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Federal Energy RD&D: Building on Momentum in Fiscal Year 2019

联邦能源研发与示范:2019财年蓄势待发

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【时间】: 2018-04-23
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Congress should continue on the path toward doubling federal energy RD&D funding, which would fulfill a commitment the United States made along with 19 other countries to accelerate the global transition to cleaner, more affordable, more reliable energy.


When Congress passed appropriations bills for fiscal years (FY) 2017 and 2018, it wisely rejected extreme cuts to the Department of Energy’s (DOE) research, development, and demonstration (RD&D) budget proposed by the Trump administration. Yet, the administration has persisted, making similar proposals again this year. Its FY 2019 budget request reflects a fundamental skepticism about public RD&D investment. If enacted, the administration’s proposed cuts would jeopardize U.S. energy innovation, threatening national imperatives in energy security, economic competitiveness and productivity, and environmental stewardship.


Congress should continue on the path it has set, supporting what the Senate Appropriations Committee described as “a comprehensive and real-world strategy that includes medium- and later-stage research and development、 deployment and demonstration...” This path leads to a doubling of federal energy RD&D funding, which would fulfill a commitment made by the United States along with 19 other countries to accelerate the global transition to cleaner, more affordable, more reliable energy.





Within this doubling pathway, the Information Technology and Innovation Foundation (ITIF) urges particular attention be paid to these programs, which have been analyzed in prior reports:


Grow the Advanced Research Projects Agency-Energy (ARPA-E) budget to $1 billion.


Build a robust, diverse portfolio of technology-demonstration projects.


Sustain and expand the Clean Energy Manufacturing Innovation Institutes.


Double the budget of DOE’s Energy Innovation hubs.


In this report, we first describe the key role of the federal government in the U.S. energy innovation system. We then provide a high-level overview of both DOE’s overall budget and its RD&D budget. The bulk of the report drills down into the programs and subprograms that make up DOE’s RD&D budget, detailing what would be put at risk by the administration’s proposal, and opportunities that might be realized through its expansion.


THE KEY ROLE OF THE FEDERAL GOVERNMENT IN THE U.S. ENERGY INNOVATION SYSTEM


Accelerating the pace of energy innovation is essential to U.S. national security, economic competitiveness and productivity, and environmental stewardship. The Department of Defense is the single largest consumer of energy in the United States and must have reliable and efficient access to energy resources for operations and facilities at home and abroad. Energy is an enormous and vital economic sector, and innovation in this sector is key to reducing volatility and costs in the future. In energy-related manufacturing, the United States has fallen behind key competitors in many market segments that show the greatest growth potential, such as solar panels, batteries, next-generation nuclear power, and technologies to capture carbon. As emissions from the consumption of fossil fuels continue to drive climate change, the fight to avoid potential worst-case scenarios could lead to onerous regulations and taxes that limit consumer choice and reduce living standards—unless energy innovation is accelerated. The United States has historically been a global energy-innovation leader. Many technologies that now make major contributions to both the U.S. and global energy systems were created through federal investments and public-private cooperation. Federally funded nuclear power RD&D, for instance, led to large-scale private investment in commercial power plants that now account for 20 percent of U.S. electricity generation and 54 percent of zero-carbon power generation. Federal support for shale-gas resource characterization and directional drilling—in tandem with industry-matched applied research and a federal production tax credit—led to the dramatic rise of shale gas production from less than 1 percent of domestic gas production in 2000 to nearly 60 percent in 2016. Decades of federal investment in solar power have culminated in the early achievement of the DOE SunShot Initiative program’s 2020 goal of utility-scale solar PV power at six cents per kilowatt-hour ($0.06/kWh). Despite this record of success, federal investment that supports energy innovation has gyrated up and down over time, reducing the odds of new breakthroughs. Adjusted for inflation, DOE’s energy RD&D budget for FY 2018 remains more than 26 percent below what it was when the department was established in 1978. As a share of gross domestic product (GDP), DOE’s energy RD&D is down more than 75 percent in the same period. This decline is inconsistent with the view of a large majority of voters across the political spectrum who support increased funding for research into clean energy technologies. Energy RD&D spending is far below comparable federal spending for space, health, and defense. It also falls short in comparison with other countries around the globe. Eleven other countries invest more in energy RD&D as a percentage of GDP than the United States (figure 1). Figure 1: Government Energy RD&D Investment as a Percentage of GDP, 2015 The shortfall in public energy RD&D investment contributes to a similar shortfall in the private sector. R&D spending as a share of sales in the U.S. energy industry is only 0.4 percent, compared with 8.5 percent in aerospace and defense, 9.8 percent in computers and electronics, and 2.4 percent in the automotive industry. Venture capital and private-equity investment in U.S. renewable energy companies has declined, and only a handful of U.S. companies developing advanced nuclear reactors and carbon capture technologies have raised enough private capital to scale up their innovations. U.S. investors are wary of funding technology scale-up, leading domestic energy entrepreneurs to look overseas for funding, while slow-moving incumbents in this industry tend to support only modest, incremental innovation. Public investment and private investment play complementary roles along the pathway to commercialization for new energy technologies. Federal investment frequently serves as a catalyst for industry, as government RD&D tends to incent additional private R&D dollars, rather than crowding them out. In fact, ITIF has found that firms funded by federal programs like ARPA-E and Small Business Innovation Research (SBIR) are more likely to receive follow-on private support than comparable firms. The synergy between public and private investment has motivated the 20 countries that are the largest public investors in energy RD&D, led by the United States, to commit to doubling of their support and inspired a counterpart commitment by private investors led by Bill Gates to put more than a billion dollars to work behind innovative energy technologies stemming from the increase in public funding. Research by ITIF has identified gaps in the energy innovation ecosystem that the U.S. government is best-positioned to address and cannot be filled solely by the private sector. While public support is required at varying levels throughout the entire energy innovation process, from full public support for basic research to time-limited, modest subsidies for early deployment, the following gaps are particularly prominent: High-risk, high-impact, cross-cutting energy R&D in areas industry alone cannot address、


Technology demonstration projects for first-of-a-kind technologies that are too risky for private industry to fund、


Technology transfer and advanced manufacturing programs that partner with industry to infuse innovation into U.S. manufacturing、 and


Interdisciplinary, integrative centers of excellence that bring together researchers from across all sectors to work toward meeting ambitious and targeted technology goals with industry applications in mind. Congress has taken important steps to fill these gaps. It created ARPA-E to “sponsor creative, out-of-the-box, transformational, generic energy research.” It supported a suite of demonstration proj

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