What to Look For in Tomorrow’s DOE Budget Hearing

, senior energy analyst | March 21, 2018, 10:24 am EST
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On Thursday morning, the House Subcommittee on Energy and Water Development and Related Agencies (within the Committee on Appropriations) will hold a hearing on applied energy funding for the FY 2019 budget. (The FY 2018 budget, which goes until the end of September, is being finalized this week in order to avoid a government shutdown on Friday.) We’ll see a parade of undersecretaries and assistant secretaries of the applied energy technology offices within the Department of Energy (DOE)—all of whom are political appointees—attempt to justify their boss’s proposal seeking to gut R&D funding for clean energy and low carbon technologies.

The President’s budget takes aim at applied energy programs

It’s pretty clear that the president’s proposed budget, similar to last year, seeks to drastically reduce funding for applied energy research, development, and demonstration (R&D). And the cuts extend beyond the nearly 2/3 reduction in R&D funding for Energy Efficiency and Renewable Energy—the budget slashes funding by 26 percent for advanced fossil technology like CCS and 26% for advanced nuclear R&D. The Office of Electricity Delivery is hit hard, with its program on Energy Storage facing a 74 percent reduction to its already paltry budget.

For the second year in a row, the administration is proposing to ax ARPA-E, something even Secretary Perry opposes. ARPA-E enjoys strong bipartisan support because the agency is advancing transformational energy projects that can potentially and radically improve U.S. economic strength, national security, and environmental outcomes. And finally, the president’s budget eliminates the Loan Guarantee Program, even though the program has generated more than $1.79 billion in interest repaid to the US Treasury.

Program FY 2017 Enacted FY 2018 Senate Proposal FY 2018 House Proposal FY 2018 President’s Request FY 2019 President’s Request Proposed FY18 cut Proposed FY19 cut
Basic Energy Sciences $1,872 $1,980 $1,872 $1,555 $1,850 -16.9% -1.1%
EERE $2,035 $1,937 $1,104 $636 $696 -68.7% -65.8%
Office of Electricity $150 $213 $219 $120 $61 -20.2% -59.2%
Energy Storage Program $31 $31 $31 $8 $8 -74.2% -74.2%
ARPA-E $305 $330 $- $20 $- -93.4% -100.0%
Fossil R&D $682 $573 $635 $335 $502 -50.9% -26.4%
Nuclear Energy $1,016 $917 $969 $703 $757 -30.8% -25.5%
All Dollars in Millions.

The table above shows the current funding levels (FY 2017 Enacted refers to the final numbers passed by Congress through continuing resolutions); the House and Senate committee reports for FY 2018 (likely to be out of date by the end of the week); and the president’s requests for both FY 2018 and FY 2019.

Grid scale energy storage has the potential to change the way the grid functions—with positive benefits for society. But the technologies aren’t quite commercial scale, yet. Most of DOE’s funding for energy storage RD&D comes through the Energy Storage program within the Office of Electricity, various programs and cross programmatic initiatives within EERE, and ARPA-E. And yet, the president is proposing a 74 percent reduction in the Energy Storage program, complete elimination of ARPA-E, and a 66 percent cut to EERE.

Why such steep cuts for all these applied technology programs? As I’ve written previously, the administration continues to drive an ideological wedge between basic and applied research, based on the false premise that the private sector can pick up these technologies and move them to commercialization.

Is there any evidence that the private sector will pick up the slack?

In a word, no.

Funding for energy RD&D is a wise investment for the federal government—to maintain (or regain) US competitiveness in innovation, and to ensure that new technologies are able to reach the market instead of withering on the vine. This piece explains why; in a nutshell:

  • Venture capital is not flowing into energy projects (only 2 percent of venture capital went to energy projects in 2016) partly because these projects often require larger up-front costs;
  • Established energy institutions are risk averse, and in the case of regulated utilities, have a guaranteed rate of return—utilities, for example, generally spend only 0.1% of revenue on R&D.

By investing in energy RD&D (both basic and applied), the federal government unlocks private funding, creating a healthy innovation ecosystem for energy technologies. From solar power, to wind power manufacturing, to the shale gas revolution, and more—DOE has been an “indispensable partner in American energy innovation.”

The President cedes leadership to China

Let’s take our federal investments in energy storage as an example. As the president backs away from RD&D for energy storage, other countries are stepping up. China, India, Germany, the UK, Canada, and Australia have dedicated policies and strategies to advancing energy storage. Elsewhere around the world, policymakers see the value of energy storage and want to be part of a global market that is set to double six times by 2030.

China, for example, is making enormous government investments in storage. Chinese officials see these investments as strategic, and the country is poised to be the clean energy leader of the next decade and beyond. Last fall China published a national plan on the development of the storage industry. Chinese companies already control global markets for key battery components, and China is set to be a global superpower in storage technologies in the 2020s.

The president is proposing that the U.S. simply fold—and the stakes are high: nothing less than who will hold the jobs of the future.

The Administration’s budget will hurt our National Laboratories

Our system of 17 national laboratories “have served as the leading institutions for scientific innovation in the United States for more than seventy years,” according to the DOE’s website. They also serve as anchor institutions that are critical to local economic development—and simultaneously training the next generation of scientists and engineers. Secretary Perry said in January, “DOE’s 17 laboratories are the crown jewels of American science.” For all these reasons, people across the ideological spectrum agree that our nation’s National Labs are critical to innovation and to our nation’s competitiveness.

The thing is, the national labs are funded by government agencies—primarily DOE, to include both Basic Energy Sciences in the Office of Science as well as the applied technology offices in the Office of Energy. This means that federal budget cuts can translate into cuts—and job losses—at national labs.

In Colorado, the National Renewable Energy Laboratory (NREL) receives about three-quarters of its funding from EERE, according to a report last year on the State of the DOE National Laboratories. The uncertainty created by the administration’s proposed budget is leaving NREL’s 1,700 employees, plus hundreds of contractors, interns, and visiting researchers, in limbo about their future.

In Tennessee, Oak Ridge National Laboratory eliminated 350 jobs in 2017, although it’s unclear how much of that had to do with proposed budget cuts.

Conclusion

Any appropriator will tell you that a president’s budget is basically meaningless, because Congress holds the purse strings. Let’s hope these appropriators continue to recognize the value of applied energy technology and hold the administration’s feet to the fire.

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