First Look: Energy Innovation Investments in President’s FY2013 Budget Request

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President Obama backed up his call to “double-down” on clean energy during the State of the Union address by proposing to boost key energy innovation investments in his FY2013 federal budget request. Compared to the FY2012 Omnibus Appropriations bill, the President’s FY2013 proposal would increase top-line investments in key DOE energy innovation-related Offices and programs by 6.98 percent or $578 million.  It’s a strong statement of support for developing affordable and viable clean energy technologies at a time when clean energy innovation programs are little more than a political football. 

Of course, the FY2013 budget proposal still falls short of FY2010’s peak in energy innovation investments made through the Stimulus and represents only 77 percent of what the President requested for 2012.  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 FY2013 budget proposal does envision where targeted public investments can be used to positively impact weaknesses in the energy innovation ecosystem.

 

 

EERE Technology R&D Programs

Overall, the President’s budget request gets a lot right. Many important clean technology R&D programs within the Office of Energy Efficiency and Renewable Energy (EERE) would receive relatively significant budget increases compared to FY2012.  In particular, programs aimed at developing solar, wind, advanced vehicle, biomass, building efficiency and geothermal technologies all would receive a 2 percent to 71 percent increase compared to FY2012 (and in the case of the Industrial Technologies program a whopping 150 percent increase).

But in many cases, the details of each programs funding increase is important.  For example, the solar technologies program (the SunShot Initiative) would receive a $20 million boost, but divvied up to different stages of innovation.  Almost $20 million in proposed cuts would be made to early stage and emerging technology R&D, while later stage manufacturing scale-up (DOE’s SunPath program) and market barrier solar projects would receive a $40 million boost. Similar transfers of funding from earlier stage technology development to later stage demonstration and scale-up is also found in the biofuels and building efficiency programs as emerging technologies developed using previous fiscal year investments are moving through the innovation lifecycle. It’s represents a potentially positive case where innovative technologies are moving from the lab to later stages of development, but require fundamentally different investments and RD&D to get closer to market viability and scale.

The biggest changes would come to the Industrial Technologies program, which the FY2013 budget proposal renames the Advanced Manufacturing Office.  The refocused mission of the office would be to perform RD&D on new energy efficient manufacturing processes and materials that reduce the energy intensity of manufactured products by 50 percent over 10 years. A key highlight of the program would be its continuing focus on bridging the so-called “valley-of-death” by creating manufacturing demonstration facilities where emerging technologies can be evaluated, demonstrated, and tested in cooperation with industry to more rapidly deploy those technologies to manufacturers. In fact, the lion’s share of the $174 million proposed increase to the office would target this stage of technology development.

 

Next-Generation Nuclear Energy

 The two new programs tasked with developing next-generation small modular reactor(SMR’s) nuclear technologies in FY2012 would receive continued support.  The budget includes almost $90 million for RD&D and licensing of these new reactors.  While this is a $10 million decrease in funding, it’s largely the result of progress in researching technology issues related to licensing and not a policy shift away from SMR’s.

In addition, the budget proposes to cut the advanced fuel cycle RD&D program by over $10 million, as the program aims to refocus more resources on existing reactor issues and emerging light-water SMR’s and less on fast-reactor technologies which are deems decades away from development and deployment. In the long-term this shift is troublesome if this becomes a trend, but given the immediate needs in rapidly developing light water SMR’s, this small shift is understandable.

 

ARPA-E

DOE’s high-risk, high-reward clean energy R&D program ARPA-E would also receive a boost of $75 million to $350 million. 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 fraction of what the National Academies originally recommended and two-thirds that of President Obama’s FY2012 request.

In particular, the President’s budget request envisions using almost two-thirds of the additional investment to not only bolster existing technology categories like next-generation biofuels and vehicle batteries, but to also next-generation natural gas and hydrogen transportation fuels. The remaining third is envisioned to focus on baseload clean energy and infrastructure technology development.

 

 

Just the Beginning

Of course, the President’s FY2013 budget request is just the first shot in what will almost definitely be a yearlong battle over the shape of next year’s federal budget. And the above top-line highlights are not the only energy innovation budget pieces.  The budget would continue funding for the vitally important Energy Innovation Hubs program as well as provide a $20 million boost to the basic energy science Energy Frontier Research Center’s which are tackling key chemistry, physics, and material science questions related to clean technologies.  Also, the President proposes significant investments through the tax code as well as within the Department of Defense, which ITIF will discuss in upcoming posts.

For a better understanding of what makes up energy innovation investments as well as ongoing discussion on the federal energy innovation budget, check out the Energy Innovation Tracker Project which catalogues project-by-project, clean energy innovation investments.  We’ll be updating the database continually this year by adding in more specific energy innovation investment data as well as keeping up with ups-and-downs of the FY2013 budget debate.

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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.