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Washington Heading for Another Round of Devastating Cuts to Energy Innovation

Matthew Stepp's picture
Center for Clean Energy Innovation

Matthew Stepp is the Executive Director for the Center for Clean Energy Innovation specializing in climate change and clean energy policy. His research interests include clean energy technology...

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  • Jul 24, 2013

The Capitol Energy Report with Matthew Stepp

Both the left and the right use inspiring and lofty rhetoric about elevating U.S. international competitiveness, stimulating economic growth, and spurring innovation. But this messaging often fails to translate into deliberate policy action. This is especially the case today as the FY2014 Congressional budget appropriations process threatens deep cuts to energy innovation programs.

The House bill (H.R. 2609) would slash funding for energy innovation across the Department of Energy, cutting funds for research at DOE’s Office of Energy Efficiency and Renewable Energy by 70 percent and dealing a crippling blow to the Advanced Research Projects Agency-Energy (ARPA-E). Even if the final budget is a compromise between the much better Senate bill (S.1245) and the House-passed version, federal energy innovation budgets would remain stagnate, falling slightly from already-reduced FY2013 levels. It is yet another dangerous example of Washington talking the talk, but not walking the walk.

The Senate and House Appropriations Committees each recently approved FY2014 Energy and Water Development appropriation legislation—the bill that will provide funding for anything related to energy programs, such as those through the Department of Energy (DOE) – and the contrast between the two bills could not be more striking.

The Senate bill closely resembles the President’s budget request for FY2014 and provides a modest increase in funding for energy innovation programs. It’s not a game changer, but it puts energy programs on a positive trend. 

The House bill (H.R. 2609), which passed on the floor with amendments on July 10, recommends significant cuts to DOE programs, slashing the agency’s research and development (R&D) budget back to 2007 investment-levels. If it becomes law, H.R. 2609 would effectively put the brakes on some of the most promising efforts the country is counting on to develop low-cost, high-performance clean energy technologies.

Even in an era of tight budgets cutting public investments in energy innovation doesn’t make sense. The kinds of breakthroughs in clean energy the nation needs to make renewables cost and performance-competitive with fossil fuels will not happen unless research, development, and demonstration is funded at two to three timescurrent levels of public investment. One only needs to look at the long history of breakthroughs generated by public investments, most recently the shale gas revolution that is cutting carbon emissions and improving U.S. industrial competitiveness.

If the United States wants breakthroughs that make clean energy affordable it needs to reverse trend and aggressively support research, development, demonstration, and early deployment to enable energy innovation. In other words, when Congress restricts funding for energy innovation programs, it jeopardizes the nation’s fundamental strength and leadership in science, technology and manufacturing.

Appropriations for Key Department of Energy Innovation Offices

The House bill weakens the energy innovation ecosystem by cutting programs on average by 38 percent. Some important cuts from H.R. 2609:

  • As proposed in the Appropriations Committee, the House bill slashes the budget of the Advanced Research Projects Agency-Energy (ARPA-E) by 81 percent from FY2013 levels, reducing the agency’s budget from $265 million to only $50 million. An approved amendment offered by California Representative Adam Schiff increased the ARPA-E account to $70 million by reallocating funds from DOE’s Departmental Administration account. Unfortunately even with the help of the amendment, funding restrictions of this size will effectively terminate ARPA-E’s ability to deliver on its mission goal to invest in high-risk, high-reward technologies that are still in development but have transformative, game-changing potential.
  • The bill also takes aim at investment in solar, wind, and building technologies programs at DOE’s Office of Energy Efficiency and Renewable Energy (EERE), cutting program budgets by 70 percent from FY2013 levels. Although the bill text highlights the need for transportation innovation to strengthen national security and energy independence, the legislation still suggests cutting EERE’s Bioenergy, Hydrogen and Fuel Cell Technologies, and Vehicle Technologies programs by 35-50 percent. During the floor debate, a number of amendments were offered in support of increasing investment in EERE, but none were passed.
  • The House bill rejects the President’s budget request for a new Innovation Hub for Electricity Systems, to address smart grid integration and electricity reliability. The bill also reduces funding for other programs geared towards developing and integrating electric grid technologies, which are crucial for building a more resilient national electricity system.
  • Despite emphasizing the importance of improving American manufacturing competitiveness, the House bill rejects the President’s request for an additional $245 million to support the DOE’s Advanced Manufacturing Office, which seeks to improve the nation’s manufacturing capacity and enhance industrial efficiency. 

In short, the House’s damaging cuts will exacerbate the already weakened state of energy innovation funding, which has been hampered by previous budget cuts and sequestration. It’s a potential knock-out punch to federal support for energy innovation that would cripple America’s chances to develop next-generation energy technologies and lead the global clean energy economy.

Some on the Hill and around Washington opine that at the end of the day the House appropriations bill means relatively little because any budget signed by the President must find consensus with the Senate’s priorities. In other words, the House and the Senate will ultimately find some middle ground between their budget numbers in a budget compromise before anything becomes law. A compromise will blunt the severity of cuts passed by legislation offered by the House.

Unfortunately, this line of thinking contributes to the stagnant energy innovation budgets to-date and it is a failed approach moving forward. For example, if the House and Senate did, by chance, meet in the middle (which is far from a forgone conclusion), then America’s energy innovation investments would still be cut by 14 percent from the President’s FY2014 request. ARPA-E’s budget would still fall by $155 million. And translational research at EERE would still be cut by $831 million. Meeting in the middle is no recipe for energy innovation leadership.

Possible Energy Innovation Budget Compromise Scenario 

Investment in energy RD&D in the United States is already significantly below levels recommended by the International Energy Agency, the American Energy Innovation Council, and the President’s Council of Advisors on Science and Technology, which all suggest tripling current investments to at least $15 billion per year to enable a healthy and productive innovation ecosystem.

If legislators are serious about protecting American manufacturing, energy independence, and economic growth prospects, sacrificing the nation’s fundamental investments in energy innovation is certainly not the way forward. Neither is it prudent budget policy, as it stifles opportunities for the United States to lead in the clean economy and reap the tax and economic benefits that come with it. Look no further than the shale gas revolution to see just the most recent example. Congress needs to recognize the importance of committing consistent and sufficient public investment to energy innovation. It’s a small cost for a much cleaner and more prosperous future. 

Read more from The Capitol Energy Report with Matthew Stepp here.

Graphic by Jesse Wells:

Jessee McBroom's picture
Jessee McBroom on Jul 24, 2013

Thank you for the article Matt. This is not comforting news. I suppose I wiill have to wrte my Senators and Congressmen and advise them not to vote yes on HR 2609..

Christos Makridis's picture
Christos Makridis on Jul 24, 2013

Thank you Matt for the contribution and raising these issues.

It is important for us all to remember that innovation is not a linear process — R&D does not directly produce innovation, so funding R&D is not always the answer. This is an entire field of research in the economics literature — one that is still intensely scrutinized. My caution is for us to recognize that the desire to not increase funding — or cut it in some circumstances — can be the prudent decision; the situation is very multifaceted an the study of economic growth is much more complicated than we tend to assume it to be.

Matthew Stepp's picture
Thank Matthew for the Post!
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