Basic Research the Wrong Focus for ARPA-E

The Advanced Research Projects Agency-Energy (ARPA-E) has enjoyed bipartisan support since its inception, with members of Congress from both parties appearing at this year’s Energy Innovation Summit to laud its achievements. The agency’s reputation is such that a 2010 report by scholars from the American Enterprise Institute, the Breakthrough Institute, and the Brookings Institution entitled Post-Partisan Powercalled for its annual budget to be increased to $1.5 billion. (Congress appropriated $275 million for the agency for fiscal year 2012). Yet there has been a troubling trend as an increasing number of policymakers and advocates are calling for ARPA-E’s mission to be redirected to focus solely on basic research – exploration of fundamental principles with no regard for commercial applications. A move in that direction, however, would completely misunderstand the role the agency is meant to play in the energy innovation cycle and would be a serious mistake.

Last year, Congressman James Sensenbrenner (R-WI) accused the Obama Administration of shifting the Department of Energy’s focus from basic research to “later-stage technology development and commercialization efforts,” an approach that he panned as “picking winners and losers.” It was thus unsurprising when he, along with the other Republican leaders of the House of Representatives Committee on Science, Space and Technology penned an open letter in October 2011 that included the suggestion that ARPA-E’s budget, absent radical reform, be completely cut. Specifically, the letter expressed concern that the agency “emphasize[s] late-stage technology development more appropriately performed by the private sector.” Finally, while the Romney campaign has praised “long-term, apolitical funding mechanisms like ARPA-E,” it has nonetheless called for the government to “concentrate alternative energy funding on basic research.” “Energy R&D,” Linda Gillespie Stuntz, an energy and environmental attorney and Romney campaign surrogate remarked in July 2012, “should be done at a very basic level through something like ARPA-E.”

When it comes to breakthrough energy technology development, however, government support for basic research is simply insufficient by itself. The energy innovation cycle is both capital-intensive and long-lived, characterized by two market barriers – known as “valleys of death” – that kill off many promising new technologies that cannot secure funding for prototyping as well as first-of-kind demonstration plants. ARPA-E aims to bridge the former by investing in early-stage research for the creation of a prototype that can be used to attract private capital for further development. In other words, ARPA-E is investing in research with the purpose of moving new ideas farther along the innovation lifecycle. Investing in just basic research wouldn’t do this and would instead re-erect barriers to technology development that ARPA-E was originally created to overcome and ultimately stifle innovation.

As the agency’s founding director, Arun Majumdar has remarked, “We’re not doing basic science that is exploratory. We’re translating science into technologies that, if successful, will have a potentially large impact on society, and a large commercial impact.” Given the extent to which energy innovation serves a fundamental national interest, an ARPA-E that is empowered to invest in more than just basic research is a no-brainer.