New Report Urges Congress to Boost Funding for Clean Energy Demonstration Projects and Reform How They Are Administered

May 18, 2020

Promising new clean energy technologies—especially complex, capital-intensive, large-scale technologies—too often remain on the cusp of commercial deployment because they have not been effectively demonstrated. To solve this problem, a new report released today by the Information Technology and Innovation Foundation (ITIF), the leading think tank for science and technology policy, urges Congress to substantially increase federal investment in energy demonstration projects while reforming how they are administered. The report recommends establishing a new Office of Major Demonstrations at the Department of Energy (DOE) to manage an expanded portfolio of investments to reduce carbon emissions. 

“The federal government has often shied away from technology demonstration projects, even when it is federal investments in R&D that have brought technologies to the point of demonstration readiness,” says Robert Rozansky, senior policy analyst at ITIF, who co-authored the report. “There is good reason for policymakers’ reluctance, because while some past federally funded projects have successfully launched whole new industries, the record also has been marred by drawn-out support for some expensive, failed megaprojects and periods of stagnant investment. But that doesn’t mean government should give up; it means there need to be reforms.”

The report argues that government should focus its energy on large-scale technologies that can achieve deep decarbonization, including advanced nuclear power, long-duration grid storage, carbon-neutral fuels, carbon capture and storage, and carbon removal. Federal funding is critical for energy demonstration projects in these areas, because the risks are often too high for private investors. 

Yet concern about issues that have historically plagued federally funded demonstration projects contributes to policymakers’ reluctance to fund them. The report concludes that reforming how projects are administered would help overcome this concern. Drawing on academic literature, including prior ITIF work, the report provides eight precepts than can provide a framework to guide demonstration project administration:

  1. Develop and maintain a strategic portfolio of projects;
  2. Apply expert management practices across relevant domains, particularly project management and project finance;
  3. Avoid political influence that may distort project selection and disrupt project management;
  4. Tailor cost-share agreements to each project’s risks and benefits for its public and private partners;
  5. Facilitate knowledge sharing by private-sector project partners;
  6. Ensure strong cross-sector linkages from projects to public upstream R&D and privately funded downstream deployment;
  7. Enhance coordination among federal, state, and international projects and programs; and
  8. Ensure steady and sufficient funding for the portfolio.

“The federal government should substantially increase its investment in clean energy demonstration projects and collaborate with the private sector and other partners when looking at technologies that are sufficiently mature for demonstration and have a high potential to advance the national and global deep decarbonization agenda,” adds David M. Hart, senior fellow at ITIF, who co-authored the report. “Congress should also establish an Office of Major Demonstrations within the Department of Energy to manage this new portfolio and provide this important office with dedicated funding.”

Read the report.