This week, the House and Senate passed an omnibus appropriations bill to fund the government through September 30. While this stopgap funding agreement averts a shutdown in the near term, it sets the stage for discussions on the FY2018 budget to begin in earnest. This most recent agreement provides much needed resources to several critical Department of Energy (DOE) research and development programs and establishes an important baseline for FY2018 negotiations.
The next stage of the process will begin when the president releases a full budget request for FY2018, including mandatory spending and tax proposals, sometime in the next few weeks. This budget request is almost certain to mirror the preliminary “skinny budget” released by the White House in March, which included significant cuts to these programs.
Investments at DOE, for example, have paid enormous returns to taxpayers in the form of lower energy costs, improved energy security and environmental benefits.
While Congress ultimately sets the budget, the presidential budget request establishes priorities for the administration and often serves as a starting point for negotiations with Congress. The appropriations process for FY2017 was very different than what we’ll see for FY2018 and it’s not a given that Congress will use FY2017 funding levels as a baseline for the FY2018 budget and appropriations process.
But they should, and here’s why.
Federally funded energy research drives the economy.
Investments at the DOE, for example, have paid enormous returns to taxpayers in the form of lower energy costs, improved energy security and environmental benefits.
For example, early investments into hydraulic fracturing at DOE paved the way for businesses to commercialize the technology. According to a recent study from the Harvard Business School, the growth in unconventional gas enabled by hydraulic fracturing contributed $430 billion to the U.S. economy in 2014 alone. One of the ways it did that was by lowering the cost of electricity for manufacturers by 30 to 50 percent.
The global energy market is a huge opportunity.
The global energy sector is a multi-trillion-dollar market. The International Energy Agency projects that by 2040, $44 trillion in global energy investment will be needed to maintain our likely energy consumption between now and then with an additional $23 trillion needed to make prudent efficiency improvements to global energy systems.
As it is, the world invested $1.8 trillion into developing energy resources in 2015 and as the U.S. Energy Information Administration projects global energy demand to increase by as much as 48 percent by 2040, it’s clear that the global energy market is one of the largest sectors in the world, poised for significant growth over the next several decades.
Someone will benefit from making smart investments in the next generation of energy technologies. For the sake of our economy, it had better be the United States.
The private sector isn’t going to do it on its own.
As the American Energy Innovation Council (AEIC) and others have noted, researching new energy technologies carries significant risks—technical uncertainty, enormous capital requirements, long time frames and a complex and uncertain regulatory environment. All of these dampen private investment, despite the potential economic benefits.
That’s why effective public-private partnerships, where government fills key gaps in the innovation process, are so important to realizing the full economic, security, and environmental benefits of developing advanced energy technologies.
At the end of the day, it’s one thing to prototype a new phone app or computer tablet. It’s another thing altogether to prototype a new nuclear plant.
So back to the appropriations deal – what’s in it?
Energy innovation fared well relative other issues in the skinny budget. The budget numbers for key programs at DOE were:
- $306 million for the Advanced Research Projects Agency for Energy (ARPA-E) an increase of $15 million over FY2016.
- $2.1 billion for the Office of Energy Efficiency and Renewable Energy (EERE), an increase of $17 million over FY2016 – which includes $20 million to launch the energy-water desalination hub
- $5.39 billion for the Office of Science, an increase of $41.8 million over FY2016.
- $230 million for the Office of Electricity Delivery and Energy Reliability, an increase of $24 million over FY2016.
- $668 million for the Office of Fossil Energy, an increase of $36 million over FY2016
- $1.02 billion for the Office of Nuclear Energy, an increase of $30 million over FY2016 – which includes a $65 million cut to the International Thermonuclear Experimental Reactor (ITER) project.
This is the latest example of what has been one of the few bright spots for bipartisanship over the last few years— investing in energy innovation to grow our economy.
It’s encouraging to see continued support for energy innovation from members of both parties, but it’s important to note that other nations aren’t fighting over whether to simply maintain their current levels of funding for advanced energy technologies. Instead, they’ve recognized what these new technologies could mean to their own economies and are committed to making the additional investments necessary to develop them.
As the conversation about our nation’s budget turns to funding for FY2018, Congress should build on the growing bipartisan consensus around energy innovation and substantially increase our investments in energy research. Since 1987, energy research has decreased from 14.4 percent of the federal R&D budget to 5.3 percent by 2017. We should restore that commitment by tripling our energy research budgets. Investments with a track record like energy innovation make too much sense to pass up.