A Model for Innovation: ARPA-E Merits Full Funding

July 6, 2011
The Advanced Research Project Agency-Energy (ARPA-E) is driving energy innovation and laying the groundwork for new industries. It deserves better from Congress than steep budget cuts.

Driving growth through innovation isn’t just about boosting science funding and hoping for the best. Institutions matter. In the past, public agencies like the Defense Advanced Research Projects Agency (DARPA) and private entities like Bell Labs helped develop and spur economy-changing innovations, most notably the Internet. Their high-risk/high-reward bets created new industries and yielded massive economy-wide returns on initial investment—some of the best “bang for the buck” imaginable. In the energy innovation space, the Advanced Research Project Agency-Energy (ARPA-E)—the Department of Energy’s (DOE) breakthrough clean technology R&D program—is beginning to fill this same role.

In many ways, it represents public-private innovation at its finest, both for what it does and how it does it: this is not your grandfather’s politicized bureaucracy. It’s a fresh and nimble organization that operates at the intersection of fundamental and applied research, bringing science research and technology development together under one roof. And we’re already beginning to see early returns: ARPA-E projects, worth approximately $360 million in public funding, have to date obtained $285 million in follow-on private investment and led to 17 patent filings, and the program is still very young. But ARPA-E has only just started to spur successful innovation—and we have yet to see what this innovation engine can really do.

As such, Congress has chosen the right course in creating and sustaining it, authorizing funding at $300 million or more in prior legislation, and so far defeating attempts to de-fund or otherwise eliminate it in order to cut the federal budget. But the battle for adequate ARPA-E funding is far from over. The most recent House appropriations bill limits ARPA-E’s funding to just $100 million for FY 2012. While not a small sum, it is far below what experts have recommended. Limited resources will mean more limited recruitment of talented program managers, reduced institutional dynamism, and fewer game-changing breakthroughs. And the proposed budget levels could very well set ARPA-E on the wrong long-term trajectory, reducing America’s capacity for public-private energy innovation exactly when we need to be accelerating it. Once innovative capacity is lost, it’s hard to regain.

Therefore, Congress should substantially increase ARPA-E’s current funding levels for FY 2012 to at least $300 million in order to continue accelerating technological innovation and spurring economic growth.