2012 Federal Budget: Omnibus Halts Further Cuts to Energy Innovation Investments

The FY2012 Omnibus Appropriations bill, passed through the House and Senate conference committee last week, provides a small 2.5 percent increase in DOE energy innovation investment-related Offices and programs compared to FY2011. The budget includes key investments for new Energy Innovation Hubs, next-generation small modular nuclear reactor (SMR) RD&D and licensing programs, as well as a boost in funding for ARPA-E. Compared to the roughly $800 million cut to energy innovation investments in FY2011 and the additional cuts sought in the House version of the appropriations bill, the FY2012 budget provides renewed, albeit modest, government support for developing affordable and viable clean energy technologies.

To be clear, the 2012 federal budget still falls short of FY2010’s peak in energy innovation investments made through the Stimulus and represents only 72 percent of what the President requested for next year. It’s vital that more work is done to increase public investments in clean energy innovation, as the government must play an energetic role in supporting the development of next-generation technologies. However, the FY2012 budget does take steps to stabilize, and in some cases boost, high-impact clean energy investments (Figure 1, below). Below are a few of the highlights:

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EERE Technology R&D Programs

Overall, there is a lot to like in the budget, especially given the budget austerity mood of Congressional appropriators. Many important clean technology R&D programs within the Office of Energy Efficiency and Renewable Energy (EERE) received modest budget increases compared to FY2010 and FY2011 (Figure 2). In particular, programs aimed at developing solar, wind, advanced vehicle, biomass, building efficiency and industrial efficiency technologies all received a 5 percent to 17 percent increase compared to FY2011. The increase brings many of these technology programs back to, and in many cases exceeds, FY2010 funding levels. Only hydrogen and biomass R&D continue to realize smaller budgets compared to FY2010. Of course, in all cases except hydrogen and water power R&D, FY2012 investments are significantly lower than President Obama’s requested funding levels.

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Next-Generation Nuclear Energy

Advanced nuclear technology RD&D also received vital budgetary support (Figure 3). Specifically, two new programs were created within the Office of Nuclear aimed at developing next-generation nuclear technologies to help deploy cheaper, low-carbon base load power. The budget includes almost $100 million for RD&D and licensing of small modular nuclear reactors (SMR’s). These reactors are typically less than 300MW and implement different safety, cooling, and fuel technologies that hold the promise of potentially cheaper, more customizable, and safer reactors than their big-box brethren. In pursuit of making SMR’s viable, the FY2012 budget provides $67 million to support design certification and licensing activities of light water SMR’s (LWR SMR) in partnership with the nuclear industry. LWR SMR’s are advanced nuclear technology closest to commercialization, but require a new regulatory framework before active deployment can occur. In addition, the budget provides nearly $29 million to conduct advanced nuclear reactor  RD&D, in particular for the development of next-generation SMR’s that offer different fuel mix, fuel cycle, and cooling options.

In addition, Congress nearly tripled funding for the Office of Nuclear Energy’s Enabling Technologies program compared to FY2011 from $28 million to $75 million. The program aims to spur fundamental breakthroughs across the spectrum of nuclear energy issues including waste disposal, power conversion, fuel enrichment, and fuel management. It does so through the use of a National Scientific User Facility, which provides university and industry research teams’ access to high-tech experimental facilities and computing power to test and develop potentially transformative ideas. Similar to ARPA-E’s technology goals, any successful project from the program could be a game-changer for the nuclear industry.

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ARPA-E

DOE’s high-risk, high-reward clean energy R&D program ARPA-E also received a boost, as the conference committee increased its FY2012 budget to $275 million or almost $100 million more than FY2011. In comparison, the House budget proposal aimed to keep its funding static in 2012 (but only after a last minute amendment added $80 million to the budget proposal), yet the Senate supported an increase. As ITIF and many others have stated before, ARPA-E is one of the most important clean energy innovation programs within DOE, so any funding increase is welcome. But even this modest boost still puts ARPA-E’s budget at a quarter of what the National Academies originally recommended and less than half of President Obama’s request.

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Energy Innovation Hubs

The FY2012 budget provides investments to create two new DOE Energy Innovation Hubs.  Within the Office of Science, a new Batteries and Energy Storage Hub will be initiated, aimed at solving fundamental science problems plaguing today’s energy storage technologies, including charging cycle limitations, high cost, poor performance at low and high temperatures, and limited power capacities. Within EERE, a new Critical Materials Hub will be spun up, aimed at finding ways to reduce the content of critical, but costly and import-dependent rare-earth materials in existing clean energy technologies as well as identify new material composition and designs that aren’t reliant on rare-earth’s, but hold the same unique characteristics needed in clean technologies.

Both new Innovation Hubs are in addition those for developing new ideas for converting fuels from sunlight, advanced nuclear energy modeling, and energy efficient building design technologies.  All three also received continued support through FY2012 (Figure 5).

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So for now, the Omnibus wraps up the energy innovation budget battle of 2011 (and the start of the battle for the FY2013 federal budget seems right around the corner). One thing to consider is that not every dollar investment in DOE goes towards energy innovation. In fact, only a fraction of each offices budget does so – which Figure 6 highlights by breaking each Office down by key subprograms – so even modest changes in budgets can have a big impact on innovation in the energy sector. For a better understanding of what makes up energy innovation and public investments, check out ITIF’s and the Breakthrough Institute’s Energy Innovation Tracker Project that catalogues project by project, clean energy innovation investments. We’ll be updating the database in the coming months to include the most recent budget data.

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About the author

Matthew Stepp is a Senior Analyst with the Information Technology and Innovation Foundation (ITIF) specializing in climate change and clean energy policy. His research interests include clean energy technology development, climate science policy development, transportation policy, and the role innovation has in economic growth.