hubs and to establish three new Hubs in the areas of batteries and energy storage, smart grid technologies and systems, and critical materials. The Energy Innovation Hubs were modeled after the Department of Energy's BioEnergy Institutes, which have established an outstanding three-year track record.

Finally, the budget continues to support the Energy Frontier Research Centers, which are mostly university-led teams working to solve specific scientific problems that are blocking clean energy development.

The Energy Innovation Hubs, ARPA-E, and EFRCs represent three complementary approaches to advance groundbreaking discovery. When you think of the EFRCs, think about a collaborative team of scientists such as Watson and Crick unlocking the secrets of DNA. When you think of ARPA-E, think about visionary risktakers launching new technologies and start-up companies out of their garages. When you think of the Hubs, think of large, mission-oriented research efforts such as the Manhattan Project, the development of radar at MIT's Radiation Laboratory during World War II and the research in America's great industrial laboratories in their heyday.

We don't know where the big energy breakthroughs are going to come from. To reach our energy goals, we must take a portfolio approach to R&D: pursuing several research strategies that have proven to be successful in the past. But I want to be clear -- this is not a "kitchen sink" approach. This work is being coordinated and prioritized, with a 360-degree view of how these pieces fit together. Taken together, these initiatives will help America lead in science and technology innovation.

Nuclear Safety and Security

In addition to strengthening our economy, the budget request also strengthens our security by providing $11.8 billion for the Department's National Nuclear Security Administration. The five-year FY 12 to FY 16 request of nearly $65 billion for NNSA reflects the President's nuclear security priorities, as well as his commitment to modernize the U.S. nuclear weapons enterprise and sustain a strong nuclear deterrent for the duration of the New START Treaty and beyond.

The request of $7.6 billion for Weapons Activities provides a strong basis for
transitioning to a smaller yet still safe, secure and effective nuclear stockpile without additional nuclear testing. It also provides much-needed resources to strengthen science, technology and engineering capabilities and to modernize the physical infrastructure of our nuclear security enterprise.

The President has identified the danger of terrorists getting their hands on nuclear weapons or the material to build them as the greatest threat to global security. To support the President's goal of securing all vulnerable nuclear material around the world in four years, the budget invests $2.5 billion in the NNSA Defense Nuclear Nonproliferation program. This is part of a five-year, $14.2 billion commitment for the program.

The budget also requests $1.2 billion to support the Navy's nuclear powered
submarines and aircraft carriers. And it provides $6.1 billion to protect public health and safety by cleaning up the nation's Cold War nuclear legacy.

Fiscal Responsibility

Through our investments, we are laying the groundwork for the nation's future prosperity and security. At the same time, we are mindful of our responsibility to the taxpayer.

We are cutting back in multiple areas, including eliminating unnecessary fossil
fuel subsidies, reducing funding for the Fossil Energy program and reducing funding for the hydrogen technology program. We're streamlining operations to reduce administrative costs. And we're making some painful cuts, including ending operation of the Tevatron accelerator and freezing salary and bonuses for hard-working National Laboratory, site and facility management contractor employees.

Finally, we continue to make progress on a management excellence agenda to improve our operations.

The United States faces a choice today: will we lead in innovation and outcompete the rest of the world or will we fall behind? To lead the world in clean energy, we must act now. We can't afford not to.

Thank you, and now I am pleased to answer any questions you may have.

HIGHLIGHTS OF THE FY 2012 BUDGET REQUEST

In his State of the Union address, President Obama said that America faces "our generation's Sputnik moment" and that we need to out-innovate, out-educate and outbuild the rest of the world to capture the jobs of the 21st century. "In America, innovation doesn't just change our lives. It's how we make our living." Through innovation in promising areas like clean energy, the United States will win the future and create new industries and new jobs. To lead in the global clean energy economy, we must mobilize America's innovation machine in order to bring technologies from the laboratory to the
marketplace. The Department of Energy (DOE) is on the front lines of this effort. To succeed, the Department will pursue game-changing breakthroughs, invest in innovative technologies, and demonstrate commercially viable solutions.

In addition to energy advances that spark economic growth, national security remains fundamental to the Department's mission. Through bipartisan ratification of the New START treaty with Russia, America and its global partners are leading by example in implementing the focused expansion of domestic and international activities to reduce the threat of nuclear weapons, nuclear proliferation, and unsecured or excess weapons-usable materials. The National Nuclear Security Administration (NNSA) supports the international effort to secure all vulnerable nuclear materials around the world within four years. The NNSA also fulfills the President's commitment to modernize the nation's nuclear stockpile until a world without nuclear weapons can be realized.

The Department's Fiscal Year (FY) 2012 budget request is $29.5 billion, an 11.8 percent or $3.1 billion increase from FY 2010 current appropriation levels. The FY 2012 request supports the President's goals to increase America's competitiveness by making strategic investments in our nation's clean energy infrastructure and to strengthen our national security by reducing the global threat of nuclear materials. The President has called for advancing research on clean energy technologies and manufacturing, doubling the share of electricity generated from clean energy supplies by 2035, and putting one million electric vehicles on the road by 2015. The Department's request prepares for a multiyear effort to address these interconnected objectives and prioritizes research and development of renewable energy technologies to expand sustainable energy options for the United States.

The FY 2012 budget builds on the intense planning, execution, and oversight of the $35.2 billion from the American Recovery and Reinvestment Act of 2009. By the end of FY 2010, the Department successfully obligated $32.7 billion of Recovery Act funds, including all funding that was set to expire. In developing the FY 2012 budget request, the Department has taken these investments into account and will oversee execution of these funds with value to the taxpayer in mind. Recovery Act investments are focused on: energy conservation and renewable energy sources ($16.8 billion), environmental cleanup ($6 billion), loan guarantees for renewable energy and electric power transmission projects ($2.4 billion), grid modernization ($4.5 billion), carbon capture and sequestration ($3.4 billion), basic science research ($1.6 billion), and the Advanced Research Projects Agency -- Energy ($0.4 billion). The Department's Recovery Act activities are strengthening the economy by providing much-needed investment, saving or creating tens of thousands of jobs, cutting carbon pollution, and reducing U.S. dependence on oil.

The President's FY 2012 Budget supports three strategic priorities:

* Transformational Energy: Accelerate the transformation to a clean energy
economy and secure U.S. leadership in clean energy technologies.

* Economic Prosperity: Strengthen U.S. science and engineering efforts to serve as a cornerstone of our economic prosperity and lead through energy efficiency and secure forms of energy.

* Nuclear Security: Enhance nuclear security through defense, nonproliferation, naval reactors, and environmental cleanup efforts.

As the President has articulated, innovation is essential to America's economic competitiveness. To meet the challenge of "our generation's Sputnik moment,' the Department supports a coordinated strategy for research and development across all of its programs. With every initiative the Department undertakes, sound science is at the core. In FY 2012, we will increasingly emphasize cross-cutting initiatives to link science throughout the Department, specifically with energy and national security programs in order to deliver results to the American taxpayer. In the Office of Science, the
Department requests $5.4 billion, a 9.1 percent or $452 million increase over the FY 2010 current appropriation levels, to support an elevated focus on the advancement of the United States' leadership in fundamental research. Advanced Research Projects Agency -- Energy (ARPA-E) is building on established gains since its initial funding in FY 2009 through the Recovery Act to perform transformational research and create gamechanging breakthroughs for eventual market adoption. The FY 2012 budget request
includes $550 million for ARPA-E to sustain investment in new energy technologies.

Energy Innovation Hubs play a key role in solving specific energy challenges by convening and focusing top scientific and engineering talent to focus on those problems. The Hubs bring together multidisciplinary team of researchers in an effort to speed research and shorten the path from scientific discovery to technological development and commercial deployment of highly promising energy-related technologies. The Department is proposing to double its commitment to this research approach by requesting three new Hubs to focus on batteries and energy storage, critical materials, and Smart Grid technologies and systems. The Department will continue funding the three Energy Innovation Hubs introduced in FY 2010 to focus on developing fuels that can be produced directly from sunlight, improving energy efficient building systems design, and using modeling and simulation tools to create a virtual model of an operating advanced nuclear reactor. Complementing the Hubs, the Department plans in FY 2012 to continue
coordination with the Office of Science's Energy Frontier Research Centers, which exemplify the pursuits of broad-based science challenges for energy applications.

Energy Security: Promoting America's Energy Security through Reliable, Clean
and Affordable Energy

In his State of the Union address, the President outlined clearly to the American people his roadmap for transforming our nation's energy economy to meet the demands of future generations. "Instead of subsidizing yesterday's energy, let's invest in tomorrow's," he said. To meet the President's challenge, the Department must recruit the sharpest research minds and build on its aggressive discovery agenda across all programs to
achieve breakthroughs on the most pressing energy challenges facing the United States.

In his address, President Obama laid out a goal for clean energy sources to account for 80 percent of America's electricity by 2035. In FY 2012, the Department requests funds to help achieve this Presidential objective and address many of the energy delivery challenges facing American families and energy providers.

* Applied Research, Development and Deployment -- Meeting the President's
goal of making America the first country to have one million electric vehicles on the road by 2015, the Department will research cost competitive methods to develop electric vehicles, increase the adaptability and capacity of the grid to enable vehicle charging, incentivize communities to invest in electric vehicles and infrastructure and send these vehicles to the nation's roadways. The Department will also launch competitive manufacturing research for breakthrough technologies in energy efficiency diagnostics and retrofits to help business owners around the country save money on energy costs.

* Loan Guarantees: The Loan Programs Office (LPO) is a vital tool for
promoting innovation in the energy sector across a broad portfolio of clean and efficient energy technologies. In FY 2012, the Department is requesting credit subsidies to support approximately $1 to $2 billion in loan guarantees for renewable energy deployment and up to $36 billion in additional authority to loan guarantees for nuclear power projects. The Department will also continue to streamline and prioritize the issuance of loan guarantees to leverage private sector investment in clean energy and energy efficiency projects that will save and create jobs.

* Better Buildings Initiative: Last year, commercial buildings consumed roughly 20 percent of all energy in the U.S. economy. Improving energy efficiency in our buildings can create jobs, save money, reduce our dependence on oil, and make our air cleaner. The President's Better Buildings Initiative will make commercial buildings 20 percent more energy efficient over the next decade through initiatives that include: re-designing the current tax deduction for commercial buildings and upgrades to a credit that is more generous and that will encourage building owners and real estate investment trusts (REITs) to retrofit their properties; improving financing opportunities for retrofits through programs including a new Better Buildings Pilot Loan Guarantee Initiative for Universities, Schools and Hospitals, for which the Department of Energy requests $100 million in credit subsidy to guarantee up to $2 billion in loans for energy efficiency retrofits for these facilities; creating a $100 million Race to Green competitive grant program for state and municipal governments to implement innovative approaches to building codes, performance standards, and regulations so that commercial building efficiency will become the norm in communities across the country; and calling on CEOs and university presidents to join the Department of Energy and other Federal partners in a Better Buildings Challenge to make their organizations leaders in saving energy. The Better Buildings Initiative builds on our investments through the Recovery Act and our continued commitment to passing "HOMESTAR" legislation to encourage American families to make energy saving upgrades in their homes.

* Electricity Reliability and Energy Management: Reliable, affordable, efficient, and secure electric power is vital to expanding economic recovery, protecting critical infrastructures, and enabling the transition to renewable energy sources. The FY 2012 request invests $238 million to bring the next generation of grid modernization technologies closer to deployment and commercialization, to assist states and regional partners in grid modernization efforts, and to facilitate recovery from energy supply disruptions when they occur. The request includes a new Smart Grid Technology and Systems Hub that will address the total electricity system, covering applied science, technology, economic, and policy issues that affect our ability to modernize the grid. The FY 2012 request also plans an expansion of the Home Energy Score program that provides homeowners with information on how their homes can be more energy efficient and guidance for saving on home energy costs. This is in addition to the President's support for passage of the Home Star rebate program in 2011. Investing in energy efficiency, renewable energy generation, and grid modernization are fundamental steps necessary for creating a clean energy economy. We must also invest in the improvement of existing sources of energy that will provide a bridge between current and future technologies. These technologies are already a major segment of the energy mix and will play a critical role in providing a solid foundation that will make possible the creation of a new energy economy.

* Leadership in Nuclear Energy: Nuclear energy currently supplies approximately 20 percent of the Nation's electricity and 70 percent of the Nation's clean, non-carbon electricity. The request for the Office of Nuclear Energy includes $380 million for research and development, in addition to key
investments in supportive infrastructure. In addition, the Department is engaging in cost-shared activities with industry that may help accelerate commercial deployment of small modular reactors. The request includes funding for costshared design certification and licensing activities for small modular reactors, the deployment of which holds promise for vastly increasing the generation of clean energy on a cost competitive basis. The Department will also promote nuclear power through the Loan Guarantee Program, which is requesting up to $36 billion in additional loan guarantee authority in FY 2012.

* Advanced Fossil Energy: Experience in Carbon Capture and Storage: The
world will continue to rely on coal-fired electrical generation to meet energy
demand. It is imperative that the United States develop the technology to ensure that base-load electricity generation is as clean and reliable as possible. The Office of Fossil Energy requests $452.9 million for research and development of advanced coal-fueled power systems and carbon capture and storage technologies. The Budget focuses resources within the fossil energy program on activities that can reduce carbon pollution and have potential benefits for both the existing fleet and new power plants specifically, post-combustion capture R&D and geologic carbon storage R&D.

* Ending Tax Subsidies to Fossil Fuel Producers: In accordance with the
President's agreement at the G-20 Summit in Pittsburgh to phase out subsidies for fossil fuels so that we can transition to a 21st century energy economy, the Administration proposes to repeal a number of tax preferences available for fossil fuels. Tax subsidies proposed for repeal include, but are not limited to: the credit for oil and gas produced from marginal wells; the deduction for costs paid or incurred for any tertiary injectant used as part of a tertiary oil recovery method; the ability to claim the domestic manufacturing deduction against income derived from the production of oil and gas and coal; and expensing the exploration and development costs for coal.

Economic Security: Sharpening America's Competitive Edge through a Clean
Energy Economy

To meet "our generation's Sputnik moment" and promote economic competitiveness, the U.S. must demonstrate leadership in clean energy technologies. "We'll invest in biomedical research, information technology and especially clean energy technology -- an investment that will strengthen our security, protect our planet, and create countless new jobs for our people," said President Obama before Congress in the State of the Union
address. President Obama outlined his comprehensive vision to lead our nation's clean energy economy and provide economic security to Americans. As the Administration seeks to reduce federal government spending, the Department recognizes its role and has tightened its expenditures in several areas such as oil and natural gas. The FY 2012 budget request acknowledges the Department's missions to achieve these imperative goals while setting forth a clean energy economy for entrepreneurs and manufacturers to reclaim their competitive edge in clean energy innovation.

The Department plans to promote economic security by building on the progress made through the over $32 billion in grants and contracts under the American Recovery and Reinvestment Act of 2009, which made historic investments in the nation's economy and has put the country on target to double renewable energy generation by 2012. The Recovery Act helped create tens of thousands of jobs and, combined with the FY 2012 request, will help the Department accelerate the transition of our nation to a clean energy economy.

The President's FY 2012 Budget supports the plan to rebuild our economy through clean energy research and development by:

* Expanding ARPA-E to spur innovation -- The President's request proposes
$550 million for the Advanced Research Projects Agency -- Energy (ARPA-E)
program, plus an additional $100 million for the program from the Wireless
Innovation and Infrastructure Initiative for a total of $650 million. ARPA-E
performs transformational and cutting edge energy research with real-world
applications in areas ranging from grid technology and power electronics to
batteries and energy storage. The budget also supports programs with significant promise to provide reliable, sustainable energy across the country, such as the SunShot initiative aimed at making solar energy cost competitive. With focused investment in manufacturing innovation and industrial technical efficiencies, the President's proposal will move private sector capital off the shelves and into the marketplace.

* Targeting investments for future economic growth -- To secure a competitive advantage in high-tech industries and maintain international leadership in scientific computing, we will invest in core research activities for energy technologies, the development of general biological design principles and new synthetic molecular toolkits to improve understanding of natural systems, and core research activities to advance the frontiers of high performance computing. Underlying these investments in research is the education and training of thousands of scientists and engineers who contribute to the skilled scientific workforce needed for a 21st century innovation economy.

* Doubling the number of Energy Innovation Hubs to solve key challenges --
Innovation breakthroughs occur when scientists collaborate on focused problems. The FY 2012 budget request proposes three new Energy Innovation Hubs that will bring top American scientists to work in teams on critical energy challenges in areas such as critical materials, batteries and energy storage, and Smart Grid technologies. These will join three existing Hubs that focus on fuel generation from sunlight, building efficiency, and nuclear reactor modeling and simulation.

* Integrating Research & Development: The Department has identified areas
where coordinated work by discovery-oriented science and applied energy
technology programs hold the greatest promise for progress in achieving our
energy goals. The Energy Systems Simulation to increase the efficiency of the
Internal Combustion Engine (ICE) will produce a set of modern, validated
computer codes that could be used by design engineers to optimize the next
generation of cleaner, more efficient combustion engines. An initiative on
extreme environments will close the gap between actual and ideal performance of materials in nuclear environments. And the Department's Exascale Computing initiative will allow the Department to take the lead in developing the next generation of scientific tools and to advance scientific discoveries in solving practical problems.

* Pursuing the passage of HOMESTAR -- Enactment of this program will create
jobs by providing strong short-term incentives for energy efficiency improvements in residential buildings. The HOMESTAR program has the potential to accelerate our economic recovery by boosting demand for energy
efficiency products and installation services. The program will provide rebates of $1000 to $3000 per household to encourage immediate investment in energyefficient appliances, building mechanical systems and insulation, and whole-home energy efficiency retrofits. This program will help middle-class families save hundreds of dollars a year in energy costs while improving the comfort and value of their most important investment -- their homes. In addition, the program would help reduce our economy's dependence on fossil fuels and support the development of an energy efficiency services sector in our economy.

* Extending access to tax credit and tax grant programs -- Two provisions of the American Recovery and Reinvestment Act have been extraordinarily successful in spurring the deployment of renewable energy projects and building advanced manufacturing capabilities: Section 48C Advanced Energy Manufacturing Tax Credit program and the Section 1603 Energy Cash Assistance program. The Administration is pursuing an additional $5 billion in support for the Section 48C program, which, by providing a 30% tax credit for energy manufacturing facilities, will continue to help build a robust high-technology, U.S. manufacturing capacity to supply clean energy projects with U.S. made parts and equipment. The Section 1603 tax grant program has created tens of thousands of jobs in industries such as wind and solar by providing up-front incentives to thousands of projects. The Administration is seeking a one-year extension of this program.

* Promoting efficient energy use in our everyday lives - Currently, weatherization of more than 300,000 homes of low income families has been
achieved, providing energy cost savings and financial relief to households. The FY 2012 request of $320 million continues residential weatherization, while increasing the focus on new innovative approaches to residential home
weatherization.

National Security: Securing Nuclear and Radiological Materials, Maintaining
Nuclear Deterrence, and Advancing Responsible Legacy Cleanup

A pillar of President Obama's national security agenda for the United States is to eliminate the global threat posed by nuclear weapons and prevent weapons-usable nuclear material from falling into the hands of terrorists. As part of this agenda, the Administration and Congress worked tirelessly toward the December 2010 bipartisan ratification of the New Strategic Arms Reduction Treaty (New START) with Russia, which cuts the number of strategic nuclear weapons each country can deploy to 1,550. After signing this agreement in April 2010, President Obama said, "In many ways, nuclear weapons represent both the darkest days of the Cold War, and the most troubling threats of our time. Today, we've taken another step forward … in leaving behind the legacy of the 20th century while building a more secure future for our children. We've turned words into action. We've made progress that is clear and concrete. And we've demonstrated the importance of American leadership -- and American partnership -- on behalf of our own security, and the world's".

The Department's National Nuclear Security Administration (NNSA), through work with global partners and efforts to secure vulnerable nuclear materials, achieved significant milestones during FY 2010 and FY 2011 to reduce the risk of proliferation and leverage science to maintain our nation's nuclear deterrence. Additionally, the Environmental Management program made progress advancing responsible nuclear cleanup from the Cold War. The Department's FY 2012 request seeks to build upon these successes and advance the President's nuclear security agenda.

Reduce the Risk of Proliferation

In 2009, President Obama committed the United States to an international effort to secure vulnerable nuclear material worldwide in four years. To solidify international support for this effort, and to address the threat of nuclear terrorism, the President convened leaders from 47 countries at the Washington Nuclear Security Summit in April 2010. The Summit resulted in a Communiqué which stated, "Nuclear terrorism is one of the most challenging threats to international security, and strong nuclear security measures are the most effective means to prevent terrorists, criminals, or other unauthorized actors from acquiring nuclear materials."

The FY 2012 budget for the NNSA Defense Nuclear Nonproliferation program will help advance further work that is needed to meet the goals of President Obama and the Nuclear Security Summit, recognizing the urgency of the threat and making the full commitment to global cooperation on nonproliferation. The budget provides $2.5 billion in FY 2012, and $14.2 billion through FY 2016 to detect, secure, and dispose of dangerous nuclear and radiological material worldwide. This request is a decrease of 5 percent, or $138 million, from the FY 2011 request, which reflects completion of accelerated efforts to secure vulnerable nuclear materials within the President's stated timeframe. The decrease also reflects our decision to await agreement between the United States and Russia on detailed implementation milestones prior to requesting additional U.S. pledged funding to support Russian plutonium disposition. The FY 2012 budget request follows through on securing vulnerable materials and supports efforts to design new technologies in support of treaty monitoring and verification, which will contribute to implementation of New START. The budget also broadens cooperative nonproliferation initiatives with foreign governments and international organizations in support of the President's objective of a world without nuclear weapons. The budget continues the provision of security upgrades at selected sites, both within the United States and in foreign countries, to address outsider and insider threats, and accelerates the pace of research reactor conversions from use of highly-enriched uranium fuel to lowenriched uranium fuel.

Leverage Science to Maintain Nuclear Deterrence

The FY 2012 budget request advances the Department's commitment to the national security interests of the United States through stewardship of a safe, secure and effective nuclear weapons stockpile without the use of underground nuclear testing. The 2010 Nuclear Posture Review Report calls for the United States to reduce nuclear force levels. As the United States begins the reduction required by New START, the science, technology and engineering capabilities and intellectual capacity within the nuclear security enterprise become more critical to sustaining the U.S. nuclear deterrent. NNSA continues to emphasize these capabilities, including functioning as a national science, technology, and engineering resource to other agencies with national security responsibilities. Through the NNSA, the Department requests $7.6 billion for the Weapons Activities appropriation, an 8.9 percent, or $621 million, increase from the President's FY 2011 request. It also is an 18.9 percent, or $1.205 million increase from the FY 2010 enacted appropriation. This increase reflects an investment strategy that provides a strong basis for transitioning to a smaller yet still safe, secure and effective nuclear stockpile without additional nuclear testing, strengthening the science, technology and engineering base, modernizing the physical infrastructure, and streamlining the enterprise's physical and operational footprint. These investments will further enable the Nuclear Posture Review's comprehensive nuclear defense strategy, based on current and projected global threats that rely less on nuclear weapons, while strengthening the nation's nuclear deterrent through completing major stockpile system life extensions, stabilizing the science, technology and engineering base, and modernizing the infrastructure.

The Naval Reactors program ensures the safe and reliable operation of reactor plants in nuclear-powered submarines and aircraft carriers, constituting 45 percent of the U.S. Navy's combatants. The FY 2012 request for Naval Reactors of $1.2 billion, is an increase of $83.2 million or 7.8 percent over the FY 2011 request and $209 million or 18.1 percent above the FY 2010 enacted appropriation. Funding for this program is ramping up for reactor design and development efforts for the Ohio Class Replacement Submarine ($121 million), refueling of the Land-Based Prototype ($99.5 million), and recapitalization of the naval spent nuclear fuel infrastructure for the Spent Fuel Handling Recapitalization program ($53.8 million) at the Naval Reactors Facility located at the Idaho National Laboratory.

Advance Responsible Environmental Cleanup

The FY 2012 budget includes $6.13 billion for the Office of Environmental Management (EM), to protect public health and safety by cleaning up hazardous, radioactive legacy waste from the Manhattan Project and the Cold War. This funding will allow the program to continue to accelerate cleaning up and closing sites, focusing on activities with the greatest risk reduction. Acceleration of cleaning up sites where funding would have immediate impact was established as the overarching objective of the $6 billion in Recovery Act funding. EM will use the remaining $309 million of Recovery Act funding during FY 2012 as it completes footprint reduction and near-term completion cleanup activities.

As the Department continues to make progress in completing environmental cleanup, the FY 2012 budget request of $170 million for the Office of Legacy Management supports the Department's long-term stewardship responsibilities and payment of pensions and benefits for former contractor workers after site closure.

DEPARTMENT OF ENERGY FY 2012 PROGRAM OFFICE HIGHLIGHTS

Office of Science: Invest in the Building Blocks of American Innovation

The Department of Energy's Office of Science (SC) delivers scientific discoveries and major scientific tools to transform our understanding of energy and matter and advance the energy, economic, and national security of the United States. SC is the largest Federal sponsor of basic research in the physical sciences, supporting programs in areas such as physics, chemistry, biology, environmental sciences, applied mathematics, and computational sciences. In FY 2012, the Department requests $5.4 billion, an increase of 9.1 percent over the FY 2010 current appropriation, to invest in basic research. The FY 2012 request supports the President's Strategy for American Innovation, and is consistent with the goal of doubling funding at key basic research agencies, including the Office of Science. The FY 2012 Office of Science budget request supports the following objectives from the Strategy, including:

* Unleash a clean energy revolution

* Strengthen and broaden American leadership in fundamental research

* Develop an advanced information technology ecosystem

* Educate the next generation with 21st century skills and create a world-class workforce

In FY 2012, SC continues to support fundamental research for scientific discovery, but today our country needs to move strongly to solve our energy problems. Therefore, the central theme of this year's budget in SC is research in new technologies for a clean energy future that address competing demands on our environment. These efforts, coordinated with the DOE applied technology programs and with input from the scientific community and industry, will emphasize research underpinning advances in non-carbon emitting energy sources, carbon capture and sequestration, transportation and fuel switching, transmission and energy storage, efficiency, and critical materials for energy applications.

In the area of advancing non-carbon energy sources, the FY 2012 budget request will provide for new investments in the science of interfaces and degradation relevant to solar photovoltaics, basic actinide chemistry research related to advanced nuclear fuel cycles, and research in materials under extreme environments relevant to extreme nuclear technology environments, and genomics-based research on biological design principles and synthetic biology tools to underpin bio-based energy solutions. Carbon capture and sequestration research will focus on novel molecular design for materials and multiscale dynamics of flow and plume migration, respectively. SC will initiate an energy systems simulation research effort focused on predictive modeling of combustion in an evolving fuel environment in support of the Department's efforts in transportation and alternative fuels. Also underpinning transportation and fuel switching, as well as energy storage, the FY 2012 request will support an Energy Innovation Hub for Batteries and Energy Storage. The Fuels from Sunlight Hub, established in FY 2010, as well as the Energy Frontier Research Centers and DOE Bioenergy Research Centers also continue. Research in enabling materials sciences will support needs of future electricity transmission systems and novel building materials to improve building efficiencies.

The FY 2012 budget request also provides for foundational science in condensed matter and materials physics, chemistry, biology, climate and environmental sciences, applied mathematics, computational and computer science, high energy physics, nuclear physics, plasma physics, and fusion energy sciences; and provides for research facilities and capabilities that keep U.S. researchers at the forefront of science. The FY 2012 request supports targeted increases in areas such as computational materials and chemistry by design, nanoelectronics, and advanced scientific applications and integrated applicationhardware-software co-design for exascale, which position the U.S. to secure a competitive advantage in high-tech industries and maintain international leadership in scientific computing. Underlying these investments is the education and training of thousands of scientists and engineers who contribute to the skilled scientific workforce needed for the 21st century innovation economy.

The Office of Science supports investigators at about 300 academic institutions and from all of the DOE laboratories. Over 26,000 researchers from universities, national laboratories, industry, and international partners are expected to use the Office of Science scientific user facilities in FY 2012.

Advanced Research Projects Agency -- Energy: Transformational Research and Development

The FY 2012 budget request includes $550 million for the Advanced Research Projects Agency -- Energy (ARPA-E), plus an additional $100 million for the program from the Wireless Innovation and Infrastructure Initiative for a total of $650 million. ARPA-E was launched in FY 2009 to sponsor specific high-risk and high-payoff transformational research and development projects that overcome the long-term technological barriers in the development of energy technologies to meet the Nation's energy challenges, but that industry will not support at such an early stage. An essential component of ARPA-E's culture is an overarching focus on accelerating science to market. Beyond simply funding transformational research creating revolutionary technologies, ARPA-E is dedicated to the market adoption of those new technologies that will fuel the economy, create new jobs, reduce energy imports, improve energy efficiency, reduce energy-related emissions, and ensure that the U.S. maintains a technological lead in developing and deploying advanced energy technologies.

Office of Energy Efficiency and Renewable Energy: Investing in Breakthrough
Technology and a Clean Energy Future

The Office of Energy Efficiency and Renewable Energy (EERE) supports research, development, demonstration, and deployment activities on technologies and practices essential for meeting national security goals by reducing dependence on oil, meeting environmental goals by minimizing the emissions associated with energy production and use, and stimulating economic growth and job creation by minimizing the cost of energy services. The EERE portfolio emphasizes work areas where the potential impact is largest, where Federal funds are most critical. It balances investments in high-risk research with partnerships with private firms that speed the translation of innovations into practical business opportunities. The diverse set of technologies supported helps ensure that the U.S. has many options for meeting its energy goals. Program management is designed to identify the best groups in the country to address these challenges and supports work in universities, companies, national laboratories, and consortia.

The FY 2012 budget request of $3.2 billion, the increase of 44.4% over the FY 2010 current appropriation, is aimed at accelerating innovation and change in the Nation's energy economy. The request includes programs associated with meeting the President's goals of investing in the next generation of clean energy technologies, vehicles and fuels, and energy efficiency measures that reduce energy use in Federal agencies and the industrial and building sectors.

Clean, Renewable Energy Generation

The FY 2012 budget request continues to work to transform the Nation's energy infrastructure by investing over $1,164.9 million in a variety of renewable programs including solar ($457.0 million), wind ($126.9 million), water ($38.5 million), hydrogen ($100.5 million), biomass ($340.5 million), and geothermal ($101.5 million). Research, development, and deployment of these technologies will reduce the production of greenhouse gas emissions and revitalize an economy built on the next generation of domestic production. The request includes the solar SunShot program which will invest in transformative research focusing on achieving radical cost reductions in photovoltaic modules, balance of systems, and power electronics.

Energy Efficiency

The Department implements a number of efforts to increase energy efficiency in homes, transportation, and industry. The FY 2012 budget requests $1,805.3 million to accelerate deployment of clean, cost-effective, and rapidly deployable energy efficiency measures in order to reduce energy consumption in residential and commercial buildings, and the industrial and Federal sectors. The Department will invest $470.7 million in the Building Technologies program and $33.0 million for the Federal Energy Management Program. Federal assistance for state-level programs such as State Energy Program ($63.8 million), Tribal ($10.0 million) and Weatherization Assistance Program ($320.0 million) will continue to help citizens implement energy efficiency measures, lower energy costs and greenhouse gas emissions, and build a technical workforce. ($319.8 million) for Industry will provide a balanced portfolio of advanced R&D and pursuit of near-term low cost opportunities with the objectives of increasing U.S. competitiveness, enhancing clean energy manufacturing, and improving energy productivity. There will be a focus on next generation manufacturing processes and materials, activities for clean energy manufacturing, and refocused efforts for Industrial Technical Assistance to achieve greater results with less funding through more effective leveraging of funding for deployment partnerships. A new Energy Innovation Hub on critical materials will be competed through the Industrial Technologies program. The FY 2012 request also includes $588 million to accelerate research, development and deployment of advanced vehicle technologies, working in concert with biomass RD&D to reduce the use of petroleum and greenhouse gas emissions.

Better Buildings Initiative for Commercial Energy Savings -- The President's Better Buildings Initiative is focused on achieving a 20 percent improvement in commercial buildings' energy use by 2020. The initiative will include many new components to achieve this goal. The following are supported in the Department's FY 2012 request: launch of the Race to Green competitive grant program for states and municipal governments to encourage higher standards for commercial energy efficiency, which is funded within the Buildings Technologies Program; a new pilot loan guarantee program to support energy efficiency retrofits for buildings that serve as community assets; and increased R&D funding for building technologies. The Department intends to work with the business and academic communities to make their organizations leaders in saving energy.

Office of Electricity Delivery and Energy Reliability: Enabling a Clean Energy
Economy

The Office of Electricity Delivery and Energy Reliability (OE) is responsible for leading national efforts to modernize the electric grid, enhance the security of energy infrastructure, and facilitate recovery from disruptions to the energy supply. The Department's FY 2012 budget request for OE of $238 million, a 38% increase over the FY 2010 appropriation, represents a clear and determined effort to accelerate the transformation of one of the Nation's key enablers of a clean energy economy -- the electricity delivery system.

The U.S. electricity delivery system was built on technology that was developed early in the 20th century and designed for the demands and challenges of that era. Today, this aging and often congested system is facing many new and complex challenges that require considerable improvements in the physical and technological components of the system. In order to alleviate the stress on the system from increasing demand for electricity and to enable greater use and integration of renewable and distributed resources, all while maintaining the reliability, security, and affordability of electric power, research and development breakthroughs and new energy management approaches are critical in the areas of transmission and distribution, energy storage, and cyber security.

OE's FY 2012 budget request provides $193 million for research and development in these critical areas to bring the next generation of grid technologies closer to deployment and commercialization. The increased investment reflects the President's vision and OE's role in competing in a worldwide technological race. As such, with $20 million in FY 2012, OE will establish a new Energy Innovation Hub, or in the words of President Obama, one of "the Apollo projects of our time." The Smart Grid Technology and Systems Hub will bring together a diverse, multi-disciplinary group to develop an integrated approach to enhancing smart grid technologies and systems. OE will also expand its advanced modeling capabilities to include other system layers in order to provide a more in-depth system understanding. The energy storage program will expand to aggressively support the deployment of grid-scale energy storage technologies with new demonstrations, and the cyber security program will continue to focus on the development and integration of secure control systems.

The budget request continues to support Permitting, Siting, and Analysis (PSA) with $8 million to develop and improve policies, state laws, and programs that facilitate the development of electric infrastructure needed to bring new clean energy projects to market, and to provide technical assistance to states and regions. It also supports Infrastructure Security and Energy Restoration (ISER) with $6.2 million to enhance the reliability and resiliency of critical energy infrastructure and to facilitate recovery from energy supply disruptions.

Office of Environmental Management: Meeting Commitments and Making
Progress

The mission of the Office of Environmental Management (EM) is to complete the safe cleanup of the environmental legacy brought about from over six decades of nuclear weapons development, production, and Government-sponsored nuclear energy research. This cleanup effort is the largest in the world, originally involving two million acres at 110 sites in 35 states, dealing with some of the most dangerous materials known to man.

EM continues to pursue its cleanup objectives within the overall framework of achieving the greatest comparative risk reduction benefit and overlaying regulatory compliance commitments and best business practices to maximize cleanup progress. To support this approach, EM has prioritized its cleanup activities:

* Activities to maintain a safe and secure posture in the EM complex

* Radioactive tank waste stabilization, treatment, and disposal

* Spent nuclear fuel storage, receipt, and disposition

* Special nuclear material consolidation, processing, and disposition

* High priority groundwater remediation

* Transuranic and mixed/low-level waste disposition

* Soil and groundwater remediation

* Excess facilities deactivation and decommissioning

The FY 2012 budget request for $6.13 billion will fund activities to maintain a safe and secure posture in the EM complex and make progress against program goals and compliance commitments by reducing the greatest risks to the environment and public health, using science and technology to reduce lifecycle costs, and reducing EM's geographic footprint by 90 percent by 2015. EM continues to move forward with the development of the capability for dispositioning tank waste, nuclear materials, and spent (used) nuclear fuel. The budget request includes the construction and operation of three unique and complex tank waste processing plants to treat approximately 88 million gallons of radioactive tank waste for ultimate disposal. It will also fund the solid waste disposal infrastructure needed to support disposal of transuranic and low-level wastes generated by high-risk activities and the footprint reduction activities.

EM carries out its cleanup activities with the interests of stakeholders in mind. Most importantly, EM will continue to fulfill its responsibilities by conducting cleanup within a "Safety First" culture that integrates environment, safety, and health requirements and controls into all work activities to ensure protection to the workers, public, and the environment, and adheres to sound project and contract management principles. EM is also strengthening its project and planning analyses to better assess existing priorities and identify opportunities to accelerate cleanup work. Working collaboratively with the sites, EM continues to seek aggressive but achievable strategies for accelerating cleanup of discrete sites or segments of work. In addition, functional and cross-site activities such as elimination of specific groundwater contaminants, waste or material processing campaigns, or achievement of interim or final end-states are being evaluated.

After the EM program completes cleanup and closure of sites that no longer have an ongoing DOE mission, post closure stewardship activities are transferred to the Office of Legacy Management (LM). LM also receives sites remediated by the U.S. Army Corps of Engineers (Formerly Utilized Sites Remedial Action Program) and private licensees (Uranium Mill Tailings Radiation Control Act, Title II sites). Post closure stewardship includes long-term surveillance and maintenance activities such as groundwater monitoring, disposal cell maintenance, records management, and management of natural resources at sites where active remediation has been completed. At some sites the program includes management and administration of pension and post-retirement benefits for contractor retirees.

Loan Programs Office: Helping Finance Clean Energy Deployment

Innovative Technology Loan Guarantee Program - To encourage the early commercial deployment of new or significantly improved technologies in energy projects, the Department requests up to $36 billion in loan guarantee authority for nuclear power facilities and $200 million in appropriated credit subsidy to support an estimated $1 to $2 billion in loans for renewable energy system and efficient end-use energy technology projects under section 1703 of the Energy Policy Act of 2005. The additional loan guarantee authority for nuclear power projects will promote deployment of new plants and support an increasing role for private sector financing. The additional credit subsidy will allow for investment in the innovative renewable and efficiency technologies that are critical to meeting the Administration's goals for affordable, clean energy, technical leadership, and global competitiveness.

The FY 2012 budget also requests $38 million to evaluate applications received under the eight solicitations released to date and to ensure efficient and effective management of the Loan Guarantee program. This request is expected to be offset by collections from borrowers authorized under Title XVII of the Energy Policy Act of 2005 (P.L. 109-8).

Advanced Technology Vehicle Manufacturing Program- The Department requests $6 million to support ongoing loan monitoring activities associated with the program mission of making loans to automobile and automobile part manufacturers for the cost of re-equipping, expanding, or establishing manufacturing facilities in the United States to produce advanced technology vehicles or qualified components, and for associated engineering integration costs.

Better Buildings Pilot Loan Guarantee Initiative for Universities, Schools, and Hospitals - To spur investment in energy efficiency retrofits for buildings which serve as assets to our communities, the Department requests $100 million for loan guarantee subsidy costs to support up to $2 billion in loan authority for universities, schools, and hospitals. This pilot program is one component of the President's Better Buildings Initiative and would fund cost-effective technologies and measures to assist universities, schools, and hospitals save on energy usage and associated energy costs. The Department also requests $5 million for administrative expenses to carry out the program. The request is subject to the enactment of legislation authorizing this program.

Office of Nuclear Energy: Investing in Energy Innovation and Technical Leadership

The Department is requesting $852.5 million for the Office of Nuclear Energy (NE) in FY 2012 -- a decrease of 0.6 percent from the FY 2010 current appropriation. NE's funding supports the advancement of nuclear power as a resource capable of meeting the Nation's energy, environmental, and national security needs by resolving technical, cost, safety, proliferation resistance, and security barriers through research, development, and demonstration as appropriate.

Currently, nuclear energy supplies approximately 20 percent of the Nation's electricity and over 70 percent of clean, non-carbon producing electricity. Over 100 nuclear power plants are offering reliable and affordable baseload electricity in the United States, and they are doing so without air pollution and greenhouse gas emissions. NE is working to develop innovative and transformative technologies to improve the competitiveness, safety and proliferation resistance of nuclear energy to support its continued use.

The FY 2012 budget supports a balanced set of research, development, and deployment (RD&D) activities. This program is built around exploring, through its R&D: technology and other solutions that can improve the reliability, sustain the safety, and extend the life of current reactors; improvements in the affordability of new reactors to enable nuclear energy to help meet the Administration's energy security and climate change goals; development of sustainable nuclear fuel cycles; and minimization of risks of nuclear proliferation and terrorism.

NE is requesting $125 million for Reactor Concepts Research, Development and Demonstration. This program seeks to develop new and advanced reactor designs and technologies. NE is also requesting $67 million for the Light Weight Reactor SMR Licensing Technical Support program, which will support cost-shared design certification and licensing activities for two light water reactor-based designs. Small modular reactors are a technology that the Department believes has the promise to help meet energy security goals. Work will continue on R&D for the Next Generation Nuclear Plant to support demonstration of gas-cooled reactor technology in the United States. The program also supports research on Generation IV and other advanced designs and efforts to extend the life of existing light water reactors.

The FY 2012 request includes $155 million for Fuel Cycle Research and Development to perform long-term, results-oriented science-based R&D to improve fuel cycle and waste management technologies to enable a safe, secure, and economic fuel cycle. The budget also requests $97.4 million to support the Nuclear Energy Enabling Technologies program, focused on the development of cross-cutting and transformative technologies relevant to multiple reactor and fuel cycle concepts. The Crosscutting Technology Development activity will focus on a variety of areas such as reactor materials, creative approaches to further reduce proliferation risks, and establishing advanced modeling and simulation capabilities to complement physical experimentation. The Transformative Nuclear Concepts R&D activity supports, via an open, competitive solicitation process, investigator-initiated projects that relate to any aspect of nuclear energy generation ensuring that good ideas have sufficient outlet for exploration. Modeling and Simulation Energy Innovation Hub, supported within this program, will apply existing modeling and simulation capabilities to create a "virtual" reactor user environment to simulate an operating reactor and is a prime example of the type of crosscutting, transformative activity that will enhance many research areas within NE. NE will also continue its commitments to investing in university research, international cooperation, and the Nation's nuclear research infrastructure -- important foundations to support continued technical advancement.

Office of Fossil Energy: Sustaining American Energy Options through U.S.
Ingenuity

The FY 2012 budget request of $521 million for the Office of Fossil Energy (FE) will help ensure that the United States can continue to rely on clean, affordable energy from traditional domestic fuel resources. The United States has 25 percent of the world's coal reserves, and fossil fuels currently supply over 80 percent of the Nation's energy.

The Department is committed to developing technologies and providing technologybased options having public benefits including enhanced economic, environmental and energy security impacts. In FER&D, the emphasis, in keeping with Presidential priorities, is in supporting long-term, high risk initiatives targeted at carbon capture and storage as well as advanced energy systems and on cross-cutting research.

In addition, $122 million of FE's $521 million request will be to provide for national energy security through the continued operations of the Strategic Petroleum Reserve. The budget proposes to sell $500 million of SPR oil in order to provide operational flexibility in managing the Reserve.

The National Nuclear Security Administration: Leading Global Partners on
Nonproliferation by Securing Vulnerable Nuclear Materials; Reaffirming
Commitment to Stockpile Modernization

The National Nuclear Security Administration (NNSA) continues significant efforts to meet Administration and Secretarial priorities, leveraging science to promote U.S. national security objectives. The FY 2012 President's budget request for NNSA is $11.8 billion; an increase of 5.1 percent from the President's FY 2011 Request. The five-year FY 2012-2016 President's Request for the NNSA reflects the President's global nuclear nonproliferation priorities and his commitment to modernize the U.S. nuclear weapons complex and sustain a strong nuclear deterrent, as described in the 2010 Nuclear Posture

Review (NPR) Report, for the duration of the New START Treaty and beyond. The NNSA's defense and homeland security-related objectives include:

* Ensure that the U.S. nuclear deterrent remains safe, secure and effective while implementing changes called for by the 2010 NPR and the New START Treaty

* Broaden and strengthen the NNSA's science, technology and engineering mission to meet national security needs

* Transform the Nation's Cold-War era weapons complex into a 21st century
national security enterprise

* Work with global partners to secure all vulnerable nuclear materials around the world and implement the President's nuclear security agenda expressed in the May 2010 National Security Strategy and the Nuclear Posture Review report

* Provide safe and effective nuclear propulsion for U.S. Navy warships

The FY 2012 budget request of $7.6 billion for the Weapons Activities appropriation provides funding for a wide range of programs. Requested activities include providing direct support for the nuclear weapon stockpile, including stockpile surveillance, annual assessments, life extension programs, and warhead dismantlement. Science, Technology and Engineering programs are focused on long-term vitality in science and engineering, and on performing R&D to sustain current and future stockpile stewardship capabilities without the need for underground nuclear testing. These programs also provide a base capability to support scientific research needed by other elements of the Department, the federal government national security community, and the academic and industrial communities. Infrastructure programs support facilities and operations at the government-owned, contractor-operated sites, including activities to maintain and steward the health of these sites for the long term and construct new facilities that will allow the United States to maintain a credible nuclear deterrent. The unique nuclear security expertise and resources maintained by NNSA are made available through the National Laboratories to other Departmental offices, agencies and to the Nation for security and counterterrorism activities.

The Weapons Activities request is an increase of 8.9 percent over the President's FY 2011 Request. This level is sustained and increased in the later outyears. The multi-year increase is necessary to reflect the President's commitment to maintain the safety, security and effectiveness of the nuclear deterrent without underground nuclear testing, consistent with the principles of the Report on the Plan for the Nuclear Weapons Stockpile, Nuclear Weapons Complex, and Delivery Platforms (known as the "1251 Report") and the Stockpile Management Program as stipulated in Sections 1251 and 3113(a)(2) of the National Defense Authorization Act of Fiscal Year 2010. Increases are provided for direct support of the nuclear weapon stockpile, for scientific, technical and engineering activities related to maintenance assessment and certification capabilities, and for recapitalization of key nuclear facilities. The President's Request provides funding necessary to protect the national resource of human capital at the national laboratories through a stockpile stewardship program that exercises and retains these capabilities.

The FY 2012 request for Defense Nuclear Nonproliferation (DNN) is $2.5 billion; a decrease of 5.1 percent from the President's FY 2011 Request. This decrease reflects completion of long-lead procurements for the Mixed Oxide Fuel Fabrication Facility (MOX) and Waste Solidification Building (WSB). It also reflects our decision to await an agreement between the U.S. and Russia on detailed implementation milestones prior to requesting additional U.S.-pledged funding to support Russian plutonium disposition. The Administration prioritizes U.S. leadership in global nonproliferation initiatives as directed through the National Security Strategy and has advanced this agenda through commitments from global partners during the 2010 Nuclear Security Summit. In addition to the programs funded solely by the NNSA, Defense Nuclear Nonproliferation programs support interagency and international efforts to protect national security by preventing the spread of nuclear weapons and nuclear materials to terrorist organizations and rogue states. These efforts are implemented in part through the International Atomic Energy Agency, the G8 Global Partnership against the Spread of Weapons and Materials of Mass Destruction, and the Global Initiative to Combat Nuclear Terrorism.

DNN supports the President's goal to secure vulnerable nuclear materials around the world within four years. The Global Threat Reduction Initiative's emphasis in FY 2012 is to convert domestic and international nuclear reactors from weapons-usable highly enriched uranium fuel to low-enriched uranium fuel (LEU); while preserving our capability to produce the critically needed Molybdenum 99 isotope. The FY 2012 President's request for International Nuclear Materials Protection and Cooperation reflects selective new security upgrades to buildings and sites in accordance with the President's goal to secure vulnerable nuclear materials around the world within four years, as well as enhancements and sustainability support for previous work. The Fissile Materials Disposition program continues domestic construction of the MOX Fuel Fabrication Facility scheduled to come online in 2016; and design for the pit disassembly and conversion capability to provide it with plutonium oxide feedstock.

The President's request of $1.2 billion for Naval Reactors is an increase of 7.8 percent over the President's FY 2011 Request. The program supports the U.S. Navy's nuclear fleet, comprised of all of the Navy's 72 submarines and 11 aircraft carriers, which constitute 45 percent of the Navy's combatants. The U.S. relies on these ships every day, all over the world, to protect our national interests. The budget provides funding increases for the Ohio Class Replacement submarine to design and develop required submarine reactor plant technologies. R&D is underway now, and funding during this Future Years Nuclear Security Program is critical to support the long manufacturing spans for procurement of reactor plant components in 2017, and ship construction in 2019. Resources are also requested in FY 2012 to support design work for the recapitalization of the spent nuclear fuel handling infrastructure and refueling of the Land-based prototype.

The Office of the Administrator appropriation provides for federal program direction and support for NNSA's Headquarters and field installations. The FY 2012 request is $450.1 million; a 0.4 percent increase over the President's FY 2011 Request. This provides for well-managed, inclusive, responsive, and accountable organization through the strategic management of human capital, enhanced cost-effective utilization of informationtechnology, and integration of budget and performance through transparent financialmanagement practices. The increase reflects additional federal oversight for constructionof the Pit Disassembly and Conversion project, the Uranium Processing Facility, and theChemistry and Metallurgy Research Replacement Facility.

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