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Department of Energy Pursuing Sound Strategy but Funding is Vulnerable

Authors: Michael A. Levi, David M. Rubenstein Senior Fellow for Energy and the Environment and Director of the Maurice R. Greenberg Center for Geoeconomic Studies, and Adam Segal, Ira A. Lipman Chair in Emerging Technologies and National Security and Director of the Digital and Cyberspace Policy Program
October 2009


The DoE got $36.7 billion in stimulus funds, more than double its annual budget for activities
unrelated to nuclear weapons. At least $4 billion of that is devoted to R&D, and a good portion of the rest is for demonstration projects of new technologies to promote innovation. The agency's strategy for investing stimulus money in R&D has been prudent and sound, despite some worries that the department might be administratively overwhelmed by the massive inflow of funds,
and some carping about the slower funding of transformational research.

The biggest worry is that Congress may have unrealistic expectations about what energy R&D
can achieve in the short term, and might be tempted to cannibalize research to pay for other,
more politically attractive, activities. Already, in July, Congress chose to fund an extension of the
popular but environmentally and economically dubious ‘cash-for-clunkers’ car-scrapping programme by raiding the renewableenergy loan guarantee budget at the DoE, thereby hurting long-term progress for short-term gain. Basic research funding is a small part of the DoE stimulus
package — but a large boost in the context of existing efforts. The DoE Office of Science has been given $1.6 billion on top of its annual $4-billion budget. As of early September, 78% of that had already been awarded, compared to 28% across the whole department. Some of this speed results from spending $500 million on construction and equipment procurement that has more in common with traditional stimulus than with research funding.

By directing money towards ongoing projects, the DoE has ensured that it supports areas that have already been vetted and probably have long-term prospects. A short-term funding boost risks creating new institutions
with uncertain prospects. The DoE may avoid this pitfall by making longer-term plans: for example, it committed $277 million to 16 of the new Energy Frontier Research Centers to support five years of operation.

What about blue-sky research? The Advanced Research Projects Agency — Energy, the new agency tasked with supporting high-risk energy research, has $388 million to spend. The DoE Office of Energy Efficiency and Renewable Energy has another $2.5 billion for development, demonstration and deployment. Critics say this is not enough to jump-start any transformational research. They cite large amounts going into energy R&D in China by comparison. But it is unclear whether the US monies are insufficient for fundamental research; most of the big energy-innovation spending that is needed won’t be for R&D, but for big demonstration projects, such as commercial-scale biofuel facilities. And the DoE’s stimulus spending so far has been well structured — its focus on broad categories, not specific bets, is bottom–up and flexible, and yet is steering enough money to each area to have the potential for real impact. The DoE will need to continue making the case for strong R&D funding — particularly
by demonstrating results and linking them to real-world promise — to show that the money
is being spent wisely.

This article appears in full on CFR.org by permission of its original publisher. It was originally available here (Subscription required).

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