Science Committee Discusses New Agency for Energy R&D

One of the recommendations of the National Academies’ October 2005 report on U.S. competitiveness, “Rising Above the Gathering Storm,” (see http://www.aip.org/fyi/2005/155.html ) was the creation, within the Department of Energy, of an organization modeled after the Defense Advanced Research Projects Agency (DARPA). This organization would be called the Advanced Research Projects Agency-Energy (ARPA-E) and would sponsor out-of-the-box, transformational R&D that would help the nation meet its long-term energy challenges. On March 9 a House Science Committee hearing explored a number of issues surrounding the ARPA-E proposal, including how its role and circumstances would differ from those of DARPA, what exactly its mission should be, and how it might be funded.

Several pieces of legislation have been introduced that would create an ARPA-E, including the PACE-Energy Act (S. 2197) sponsored by Sens. Pete Domenici (R-NM), Jeff Bingaman (D-NM), Lamar Alexander (R-TN) and Barbara Mikulski (D-MD), the Advanced Research Projects Energy Act (S. 2196), sponsored by Senators Hillary Rodham Clinton (D-NY), Harry Reid (D-NV), and Jeff Bingaman (D-NM), and a House bill providing for the establishment of ARPA-E (H.R. 4435), sponsored by House Science Committee Ranking Minority Member Bart Gordon (D-TN). However, the White House did not request funds for such an agency in its FY 2007 budget submission.

Science Committee Chair Sherwood Boehlert (R-NY) and Energy Subcommittee Chair Judy Biggert (R-IL) declared themselves open-minded but skeptical about the ARPA-E proposal. Boehlert questioned the need for an organization that would support more R&D when plenty of useful energy technologies are “just sitting on the shelf,” and argued that the largest barrier to adoption of new energy technologies is not supply but demand. “Until the government is willing to institute policies to stimulate demand” - an area which is not under Science Committee jurisdiction - “it’s going to be very hard for new technologies to enter or dominate the market,” he stated. “It is not clear what problems we are trying to solve” with the new agency, Biggert added: lack of private-sector investment in basic research; lack of federal funding for innovative, high-risk research; failure to effectively transfer new energy technologies to the marketplace; or some combination of these. Both warned that new funding was unlikely, and the organization would probably be funded by shifting money from other research, possibly from DOE’s Office of Science. Ranking Member Gordon urged the committee to follow the lead of the Senate, where he said two-thirds of Senators have signed onto legislation establishing an ARPA-E, and come together in a bipartisan way to support the recommendations of the National Academies report.

Steven Chu of Lawrence Berkeley National Laboratory, a Nobel Prize winner and a member of the National Academies’ panel that produced the “Gathering Storm” report, described energy as “the single most important problem” that science and technology will need to solve in the coming decades. He explained that the committee envisioned ARPA-E as a small, nimble entity that would support breakthrough, not incremental, research without constraints to fund existing programs, and would bridge the gap between basic research and industrial development. The committee hoped that a new entity would create a “freshness, excitement, and sense of mission” and attract the best scientific minds. ARPA-E’s purpose, he said, would not be to get products to the marketplace, but to transform the energy -marketplace itself. The report called for funding of $300 million in the first year and $1 billion annually for the next five or six years. “It is critical,” Chu added, that its funding “not jeopardize” funding for basic research in the Office of Science.

Most of the witnesses supported the ARPA-E idea. Frank Fernandez of F.L. Fernandez, Inc. explained that DARPA was originally created to be small and flexible and “work across and around” risk-averse, parochial organizational “stovepipes.” He thought that ARPA-E could be useful to address similar organizational problems within DOE. However, he noted that DARPA’s creation and evolution were “not without a lot of problems” and urged Congress to give ARPA-E the money, flexibility, authority, and time to become effective. Melanie Kenderdine of the Gas Technology Institute applauded the concept as “a welcome effort” to alter the nation’s energy production, distribution and consumption “by accelerating research in game-changing technologies,” but she commented that it was “unclear what type of research” ARPA-E would fund. She cautioned that the agency would need new money; that shifting funds from existing programs and inadequate funding could “set it up for failure.”

David Mowery of the University of California at Berkeley declared that the ARPA-E proposal “overlooks some critical features” of energy R&D. “First and most important,” he said, are policies that address the demand side. He noted the government serves as the primary customer for DARPA and creates demand, while ARPA-E would be serving a broad and diverse marketplace. Energy R&D should be complemented, he said, by federal policies that would encourage more widespread adoption of new energy technologies. He suggested a combination of policy incentives such as fuel economy standards and a carbon tax. In-Q-Tel’s Catherine Cotell added that the barriers to bringing a product to market “comes down to money,” and to whether companies believe they will make a profit. She recommended seeking investors’ perspectives to inform ARPA-E’s funding decisions.

“I know most of you support...the establishment” of an ARPA-E, Boehlert said, but Congress is “faced with setting priorities.” With new funding unlikely, he asked the witnesses whether they would support ARPA-E if the money came from the Office of Science. The response was resoundingly negative. Chu pointed out that the Academy report’s top research funding recommendation was to increase federal funding for basic research, and Fernandez commented, “insufficiently funding two activities instead of sufficiently funding one is the worst of all management decisions.” Kenderdine proposed exploring innovative funding options such as a trust fund.

Choosing between funding for ARPA-E and funding for the Office of Science is “the wrong question,” said Gordon. The right question, he said, was whether the nation should invest in energy independence, or other priorities such as “Star Wars” or reducing the capital gains tax. A number of committee members indicated support for the idea of ARPA-E, but also praised existing DOE energy R&D programs and asked how the new agency would differ from them. Chu responded that the existing programs have already identified paths forward and tend to focus on incremental advances, while ARPA-E would seek to use emerging basic research in areas such as nanotechnology to develop “totally new” technologies. Rep. Gil Gutknecht (R-MN) called ARPA-E “an idea whose time has come,” and Gordon said, “it’s time to stop talking about subtleties and get on with action.”