(Ed. Note: The “Innovation Fact of the Week” appears as a regular feature in each edition of ITIF’s weekly email newsletter. Sign up today.)
The Trump administration has once again proposed steep cuts to energy research, development, and demonstration (RD&D), putting forward a fiscal year (FY) 2021 budget so extreme that most observers—including key Republicans—agree the budget is dead on arrival in Congress.
The administration’s budget proposal was released just weeks after House Republicans unveiled their climate innovation agenda, which calls for doubling investment in basic science research to accelerate clean energy innovation. Top Senate energy appropriator Lamar Alexander (R-TN) has long supported doubling applied clean energy research and development. And the Senate Budget Committee Chairman Mike Enzi (R-WY) has said he would not hold a hearing on the president’s budget proposal, advising his Senate colleagues during a floor speech, “I want to encourage people … not to waste any time searching out the president’s budget cuts. … Congress doesn’t pay attention to the president’s budget exercise.”
But these reassurances gloss over an important point: Unless Congress takes specific action to reverse the administration’s plans, the president’s budget request will become binding on federal energy RD&D programs, eliminating vital activities. Congress must explicitly direct federal agencies to maintain those programs and provide sufficient funding to do so.
Here are nine of the most important programs at risk:
- SuperTruck II: Reducing carbon emissions in long-distance trucking.
- Advanced Battery Consortium: Facilitating industry input into federal battery research.
- Solar Energy Balance of Systems Soft Cost Reduction: Cutting largest solar costs.
- Wind Energy Demonstration Projects: Partnering with industry to prove new tech.
- National Marine Renewable Energy Centers: Tapping into new energy resources.
- Frontier Observatory for Research in Geothermal Energy: Piloting advanced tech.
- Algae Biofuel from CO2 Direct Air Capture: Using plants to pull carbon out of the air.
- Better Buildings Initiative: Accelerating innovations to lower building energy costs.
- Clean Energy Manufacturing USA Institutes: Driving solutions to make things here.
The Budgetary Fine Print
Congress typically specifies funding amounts at the level of a technology program office—e.g. the Solar Energy Technologies Office (SETO). Congress may provide additional direction to each office about how to spend the money it appropriates in the report that accompanies each appropriations bill. But, absent any direction, DOE retains discretion over each office’s spending. Ordinarily, this discretion is a good thing, because it provides the technology experts at DOE the flexibility to identify priorities and develop RD&D activities based on the best available science and the most promising innovation opportunities. But the current administration has demonstrated antipathy towards certain technologies, such as solar, wind, and geothermal power. And across the entire technology portfolio, the administration has prioritized early stage research and development over the later-stage technology demonstration and testing that are necessary to translate R&D results into viable commercial products.
This means that subprograms and research activities within a technology program that are slated for elimination in the president’s FY 2021 budget request will be eliminated for real unless congressional appropriators explicitly direct DOE to preserve these activities.
Programs at Risk
1. SuperTruck II in the Vehicle Technologies Office (VTO). SuperTruck II is a public-private partnership between DOE and truck manufacturers and suppliers to improve freight-hauling efficiency of Class 8 heavy-duty long-haul trucks. These trucks haul 80 percent of goods in the United States and consume about 28 billion gallons of fuel per year, accounting for 22 percent of total transportation energy usage. ITIF has identified long-haul trucking as one several harder-to-decarbonize energy sectors. The SuperTruck II program seeks to develop advanced drivetrains, improved aerodynamics, vehicle light-weighting, and electrification technologies that have the potential to save truck operators nearly $20 billion in fuel expenditures while reducing carbon dioxide emission by 128 million metric tons. SuperTruck II was originally scheduled to run through 2021, but the administration has proposed eliminating the program as part of its pivot away from later-stage technology development and commercialization, and has not made any plans to develop a SuperTruck III successor program.
2. Advanced Battery Consortium. VTO coordinates its research on batteries for electric vehicles with the U.S. Advanced Battery Consortium (USABC), a group run by the industry organization the U.S. Council for Automotive Research (USCAR). This coordination is important to ensure that government-funded research, testing, and benchmarking is informed by industry needs, and increases the probability that government-funded research in batteries results in commercially viable products. The budget proposal provides no new funded for battery development work through USABC.
3. Solar Energy Balance of Systems Soft Cost Reduction subprogram in the Solar Energy Technologies Office. “Soft costs” are the non-hardware costs of installing solar projects, including financing, customer acquisition, permitting, installation, labor, and inspection. In the United States, there are 18,000 jurisdictions and 3,000 utilities with different rules and regulations for how to adopt solar, creating barriers for rapid solar adoption. For residential “rooftop” systems, soft costs on average accounted for 63 percent of total system costs in 2018. But soft costs in Germany (15 percent of total costs) and Australia (25 percent of total costs) are substantially lower than in the United States, indicating there is significant potential to lower the cost of solar adoption. The Soft Costs subprogram focuses networking and technical assistance, data analysis, business innovation, and workforce training to drive down soft costs. The budget proposal would eliminate the Soft Costs subprogram.
4. Offshore Wind and Land-Based Tall Tower demonstration projects in the Wind Energy Technologies Office. Offshore wind energy has enormous potential to contribute carbon-free energy to coastal and Great Lakes states, but the domestic offshore wind industry is still in its infancy. Demonstration and validation of new offshore wind technologies will be necessary to address technology risk and provide investors with greater confidence. Since 2012, DOE has supported a portfolio of offshore wind demonstration projects that address key technology challenges. Similarly, DOE’s Tall Tower demonstration program has partnered with industry leaders such as GE to demonstrate and validate novel technologies that enable taller land-based wind towers, which provides access to higher wind speeds and increases the electricity produced by a single turbine. The budget proposal would eliminate all wind demonstration projects.
5. National Marine Renewable Energy Centers (NMRECs) in the Water Power Technologies Office. National resource assessments have identified 1.28–1.85 thousand terawatt-hours per year of untapped, technically extractable marine energy potential from waves, tides, and currents, or the equivalent of 30 percent of the total electricity generated in the United States. But marine energy technologies are far from commercial and face cost and technical hurdles before marine energy can contribute to domestic energy needs. The three NMRECs—in Oregon, Hawaii, and Florida—enable development and testing of advanced marine and hydrokinetic technologies. In FY 2020, DOE launched a competitive solicitation to establish a fourth Atlantic Marine Energy Center. The FY 2021 budget proposal provides no further funding for the new Atlantic Marine Energy Center or for infrastructure upgrades at the existing marine energy centers.
6. Frontier Observatory for Research in Geothermal Energy (FORGE) in the Geothermal Technologies Office. DOE’s GeoVision report finds that, through technology improvements, geothermal energy has the potential to increase to more than 60 gigawatts by 2050, providing 8.5 percent of U.S. electricity generation. FORGE is DOE’s flagship geothermal research facility in Milford, Utah, aimed at developing and piloting enhanced geothermal system technologies. The FY 2021 budget proposal calls for no new funding for the FORGE facility or pilot wells, with the intention of operating FORGE solely on previously-appropriated funding through 2024.
7. Algae Biofuel from CO2 Direct Air Capture in the Bioenergy Technologies Office. Direct air capture (DAC) technologies take carbon dioxide directly out of the atmosphere, offering the potential for carbon-neutral or even carbon-negative applications. Algal bioenergy systems focus on growing and converting algae into biofuels and other bioproducts, and often use carbon dioxide as a feedstock. In January 2020, DOE issued a new competitive funding opportunity to integrate DAC technologies with algae bioproduct systems, with the goal of reducing algae biomass costs while also reducing atmospheric greenhouse gases. The FY 2021 budget proposal provides no new funding for this activity.
8. Better Buildings Initiative in the Building Technologies Office. DOE supports collaborative partnerships through the Better Buildings Initiative (BBI) to accelerate new innovations and develop new resources to lower energy costs. Through BBI, DOE has partnered with more than 900 organizations, including businesses, schools, hospitals, state and local governments, public housing authorities, retailers and grocery stores, and residential organizations across the country. As a result of innovative energy solutions developed through BBI, commercial and industrial partners have reported an estimated cost savings of $8.4 billion in energy savings since 2011, while partnerships with other federal agencies have saved $12.3 billion in cumulative energy costs. The FY 2021 proposal provides no funding for the Better Buildings Initiative.
9. Clean Energy Manufacturing USA Institutes in the Advanced Manufacturing Office. The Clean Energy Manufacturing USA Institutes (CEMIs) sponsored by DOE support U.S. manufacturers in their efforts to accelerate innovation across key manufacturing challenges. There are currently five CEMIs, each addressing a specific technology area: wide band-gap semiconductor manufacturing (PowerAmerica); carbon-fiber composite manufacturing (IACMI); smart manufacturing (CESMII); chemical process intensification (RAPID); and sustainable manufacturing (REMADE)—with plans for a sixth institute in cybersecurity underway. The institutes were originally funded at $14 million per year for five years, with a requirement of at least a 50/50 cost-share from private-sector partners. DOE has adopted a five-year window for CEMI institutes to transition to other funding sources; however, a full transition to private funding within five years is extremely challenging. Comparable programs in other countries, such as Germany’s Fraunhofer Institutes, receive core institutional funding from the government on a permanent basis. ITIF has previously recommended that DOE provide ongoing funding, contingent on continued industry participation, beyond the initial five-year window. But the FY 2021 proposal would terminate the CEMIs.