What the Cromnibus Means for Energy Innovation

The 113th U.S. Congress made passing a budget one of its last legislative acts of 2014. Yesterday President Obama signed into law the $1.1 trillion federal appropriations bill, called the Cromnibus (Continuing Resolution Omnibus), which includes appropriations for all federal agencies. While much of the bill’s public attention focused on the political opposition from factions on both the left and the right, the Cromnibus, like all federal appropriations, represent a critical pillar of U.S. clean energy innovation policy.

Federal Investments in Clean Energy Innovation Hold Steady

Of course, the largest source of investments in clean energy innovation comes from the Department of Energy and its research offices. The above graph shows that the FY2015 Cromnibus bill tracks closely to the FY2015 President’s Request, and is even closer to the funding allocated through the FY2014 Omnibus. Funding for the Office of Science and the Offices of Nuclear, Fossil R&D, and Electricity Delivery and Energy Reliability remained relatively unchanged compared to past years. Appropriations for the Office of Energy Efficiency and Renewable Energy for FY2015 are $360 million lower than those included in the President’s request and $200 million below the FY2014 allocation. The Department of Energy’s Advanced Research Projects Agency-Energy (ARPA-E) was allocated slightly higher funding than in FY2014, but less than the President’s request of $325 million and significantly less than ARPA-E’s originally proposed budget of $1 billion annually (when the agency was created in 2009).

While the FY2015 Omnibus introduces little to modest changes to funding across key DOE innovation programs, it is important to recognize that these programs, and energy innovation programs throughout the federal government, are underfunded. Most experts estimate that U.S. energy innovation investments should be at least tripled to meet the nations climate mitigation needs. While this round of appropriations did not make any drastic changes to innovation programs, it simply perpetuates the multi-year trend of underinvestment in energy research, development, and demonstration (RD&D).

Cromnibus Pushes DOE to Create Technology Commercialization Fund

In addition to appropriations, the Cromnibus also included a small, but potentially powerful change in how the Department of Energy (DOE) conducts technology commercialization. In 2005, Congress authorized the DOE to create a Technology Commercialization Fund by skimming 0.9 percent from applied energy R&D programs. The Fund was aimed at supporting a more robust DOE effort to support technology transfer, maturation, and demonstration of breakthrough energy technologies it invests in at universities or the National Labs. Unfortunately, the DOE decided not to create the Fund. Instead the DOE argues that it meets the “spirit” of the law by signing cooperative research agreements with private sector partners. The matching investments in those agreements by the DOE, it’s argued, is the same as creating a Fund.

But as CCEI and colleagues from the Brookings Metropolitan Program argue in a report released in September, Going Local: Connecting the National Labs to their Regions for Innovation and Growth, the DOE’s accounting trick to skirt Congress’s requirement is not nearly enough. By retrospectively counting cooperative research agreements, the DOE is failing to make forward thinking investments in technology commercialization and implement a more robust technology transfer strategy. In other words, the DOE is passing that status quo as meeting Congress’s new requirements.

Deep in the Cromnibus (Section 3144 of the Department of Defense Appropriations to be exact), Congress adds 15 words to the original Technology Commercialization Fund authorizing language (in bold):

• TECHNOLOGY COMMERCIALIZATION FUND.—The Secretary shall establish an Energy Technology Commercialization Fund, using 0.9 percent of the amount made available to the Department for applied energy research, development, demonstration, and commercial application for each fiscal yearbased on future planned activities and the amount of the appropriations for the fiscal year, to be used to provide matching funds with private partners to promote promising energy technologies for commercial purposes.

While it may not seem like much, what Congress is actually doing is telling the DOE it can’t keep counting existing investments in cooperative agreements as meeting their requirement. Instead, the DOE must use 0.9 percent of its applied R&D budget to invest in projects and programs based on future commercialization and tech transfer strategy. It essentially forces DOE to think into the future and budget accordingly using the Fund.

And how much could such a fund invest in technology commercialization? Using a very liberal estimate that DOE’s applied R&D budget includes EERE, EDER, ARPA-E, Nuclear, and Fossil Energy budgets (~$4 billion in FY2014), the Fund could be as large as $36 million. Of course, not all R&D investments in these offices go towards applied R&D, so the Fund would probably cap around $15-$25 million.