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Dim Prospects for Energy R&D Funding

As Congress prepares to vote on a comprehensive spending bill, U.S. energy projects such as ARPA-E hang in the balance.
December 10, 2010

As Congress rushes to finish its business before the year’s end, it is likely to pass one of two spending bills to keep the government running in 2011. Either way, funding for energy R&D is expected to be stagnant next year and decrease in 2012.

On Wednesday, the House passed a $1.1 trillion spending bill. If the Senate follows suit, which is by no means certain, overall funding for energy R&D will remain level—but some specific research programs could take a significant funding hit. Congress may yet pass another version of the spending bill that will rescue some of these programs. However, the outlook for energy R&D remains bleak, especially for 2012.

All this comes after a year of rhetoric from the White House and key members of Congress about the urgent need for more energy R&D. But Congress failed to pass comprehensive climate and energy legislation that would have directly funded new energy projects, leaving funding to the regular budget, which has been limited. Congress also hasn’t passed a single appropriations bill yet this year—the government has been running on temporary spending bills since October—and it is running out of time to pass one in the current session.

Under the president’s proposed budget—a document submitted by the administration in February and meant to guide Congress in crafting its spending bills—several energy-related research programs would have received significant new funding. It called for $300 million for ARPA-E, an agency founded to foster high risk but potentially high reward R&D. The first projects funded by ARPA-E include one focused on developing a cheaper way to make silicon wafers for solar cells and another investigating new battery designs that could give electric cars a range of 500 miles. The President’s budget also requested a $218 million increase in spending for energy R&D in the Department of Energy’s Office of Science, as part of a long-term plan to double funding for physical sciences research in order to keep the United States competitive in this area—a goal that’s part of the 2007 America Competes Act.

The president’s budget also called for the addition of a fourth “Energy Innovation Hub” to the three that were approved by Congress last year. These innovation hubs, devised by Energy Secretary Steven Chu, are meant to bring together the best researchers and engineers to tackle key energy-related issues, in the style of the Manhattan Project or Bell Labs. Last year, Congress funded an innovation hub for making fuels using sunlight, another for increasing the energy efficiency of buildings, and a third for simulation tools to advance nuclear energy. Each of these would get $24 million under the president’s proposed budget. The new hub for developing better batteries would get $30 million. The budget also called for spending on related Energy Frontier Research Centers to increase from $100 million to $140 million.

Congress is considering two options. The first is to adopt a continuing resolution that will keep overall funding levels equal to 2010’s (about $50 billion less than the president’s budget), while rearranging where some of that funding goes. That’s the spending bill the House passed on Wednesday, and it now goes to the Senate. The other option is a more comprehensive “omnibus” bill that lumps together a dozen appropriations bills that committees have crafted based on President Obama’s budget request but modified in ways meant to make them more likely to pass or to reflect the preferences of the committee members. Overall, the omnibus bill would be better for energy R&D funding, though not as good as the budget the president requested.

In either of the options before Congress now, ARPA-E is likely to continue to get funding. Although ARPA-E was created in 2007, it wasn’t funded until the Recovery Act of 2009, and it has been running on that money since, without substantial funding from the regular budget. Keeping funding at 2010 levels could have prevented ARPA-E from funding any new projects, or even killed it. The House continuing resolution, however, allows the Department of Energy to give ARPA-E up to $300 million—the amount the president requested. But this must come at the expense of other DOE research funding, either for the Energy Efficiency and Renewable Energy program or the Office of Science. If the omnibus bill passes instead, ARPA-E is likely to get funding of its own, but about $100 million less than the President requested.

Under the continuing resolution, funding for the Office of Science, the Energy Frontier Research Centers, and the Energy Innovation Hubs will continue at 2010 levels instead of getting the increases President Obama requested. But the omnibus bill will be good news for some of these energy R&D programs. The Office of Science will get a small increase ($70 million as opposed to the $218 million the President requested), and the new battery innovation hub is likely to be funded.

It’s not clear which option—the omnibus bill or the continuing resolution—will win, says Patrick Clemins, director of the R&D budget and policy program for the American Association for the Advancement of Science. The House has passed the continuing resolution, but the Senate may prefer passing an omnibus bill. What is clear is that funding for energy R&D overall will remain essentially flat—a trend that’s been going on since 2004, he says, in spite of many calls for increased energy R&D over this time.

Things might be even worse in the 2012 budget. The new Republicans in the House were elected with a mandate to decrease government spending. ARPA-E, the benefits of which won’t be clear for years and whose funding goes largely to research in Democratic states, “is the kind of thing that is easily killed,” says David Victor, a professor at the School of International Relations and Pacific Studies at the University of California, San Diego. Mark Muro, a senior fellow at the Brookings Institute, hopes that Republicans and Democrats can find common ground in some areas, such as support for nuclear power. But, he says, there is widespread fear that existing energy R&D will be cut. “We could be playing defense rather than moving it forward,” he says.

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