Funding FAIL: The federal budget, politics and cleantech


Fighting for funding is a perennial, bloody sport for just about every federal agency. But the budget funding cycle is seriously out of whack with the development cycle for clean energy, presenting a huge challenge for the U.S. and its clean power goals, according to Arun Majumdar, director of Advanced Research Projects Agency (ARPA-E) within the Department of Energy.

Speaking at a symposium at U.C. Berkeley on Friday, Majumdar said the short funding cycle makes it difficult to nurture innovative ideas, which always take years to move from the lab to the market. ARPA-E was born only two years ago to fund very early-stage and cutting edge concepts. The program aims to fund technologies, some of which might be too risky or immature to attract private investors, who often have a set time frame for when they want to earn returns for their investments.

“There is a common public good that only the government can do, and which business can’t — things that are too risky for the private sector,” Majumdar said. “The DOE gets a new budget every year, but if you want to do energy, it’s a 20-year horizon. There is a mismatch here.”

The gap may grow bigger. ARPA-E came into being thanks to the 2009 stimulus package, and that makes it vulnerable to cuts sought by Republicans, who aren’t fond of the stimulus package and the programs it supports. Earlier this month, the House Committee of Science, Space and Technology came up with a plan to cut spending and recommended no money for ARPA-E to give out new awards. ARPA-E began with a $400 million budget in fiscal 2009 has a current budget of $170 million.

The committee contended that ARPA-E is in fact supporting more later-stage technology developments that could receive private capital. The commitee writes: “We are concerned that the program focus to date has inappropriately tended to position the government in a venture capital type of role.” It went on to say that the committee does support “truly high-risk and unsupported transformational research activities.”

It’s unclear how committee members define early-stage technology vs later stage, and it’s interesting to see the term “venture capital” now carries a negative connotation. The failing of solar panel maker Solyndra, which used a $535 million federal loan guarantee to build a factory before filing for bankruptcy last month, has stoked a broader debate about the government’s role in supporting technology development. Where along the technology development time line should the government get involved? Should it just focus more on funding university research, helping companies make that final leap to commercialization, or something in between?

Majumdar said chopping up various stages of technology development, from idea to lab work to proof of concept to engineering for mass production, is the wrong way to shepherd and launch an idea into a successful product. “What you want to do is to have a feedback loop in real-time, to form a team and address them together,” he said.

But, perhaps mindful that the audience he was addressing was made up mostly of people in the academia, Majumdar highlighted university projects that ARPA-E has been supporting. Just before 2011 fiscal year ended last month, ARPA-E announced $156 million worth of projects in biofuels, solar, energy storage and smart grid. The press release for this announcement noted that universities would lead 50 percent of the projects and another 13 percent by national labs.

Photo courtesy of ARPA-E

Comments are closed.