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DOE Energy Hubs on the Brink

Research centers conceived to speed energy-related research are facing a tough battle in Congress.
August 7, 2009

A major effort to revamp research and development at the Department of Energy, which Energy Secretary Steven Chu says is critical to solving energy-related challenges, hangs in the balance as the Obama administration attempts to make its case to a skeptical Congress.

Bell’s Nobels: Steven Chu, speaking at MIT on the subject of energy innovation hubs, cited the success of Bell Laboratories at spurring invention. The inset is a slide from his talk, picturing the inventors of the transistor and the first of many Nobel Prize winners, including Chu, from Bell Labs.

Last month, the House and Senate committees responsible for appropriating money to the Department of Energy shot down Chu’s proposed “Energy Innovation Hubs,” with the House killing funding for all but one of the eight proposed hubs and the Senate provisionally funding only three. The House committee called the hubs redundant and criticized the Department of Energy for a lack of planning and clear communication about them. Since then, the department has issued much more detailed accounts of the hubs, and the Obama administration has said it “strongly opposes” the committee’s decision to cut the requested funds.

Each hub would bring together top researchers under one roof to address one of eight “grand challenges” related to energy and would be modeled on the Manhattan Project, which developed the atomic bomb, and the legendary Bell Laboratories, where the invention of the transistor and the development of information theory, among other things, helped make possible the semiconductor industry and the Internet.

“The intent is to create a fierce sense of urgency to deliver solutions,” says a report released by the DOE in response to congressional criticism. (For a full list of the eight challenges, and detailed descriptions of the hubs, click here and here.)

The idea to create hubs was inspired by Chu’s own tenure as a researcher at Bell Labs. These well-funded research facilities featured top researchers, who had the authority to decide quickly whether or not to fund a new project, based on discussions with the researchers who came up with the idea. “You could say no within an hour, and you could say yes within a day or a week,” he said at a talk earlier this year at MIT. What’s more, the close proximity of leading experts in a variety of fields made it easy to find out what work had been done in an area and what pitfalls should be avoided. After talking to a couple of people, “you were likely to be sitting down with a world expert,” he said. At Bell Labs, research ran the gamut from basic efforts to explore how the world works to research that applied those findings and developed technical solutions–stages of research and development that are typically kept separate at universities and national laboratories.

The proposed innovation hubs would mimic this approach, with managers located on-site rather than behind a desk in Washington. They would be funded for five years at a time, freeing researchers from yearly funding cycles that make planning difficult. And the funding would be substantial–$35 million for the first year and $25 million per year thereafter. In comparison, research projects at universities typically receive $150,000 a year. To obtain a second round of five-year funding, the hubs would have to show significant progress in proving that their new technologies can work, with the goal of developing something that industry could bring to market.

The innovation hubs could correct some historical shortcomings of the Department of Energy, according to Chu. In the past, the department has not focused on commercializing technologies, and most of its efforts have revolved not around renewable energy but rather around cleaning up after nuclear weapons development, says Mark Muro, a fellow and policy director at the Brookings Institution in Washington, DC. “The reason Steven Chu wanted eight of them, dispersed across the entire corpus of the lab’s research activities, was essentially to transform the culture and practices of the lab system,” he says.

But some experts say that replicating Bell Labs today isn’t a good idea, and likely isn’t even possible. “So many people have tried to build a mini-Bell Labs and it has never quite succeeded,” says Howard Anderson, a professor at MIT’s Sloan School of Management and a venture capitalist. For one thing, when Bell Labs was at its height, “they didn’t have 125 venture-capital firms ready to suck off all the brightest guys all at once,” he says. When venture capitalists “see someone with a breakthrough who is on a government salary, we say, come over here, take $5 million, a chance to be rich.” Over time, the hubs could be drained of the top talent essential to them functioning well.

But William Aulet, director of the MIT Entrepreneurship Center, says that the Bell Labs approach has been superseded in industry by a new approach exemplified by companies such Cisco, which draw on many outside researchers and are open to spinning off technology into other companies. He says that while clusters of researchers are definitely a good idea, a more open, Cisco-type approach will ultimately be more effective than a lab that tries to do everything itself. Aulet is encouraged that more-recent descriptions of the hubs by the DOE include ties to industry, which could help foster such an open model.

The appropriations bills from the House and Senate committees are now awaiting conference, so there’s a chance that funding for the hubs could be restored before a final vote. What’s more, the Waxman-Markey energy and climate-change bill that’s working its way through Congress also has a provision for very similar energy innovation hubs.

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