ARPA-E’s (Semi) New Lease on Life

It wasn’t that long ago that the federal Advanced Research Projects Agency-Energy (ARPA-E) was on the verge of fiscal death. The agency was created in 2007 but didn’t receive a budget until 2009 with $400 million from the Recovery Act. By the beginning of this year, the FY2011 budget battle dragged along and the original funding was running thin. Various proposals were issued first to slash the agency’s budget by $250 million, and then to de-fund the innovative agency entirely.

But those bullets were dodged, and last week’s budget deal provided the agency with $180 million for the rest of FY2011—a reduced amount, to be sure, but better than the alternatives. Yesterday, during a call to announce how ARPA-E would leverage the new funding, Secretary Chu called the agreement a “big victory,” and described the stakes for more severe cuts in blunt terms:

"Any new projects would have to have been put on ice. The program would not have been funded."

Per yesterday’s announcement, $130 million of the new funding will be used for five new game-changing technology programs, all of which demonstrate the agency’s continuing knack for ambitious goals (and cool names). These include:

Plants Engineered To Replace Oil (PETRO), an advanced biofuels-from-sunlight program that aims to engineer super-efficient plant photosynthesis;

High Energy Advanced Thermal Storage (HEATS), which seeks cost-effective thermal storage technology with implications for solar power, nuclear and fossil baseload, and electric vehicle range;

Rare Earth Alternatives in Critical Technologies (REACT), an effort to develop substitutes for expensive and globally scarce minerals used in the manufacture of electric vehicle motors and wind turbines;

Green Electricity Network Integration (GENI), which will research software and hardware to radically improve power grid management and transmission, in the face of an aging grid prone to breakdowns; and

Solar Agile Delivery of Electrical Power Technology (Solar ADEPT), a power electronics program that will feed into DOE’s broader Sunshot Initiative.

It’s tremendous that ARPA-E will live to apply its agile, hard-charging management model to this new set of disruptive technology challenges. In the near term, amid serious deficit challenges and a hostile budget environment in Congress, proponents of innovation can celebrate the fact that ARPA-E has avoided the budget axe. This is largely a testament to the program’s growing profile, which is in turn driven partly by recognition that it is very good at what it does. The agency uses a novel approach to project development, starting with rigorous technology assessments and research gaps, proceeding to technical workshops and a heralded peer-review process, and culminating in rapid negotiation of contracts that drive innovation through aggressive performance and cost targets.

The result is a fast, effective development process that reduces bureaucracy – a goal most can agree on. Senator Mark Udall put it best at the recent ARPA-E Summit by stating, “You're a model of efficiency. That’s government at its best.” The agency has likely also picked up some support through its collaboration on energy projects with the Department of Defense, where senior officials have praised the program regularly. Even the Heritage Foundation showed mild support for ARPA-E in a paper on energy funding that manages to get most other things wrong.

But we also need to keep a bit of perspective. That $180 million is a big cut below what ARPA-E had been working with and 40% below its unfulfilled FY2011 request, and it’s not out of the woods yet. The White House is rightly requesting a big boost to $550 million for the little agency in FY 2012, but opponents of innovation have already set their sights on clean energy in the next round of budget negotiations, and the House has already endorsed a budget resolution that would gut much of the nation’s innovation capacity. If we’re to use the FY2011 continuing resolution as a baseline for FY2012, we’re already well short of where we need to be.

There’s a long list of technology challenges—in generation, transportation, efficiency, and transmission—that need aggressive attention, and that aren’t getting it from the private sector. Institutions like ARPA-E are thus necessary to fill the gaps and accelerate the next generation of cleantech forward. It’s gotten something like a new lease on life with the new appropriation, but it could be doing much more.