Obama Puts U.S. Energy Innovation on Steroids

Federal funding for the entire spectrum of energy innovation will more than double over the next year as the combined impact of the FY 2010 budget request for the U.S. Department of Energy and the portion of the American Recovery and Reinvestment Act of 2009 (ARRA) drives funding from $3.6 billion in FY 2009 to $7.2 billion in FY 2010.

The stimulus funds are the principal force driving the spending increase. In fact, the DOE ERD&D investments in FY 2010 would decrease very slightly when compared to FY 2009, according to a new analysis by Harvard University’s Belfer Center on Energy Innovation. The slight decrease is largely due to the large amounts of stimulus funds supporting DOE deployment programs. The Harvard report concludes that these “funding amounts, coupled with the broad range of institutional innovations the administration is putting in place and movement toward putting a price on carbon emissions, will help accelerate innovation for a broad range of energy technologies.”

One of the most highly anticipated program that will be enabled with the stimulus funds is the DOE’s Advanced Research Projects Agency-Energy (ARPA-E). The new agency will support high-risk projects in transformational technologies and recruit companies that have not traditionally worked with the government in an effort to strengthen the integration of basic and applied research in priority areas. Increasing the funding for different types of energy storage research, providing some support for exploring opportunities in coal-to-liquids with carbon capture and storage (CCS) and coal-and-biomass-to-liquids with CCS, and reducing funding for fission RD&D are other actions that Congress could take in the short-term.

The report also emphasizes that the proposed funding for FY 2010 and the resources from ARRA do not guarantee that the United States will develop the predictable and consistent publicly-funded energy technology innovation effort that it needs.

The combination of the FY 2010’s budget request for the Energy Department and the stimulus funds likely to be available next year will effectively double the funding available for ERD&D from $3.6 billion in FY 2009 to $7.2 billion in FY 2010. Excluding the $7.5 billion for the Advanced Technology Vehicles Manufacturing Loans in FY 2009, the FY 2010 budget request for deployment represents a 33 percent decrease from the FY 2009 levels from $520 million to $350 million. This decrease is largely due to the large amounts of funds appropriated in ARRA for DOE deployment programs, or $23.6 billion, which are three times greater than those appropriated in the FY 2009 budget.