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Can Reforming the Department of Energy Reinvigorate Clean Energy in Obama's 2nd Term?

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As my colleague Clifton Yin and I have written recently, U.S. clean energy innovation policy is at an inflection point. The decisions made in the coming months and years will shape America’s ability to address its climate and energy challenges as well as its international competitiveness in the clean tech industry. As such, advocates are rightly focused on creating new clean energy policies through Congressional action (see the debate on a carbon tax). Yet in the melee of federal sausage making, only minor attention has been paid to reforming the Department of Energy (DOE) as a potentially significant way of boosting support for clean energy.

Reforming DOE has been the source of continued, wonky debate since its creation in 1977. DOE last saw institutional change four years ago when current Secretary of Energy Steven Chu implemented a number of new programs like ARPA-E, the Innovation Hubs, and Energy Frontier Research Centers (EFRCs), aimed re-invigorating DOEs investments in clean energy. DOE also undertook its first Quadrennial Technology Review (QTR) to comprehensively assess the state of energy technologies. And the Department continues to implement the President’s Memorandum on Technology Transfer to accelerate the development of new ideas from Lab to market.

Without a doubt these changes have provided DOE with a new set of flexible tools to support technological innovation. Now it’s time to cement these changes as part of a long-term re-shaping of the Department. The President and the Secretary of Energy should continue the reforms of the last four years, but also continue reforming DOE to make it a well-oiled engine for clean energy innovation. In particular, the following DOE “institutional reform” goals should be addressed in a second term:

Make Energy Innovation the Mission of DOE. Cleantech private equity investor Rob Day opined at Greentech Media that the DOE “needs to transition from a focus on technological innovation (without losing the progress made there) to a focus on commercialization and consensus-building.” While Day proposes some very good policy ideas, shifting DOE’s focus away from fostering innovation is the wrong overall goal.

Part of the problem is conceptual. Commercializing emerging energy technologies is deeply integrated in the innovation lifecycle. In other words, commercialization is still research and innovation just with an outcome in mind. For example, DOE provides a nice example here of the myriad of collaborative research support it provided to commercialize NiMH Batteries. Thus it’s difficult to assess how DOE would focus more on commercialization and less on innovation.  They’re one in the same.

The rest of the problem is organizational. Believe it or not, the word “innovation” isn’t even mentioned in DOE’s stated mission. The reason being – as Day correctly points out – is that the DOE is a massive organization with different missions ranging from nuclear security, science, environmental clean-up, and energy technology development, each often pulling in different directions.  Creating a more efficient DOE explicitly focused on energy innovation (and not just re-focused on commercialization) should be the top institutional reform goal of the Secretary of Energy and the President. It’s no easy task, of course, and will take more than changing the mission statement on the agencies website. But it’s a worthy goal for the President’s second term that would have long-lasting, positive consequences for the clean energy industry.

Eliminate DOE-wide Energy Innovation Micromanagement. For many (but not all) DOE energy technology programs, funding decisions are broken up into relatively small packets with strings attached to very specific research outcomes. Put another way, DOE often dictates the path of energy research, which limits scientists and engineer’s flexibility to solve problems and come up with the best solutions because the solutions are often attached to the funding contract. For example, instead of funding contracts to increase the energy density of lithium-ion batteries for vehicles, it’s better for DOE to set the broad goal of developing cheap, scalable zero-carbon vehicle technologies and fund National Labs, Universities, and public-private partnerships on a competitive basis to meet this goal.

The Energy Innovation Hub’s aimed to solve this very issue by leveraging larger funding contracts to support collaborative teams aimed at developing solutions to broader research goals. For example, the Sunlight to Fuel Hubis tasked with coming up with innovative ways of converting sunlight into fuel, rather than DOE funding very specific technological solutions. ARPA-E utilizes a similar project management model. This funding culture should be implemented broadly across all energy programs, not just the Hubs and ARPA-E.

Unleash the National Labs by Strengthening the GOCO Model. The National Labs – the 17 DOE Labs largely born out of the Manhattan Project – represent America’s largest investment in energy innovation. The Labs also represent a unique management model[i] in which the federal government owns, funds and stewards the Labs, but independent contractors manage them on a day-to-day basis (otherwise known as Government Owned, Contractor Operated, or GOCO). It offers management flexibility as well as consistent federal funding for research, a good recipe for innovation.

Yet the Labs effectiveness has started to wane overtime because of the gradual weakening of the GOCO model. Increased funding micromanagement doesn’t allow Lab contractor management or scientists and engineers the flexibility needed to solve science and technology problems. And rigid DOE oversight of contractor management decisions is resulting in prolonged decision making and inefficiencies that are stopping contractors, scientists, and engineers from making the best project decisions based on research.

It’s time for the President and the Secretary of Energy to take a hard look at the National Labs and begin implementing reforms to strengthen the GOCO model. Of course, this isn’t anew topic among federal policymakers. Just last year the DOE Inspector General called for substantial changes at the Labs. Nonetheless, it’s an important policy issue that is crying out for reform and comes at a key time in American energy policy, in which we need much more innovation to make clean energy cheap and viable, not less.  The status quo simply isn’t working anymore.

Originally posted at Forbes.


[i] Sixteen of the 17 National Labs are GOCOs. The National Energy Technology Laboratory (NETL) is a GOGO, meaning its employees are government workers not contractors.

Image: US DOE via Wikimedia Commons

Matthew Stepp's picture

Thank Matthew for the Post!

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Rick Engebretson's picture
Rick Engebretson on Dec 5, 2012 1:28 am GMT

Since you are one of the few young people I've seen determined to make things happen, please consider this suggestion.

The world's forests are a forgotten solution. They circle the planet in the northern hemisphere. As warmer climate moves north, many changes are already seen.

Forests are a fuels opportunity, and fuels threat. An atmospheric opportunity, or threat. A soils and nutrients opportunity, or threat. A place for a crowded world to grow, or ruin. Evolving wildlife habitat, or monoculture. Protected water, or exploited water. Etc.

The DOE sells itself to urban Americans, where votes are. Much of their "clean energy" efforts are solar panels on rooftops, or windmills that annoy you for miles; in your face billboards. Nobody knows how to fix our politics, so maybe the DOE can't innovate.

Forests created the fossil fuels in a carbon rich hot earth. It is a basis of Earth's biology. The barrier to better involvement seems "how to make solid into liquid," and "how to harvest and manage without driving over it with a bulldozer."

The oceans could perhaps also be a solution. But not OTEC that would drive frozen methane into the air. And not until some nations quit using the ocean as a dump.

It seems obvious to me, growing up in a different time, and taught different biology. Maybe too obvious to call "innovation."

Jessee McBroom's picture
Jessee McBroom on Dec 5, 2012 5:26 pm GMT

Thanks for the post Matt. I do like the aspect pf the GOCO Heirarchy. This allows for what are "Unsolicited Proposals" as well. When a technology would benefit from certification as a viable technology a peivare company can if it chooses have its' technology taken from ptototype phase ro a demostration of scale phase under the auspices of a National Lab for certification etc. This is of course at the expense of the proposing company. Not the taxpayers. This flexible type of heirarchy allows for commercial inyerests ans well as National Interests to be entertained.

Lewis Perelman's picture
Lewis Perelman on Dec 7, 2012 2:20 am GMT

Reforming DOE is long overdue. But while this proposal has some constructive ideas, it omits some key points. 

Not mentioned is the pervasive influence the nuclear weapons program has had on the entire DOE culture. The major DOE labs are in fact relics of World War II and the Cold War. As one critic put it, the Forrestal Building, which houses DOE headquarters, "wouldn't look out of place in post WWII East Germany." 

If one wants to talk seriously about transforming DOE's culture, one needs to consider removing the weapons program and either putting it into DOD (which likely doesn't want it) or returning to some independent entity. Given the current administration's broad policy commitment to work toward reducing or even eliminating nuclear weapons, repositioning the weapons program outside of DOE would be a relevant step.

Second, assessment of DOE's role in innovation and commercialization of energy technology needs to consider the history of the National Renewable Energy Laboratory. Created during the Carter Administration as the Solar Energy Research Institute, its initial mission very much was oriented toward promoting innovation and commercialization. (Disclosure: I was one of its first employees.) However, the institution's subsequent history was marked by several sharp reversals of fortune: http://j.mp/TFV3qT. There are pertinent lessons to be learned from NREL's accomplishments and limitations.

Third, there is no mention in this ITIF posting of the need and opportunity to expand international collaboration on energy innovation, and simultaneously to disperse activities to far broader and more granular participation than just a few elite labs and centers. The case for that alternative strategy is presented here: http://j.mp/WXLVS9 

 

Rick Engebretson's picture
Rick Engebretson on Dec 7, 2012 8:30 am GMT

LewisJPerelman, I'm glad for your participation, but respectfully disagree with your DOE assessment. As a frustrated renewable energy advocate of your generation,  I agree with Matt's ideas.

I was doing my Biophysics PhD when Carter had some good ideas. One of my first efforts was to push the internet. Science was controlled by those that could afford travel, a big telephone bill, and a printing press. Believe me, it was a struggle to connect biophysics to bioenergy.

SERI was a good effort, until Bechtel took over and began to channel their advocacy. Then NREL became opposed to some renewable energy science and scientists. There are good smaller labs not mentioned, for example one at the U of NoDak, Grand Forks. Many new ideas were shaped by many renewable energy advocates over many years.

I had similar experiences with the Oak Ridge Biofuels program. Other groups in Agriculture and Electric research. The problem is that these labs appear to be independent government scientific research, but have often become PR arms of business interests. For better or worse, I don't know.

We have reached a new "critical mass" of global interest and talent and need. I don't know if we can recover our technology and industrial leadership. I think Matthew and his generation have a right to try fix what we broke. All I do know is I'm glad he's trying.

Lewis Perelman's picture
Lewis Perelman on Dec 7, 2012 5:00 pm GMT

Rick, I wasn't criticizing Matt's proposals. Just suggesting they don't go far enough.

I think your view of SERI/NREL history is inaccurate or incomplete at least. Beyond that, I didn't see you responding to my suggestions.

Rick Engebretson's picture
Rick Engebretson on Dec 7, 2012 7:00 pm GMT

LewisJPerelman, I don't know anything about DOE weapons policies so perhaps you are right in that regard.

But I do know one of Carter's core efforts was synfuels in North Dakota, with a lab resulting in Grand Forks. New fuels and DOD interest has evolved considerably since then. To be honest, I was surprised by the recent ARPA awards, and commented how it looked like a lot of Biophysics.

Actually, I didn't even know what Biophysics was until I was asked to join. But getting pushed away from NREL, people go away. Today, I see more happening in Belarus than NREL. I just don't think they matter anymore.

Matthew Stepp's picture
Matthew Stepp on Dec 7, 2012 8:46 pm GMT

Lewis and Rick - 

Thanks for your thoughtful comments and discussion.  All of your suggestions have merit.  Removing the weapons programs from DOE could potentially have the effect of focusing the Energy Secretary's time and efforts on energy innovation, rather than split (weapons/nukes/clean-up take up the large bulk of DOE's budget).  Though it's not clear to me the best place to move those programs, but it's something that should be talked about. While it doesn't address the weapons programs at DOE, please see ITIF's proposal for a National Institute for Innovation for the type of institutional reshuffling possible if innovation is a central goal: http://www.itif.org/files/NIF.pdf

Lewis and Rick, I also agree that we should take a look at NREL, the National Labs in general, and whether or not there are issues in how that research is being funded/developed/produced, and this is something not well suited for a blog post!  In fact, keep an eye out in first quarter 2013 for an ITIF report on this topic.

I also agree there is room for international cooperation, and the Labs and other US energy institutions do some of this already. I would argue though that the National Labs, even with its criticisms, are the premier research institutions in the world for the type of work they do (R&D that Universities and Industry won't do or are not capable of doing).  There's a reason why other countries look to the U.S. as a model for spinning up their own Lab infrastructure. With that said, I would like to hear more thoughts on international collaboration as it pertains to how that would impact U.S. competitiveness.  We, the public, invest in the Labs and in R&D in general to serve both national missions and remain on the cutting edge. I pose an open question: Does that need, especially in the case of the National Labs, negatively or positively impact whether we expand U.S. Lab-International collaboration?

Matthew Stepp, ITIF

Matthew Stepp's picture
Matthew Stepp on Dec 7, 2012 8:52 pm GMT

Couldn't agree more.  The Labs often provide functions that industry individually wouldn't do on their own for a number of competitiveness and risk reasons, one of those being technology testing.  A great example is NREL's National Wind Technology Center which houses the world's largest dynamometer, which tests wind turbine drivetrains.  To my knowledge there are only two of this type of testing facilities in the world, the other being in Europe.  Companies are able to come in and test out prototypes as ongoing R&D or test technology it hopes to be ready for market in real world circumstances to make sure it is of high-performance.  It's excellent work that is accelerating wind turbine innovation across an entire industry.

Matthew Stepp, ITIF

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