New estimates from the US Congressional Budget Office (CBO) look likely to undermine the Bush administration’s energy legislation, according to the Financial Times. Advance copies suggest that the budget surplus has been converted into a deficit of $9 billion for 2001. A small surplus in 2002 will be followed by an even larger deficit – $18 billion – in 2003, the Budget Office predicts.

The administration’s energy legislation, passed by the Congress before the summer recess, will consume all of the predicted 2002 surplus of $2 billion. This is before any extra funding is allotted to the missile shield, education and other presidential priorities.

The energy bill provides subsidies for research and development in the nuclear industry next year, including $30 million to strengthen academic courses in nuclear engineering and $20 million for research into a new generation of nuclear reactors. Coal is to get $172 million in subsidies for research and development and oil and gas would get an income tax credit worth an estimated $1.4 billion from 2002 to 2006.

A further list of expiring tax credits which have popular support but no budget allotment yet include electricity production from wind, biomass and poultry litter.

The Bush administration’s energy programme still faces strong opposition in the Senate. The latter has other priorities which could add to the budget.