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U.S. federal investment in energy research, development and deployment “condemns future generations to fewer options” and is one-third of what is necessary for the nation to stay economically competitive, according to a new report from the American Energy Innovation Council (AEIC).

The federal government’s energy RD&D investments have been stagnant for the past five years at around $5 billion — less than one-half of 1 percent of the annual nationwide energy bill, the report says. The figure is nowhere near the doubling of investment AEIC said was necessary for U.S. leadership in its original 2010 report on the state of U.S. energy RD&D.

In fact, the level of RD&D investment is less than the $9.3 billion the United States spent on potato and tortilla chips in 2013, and at current growth rates the country’s RD&D spending will be surpassed by China’s in seven years, the report said.

“To solve the world’s energy and climate challenges, we need hundreds of new ideas and hundreds of companies working on them,” said Bill Gates, co-chairman of the Bill and Melinda Gates Foundation and AEIC co-chairman, in a statement.

“That is not going to happen without the U.S. government’s continued tradition of leadership in R&D. Everyone has a role to play — from the private sector, to philanthropy, to the academy — but we will not be able to find the type of energy miracle we need without investing in the programs that support that innovation,” he said.

Along with Gates, the council members are Norman Augustine, retired chairman and CEO of Lockheed Martin Corp.; John Doerr, partner at Kleiner Perkins Caufield & Byers; Charles Holliday, former chairman and CEO of DuPont; Jeffrey Immelt, chairman and CEO of General Electric Co.; and Tom Linebarger, chairman and CEO of Cummins Inc. AEIC is a project of the Bipartisan Policy Center.

The report said speed is essential, noting that “the U.S. recovery from the 2009 financial crisis would have been even more challenging if unconventional oil and gas technologies were 10 years behind on the development path that federal innovation investments accelerated.”

Policymakers also have failed to create a “first of a kind” technology commercialization authority, like a Clean Energy Deployment Administration, that is particularly critical in moving advanced nuclear and carbon capture technologies forward, which are “orphaned” by current policy, AEIC said.

“Advanced nuclear power and carbon capture and storage will not flourish in America without this sort of commitment,” the report said. “Today, the United States is essentially foreclosing, or at best delaying, those options.”

A range of financial tools and the prioritization of direct equity investments on a case-specific basis with private-sector partners “would push first-of-a-kind projects forward in a way loan guarantees alone cannot,” the report said.

AEIC also criticizes the lack of consistent funding mechanisms available in incentives, tax policy and program support for energy RD&D that would avoid the ups and downs of annual appropriations that undermines business efforts.

In 2013 President Obama, Sen. Lisa Murkowski (R-Alaska) and Sen. Lamar Alexander (R-Tenn.) all floated the idea of a “bank” for energy research and development, although their ideas for funding mechanisms are different and remain a barrier to its creation.

Obama proposed to stand up his Energy Security Trust by allotting a percentage of current offshore development leases, while Murkowski would have vested her bank through expanded federal land oil and gas leases. Alexander told the 2013 Advanced Research Projects Agency-Energy, or ARPA-E, summit that he wanted to transfer federal spending from renewable energy subsidies to energy research and development (Greenwire, Feb. 27, 2013).

The White House also recently announced a push to obtain $2 billion in private-sector investment — mainly through pension funds and foundations — to help early-stage technology through the demonstration stage or “valley of death” to prove it can be scaled up to commercialization (Greenwire, Feb. 10).

The report applauds progress in the creation of the Energy Department’s Energy Innovation Hubs, the success of the loan guarantee program, the development of the Quadrennial Energy Review and consistent funding for ARPA-E, although not the $1 billion annual appropriation the original report called for. ARPA-E funding has ranged from $180 million to $280 million in the past five years, but the agency should receive at least $300 million, according to the report.

ARPA-E would receive $325 million under the White House fiscal 2016 budget proposal. DOE also still has $40 billion in loan guarantee authority remaining to distribute to low-carbon fossil fuel, renewable energy and nuclear technology.

Congress authorized the doubling of R&D funding through a comprehensive science and education bill known as the America Competes Act in 2007, but the budgets did not follow suit. The 2010 Competes reauthorization bill lowered its ambition, but the final budgets still fell $6 billion short of those targets between fiscal 2011 and 2013 for the National Science Foundation, the National Institute of Standards and Technology, DOE’s Office of Science and ARPA-E, according to the American Association for the Advancement of Science.

That bill expired in 2013, and work on a new reauthorization bill has been stymied by differences on funding levels and program priorities, with many Republicans urging a focus on basic research with less emphasis on applied science (E&E Daily, Nov. 18, 2014).

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