A year after it first received funding, the Advanced Research Projects Agency for Energy (ARPA-E) got high marks from the congressional committee that spearheaded its creation in its "first annual checkup." In a hearing of the House committee on Science and Technology, the new agency, which is designed to promote the research, development and commercialization off "game-changing" energy technologies, received praise for quickly sorting through 3,700 applications to make 37 awards in its first round of funding. It also fine-tuned its awards process, with the second round of funding going into specific areas of research identified in a series of workshops. Some of the projects that ARPA-E funded have since attracted private support.

The agency's fate, however, remains unclear. It's funding so far has come from last year's stimulus package, not the regular budget, and Congress denied its request for funds for the current fiscal year. [Clarification: Congress did this because the agency already had sufficient funds from the stimulus package to continue operation. The appropriations bill included the following language: "The decision not to provide any additional funding for ARPA-E in fiscal year 2010 beyond the funding already provided does not in any way suggest a lack of commitment to this new program by the Committee."] The President's 2011 budget includes nearly $300 million for the agency, but at a time when Congress is facing pressure to cut spending, that money might not make to the final budget.

John Garamendi (D-CA), noted that President Obama wants a freeze on discretionary spending. In order to do that, while also adding new funding for ARPA-E to the budget, Congress will have to cut funding or subsidies elsewhere. Garamandi has his sights set on the oil industry. "We're spending 10 to 15 billion dollars a year subsidizing an extraordinary industry, the oil industry. We've done if for a century. Why in the world are we continuing to do that?"

One concern raised by several of the committee members was whether ARPA-E's efforts will lead to American jobs. Brian Baird (D-WA), noted that technologies such as advanced batteries, which were invented in the United States, have been "exported" and are now being designed and produced in other countries.

John Denniston, a partner from the venture capital firm Kleiner Perkins Caulfield & Byers who testified before the committee, emphasized that the first step is promoting innovation through ARPA-E--and argued that jobs would follow. "First things first. Let's get the breakthroughs," he said. Denniston also warned that putting restrictions on the use of the technologies once they are produced--such as not allowing them to be produced overseas--would hurt entrepreneurs, since it could lead other countries to restrict technology flowing into the United States.

When the new Advanced Research Projects Agency for Energy (ARPA-E) requested proposals for its first round of funding, it received thousands of them, but only 43 received any cash. Some of the other proposals will get a second chance in another funding round focused on three interesting areas of research, which Energy Secretary Steven Chu announced today.

The first is research into something called "electrofuels," which the agency describes as a "new paradigm for the production of liquid fuels." The idea is to engineer organisms that can convert carbon dioxide into liquid fuels such as diesel, but not through photosynthesis. It sounds a little convoluted. First you take energy from the sun and use it to produce hydrogen, electricity, or some other "energy carrier." Engineered organisms then use this energy to convert carbon dioxide into fuel. The hope is that this will prove more efficient than photosynthesis.

I'm working on a story that will have more detail on this approach to making fuels; I hope to get it up on the website this week.

The agency will also be funding research into cheap, high energy batteries and into carbon dioxide capture from coal fired power plants. The first round also funded some projects in this area.

The Advanced Research Projects Agency-Energy (ARPA-E) is finally getting off the ground. Although created during the Bush administration, the agency only recently got its first director and this week its first funded projects were announced. But there are serious questions about whether the agency can succeed.

Its mission is to identify "revolutionary advances in fundamental sciences," then translate these advances into "technological innovations," particularly in areas where industry won't do this on its own because the technology is considered too risky. In some ways ARPA-E is supposed to be for energy technologies what DARPA (Defense Advanced Research Projects Agency) is for the military. That agency had its hand in the development of a number of revolutionary new technologies, including Arpanet, the precursor to the Internet.

The first batch of ARPA-E projects is certainly fascinating. It includes projects that could improve the performance of current energy technologies by many times, slashing the cost of solar panels and batteries, for example. If they succeed, the world could be a different place. Renewable energy could out-compete fossil fuels without the help of subsidies and long-range electric cars could become widely affordable, challenging the dominance of the internal combustion engine.

By design, the program managers at ARPA-E have picked risky projects. But have they picked the best risky projects? That would require reviewers that have an unusual combination of skills and experience. Ideally you'd have people who are both the very best scientists in their fields and who have had extensive experience in industry. The latter is particularly important because academics often aren't privy to the latest advances in industrial labs. They sometimes publish work tackling problems industry has already solved. Conversely, people with only industrial experience might not be open to radically new ideas as an academic free to explore longer-term, and riskier, possibilities.

The problem is that the ARPA-E process, by necessity, disqualified some of the very best potential reviewers. Many brilliant academics are likely to have founded their own companies that might compete with applicants. Quite rightly, those connected with potentially competing companies were banned as reviewers--but as a result, some of the best potential technologies may have slipped through the cracks, while some companies that have almost no chance of success may have received money.

The other issue is in the difference between the energy industry and the military. The military is willing to pay top dollar for radical technologies that give it a significant advantage. It's also more authoritarian--it can dictate changes from the top.

In energy, you've got to create technologies that are cheap and convenient enough to take on entrenched fossil fuel power plants and internal combustion engines and so on, which already have extensive infrastructure in place. You've also got to produce something that utilities--which are extremely risk averse--are willing to take on. And you've got to deal with consumers who are reluctant to change their routines.

All this could mean some really exciting possibilities simply won't work--because the materials required are too expensive, for example, or can't be found in large enough quantities, or because the technology would require consumers to change habits too much. For example, a very cheap and efficient new engine might not succeed if it requires consumers to take the simple step of filling two separate fuel tanks with two different fuels. The point is that projects funded DARPA-like, with an eye for really radical ideas, might lead to technologies that won't succeed in the market.

So, anyway, these are the challenges--and I'm curious what people think about them. I know for example that some people have good arguments as to why the energy industry versus the military differences might not really be a big problem--I just can't remember those arguments, or where I heard them.

And having just enumerated the challenges, I still can't help but be excited about these ARPA-E projects. Maybe they'll all fail. But if even one succeeds it could transform society. So in the next several weeks, look for a series of stories from TR digging into some of these projects.