The America First Budget Blueprint released by the White House last month proposes to eliminate the Advanced Research Project Agency–Energy (ARPA-E) of the US Department of Energy. The only reason given is that “the private sector is better positioned to advance disruptive energy research and development and to commercialize innovative technologies.”
My reaction: They’re kidding, right?
No, this is a serious threat. According to recent news stories and my own reliable sources, the White House is now preventing ARPA-E from spending money that Congress appropriated to ARPA-E in earlier federal budgets.
These moves could quickly kill ARPA-E, an energy innovation agency that is effectively applying methods developed by DARPA (the Defense Department’s ARPA) over its 50 years of success in disruptive technology research and development.
The White House rationale for cutting ARPA-E is simply wrong. I was a Program Director (PD) at the Agency for three years. I know firsthand that the technologies we funded would not have had a prayer of attracting private sector funding at the early stage we supported them.
This blog explains a bit about ARPA-E. In the indented passages I describe a few of my own experiences fostering energy innovation during my term at ARPA-E.
Every ARPA-E project builds on an innovative idea that has the potential, if successful, to transform the way energy is generated, transformed, stored, used or transported. Huge markets await.
So why wouldn’t the private sector foot the bill for the research, as the White House suggests?
The reason is that every market sector starts with many competitive ideas, but only a few will deliver in the end. ARPA-E funds teams to make first prototype of disruptive commercial products. These first few years of directed work help winnow the field to those ideas that have a chance of market success.
ARPA-E is similar to DARPA in its willingness to fund high risk projects with huge potential rewards: DARPA has certainly funded a lot of risky projects that did not go big. But DARPA also launched the Internet, GPS, stealth technology and drones, to name a few of their biggest successes. We will not know for a few more years which ARPA‑E project will make such big impacts.
However, even a successful ARPA-E project may take 5 to 15 years to reach profitability. Venture capitalists and corporate vice-presidents represent impatient capital and will only invest if they have high confidence that there is a big pot of gold at the end of such a long rainbow.
In short, when ARPA-E invests, the projects are too risky for the private sector to fund. For a team with an early-stage idea, reaching technical and market success is like doing a complicated jigsaw blindfolded while riding a horse. The team must fit many puzzle pieces together, though the shape and number of all those pieces is not even known.
ARPA-E funds a portfolio of project teams so that each can attack the most scientifically risky pieces of their own puzzle, while defining and sorting as many other pieces as possible. At that point, the private sector might consider investing.
Having reluctantly left behind my life in Colorado, I arrived at ARPA-E in 2012 with a sense of urgency. My three-year term in DC meant I had to move quickly to help launch a few great energy technologies.
By my third day at the Agency, over 4000 short Concept Papers arrived in response to the 2012 OPEN solicitation, with about half on deadline day. Teams from academia, industry and national labs proposed to transform every corner of the energy landscape, from transportation fuels to industrial efficiency, and from carbon capture to fusion reactors.
I was one of four lead Program Directors, with about two months to choose which submissions should be encouraged to submit a full proposal. The numbers and breadth were terrifying. Some concepts were obviously crazy, but most needed serious consideration.
Assisted by an eager technical staff and a fleet of reviewers from the scientific community, we battled a decided lack of sleep to sort, study, devise algorithms to get at reviewers’ wisdom, debate and finally decide. We searched for very original concepts that didn’t violate the laws of thermodynamics or known facts, favored ideas that had not been heavily investigated by the scientific community, and sought advances with potential to make huge impact if successful. We winnowed the piles to those proposals that had at least one extremely enthusiastic reader.
Finally, each PD made the hard decisions in their own assigned area. This was not a committee consensus exercise although we were empowered to teach, debate and challenge each other. Many cups of coffee later, we defended our selections to ARPA-E’s leadership and invited full proposals from the survivors.
Program Directors are accomplished scientists and engineers who usually have both academic and industry experience. Based on the DARPA model, ARPA-E PDs have considerable independence and autonomy, tempered by a healthy culture of challenge and review based on technical arguments. Three-to-four year term limits mean PDs have no time for building empires.
I joined an ARPA-E staff that is technically superb and committed to getting big things done. I was amazed at how well ARPA-E culture promoted innovation, risk-taking and big-picture thinking about the energy future. PD autonomy avoids compromise to the least risky option and lets wild and transformative, but plausible, ideas get funding.
Aside from the OPEN solicitations, PDs are empowered to imagine the future and create focused Programs (with a capital “P”) that fund 10 to 20 teams to address a specific energy technology need with transformative new concepts. Proposing teams must meet challenging metrics; rigorous technoeconomic analysis at ARPA-E suggests that these metrics would open up new energy-related markets and create new industries. Good Programs often require interdisciplinary collaboration to attack an applied problem. This breaks down the artificial separations among scientific disciplines and often creates new scientific subfields.
About six months after I got to ARPA-E we completed all our expert review panels and selected our OPEN 2012 awardees. The 66 winning teams received an average of about $2 million to pursue their dreams.
All the funded teams seemed enthusiastic and capable. Some of the winners had identified how the newest technical advances could revive a long-abandoned approach to a key energy problem. Others had a lab result that suggested a completely new technological opportunity. Most winners were selected despite bad marks from at least one reviewer who was quite certain the novel approach would never work.
Some OPEN 2012 projects would be cut in their first year for lack of performance. Others would go on to start new funded companies, revolutionize fields and launch new industries. I spent the next two years traveling the country to manage and support the teams I had selected. I became their head cheerleader and harshest critic. I had to decide whether or not they had reached their array of technical and technology-to-market milestones—and whether the project should continue to receive our funding.
The most successful one-fifth of ARPA-E’s projects have already attracted private sector funds after reaching their first technical triumphs. Together, these 74 projects have raised $1.8 billion in private funding and launched at least 56 new advanced technology startup companies. That first $1.8 billion is more than the total funding ARPA-E has given away in its seven years of existence.
These startups are already selling new products, creating jobs and ensuring U.S. technical dominance in the world’s energy marketplace. These successes are what the National Academy of Sciences hoped for when it recommended formation of ARPA-E and why President George W. Bush authorized the agency in 2007 with robust bipartisan support in Congress.
I wouldn’t trade my years at ARPA-E for anything. I had the privilege of studying both details and the big picture. I learned from some of the smartest minds in U.S. energy innovation. I saw technologies that make me confident in our ability to face the challenge of providing the energy people need without raising global temperatures or destabilizing the climate system.
The Paris Climate Agreement shows that the world is acting on the established climate science by deploying new energy technologies. The pressure for an improved global energy system based upon low-carbon technologies will not abate and energy will continue to be one of the world’s biggest industries. To succeed, we must deploy the low carbon technologies we already have and invest in transformative technologies that will minimize the cost of remaking our energy system.
Our country faces a critical choice: Defy the White House and fund U.S. ingenuity through ARPA-E or let our global leadership in advanced energy technology slip away.
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